8 ms·

Is it even illegal to hack Ethereum? Some purists would say the smart contract was behaving as written.

stale2002 9y ago
Whether something is "illegal" is a function of the court system. So the question is, could you convince a jury that it is illegal?
- dboreham 9y ago
  That's an easy "yes".
  - wwwv 9y ago
    Should be easy to describe then.
    - yorwba 9y ago
      IANAL, but here is how I would argue: The DAO was created with the intention to allocate its funds according to a certain voting scheme, with everyone's power determined by the number of tokens they held. But the program did not correctly implement this intention, and the DAO hack exploited the difference to bring the funds under control of the attacker. This most likely violated the Computer Fraud and Abuse Act, and was thus illegal.
      - Zarath 9y ago
        As I understand it, the DAO website explicitly stated that the code of the contract superseded any written or stated intent. Basically: The code is the law.
        bhaak 9y ago
        I can write anything on a website. That doesn't mean that it is legally binding.
        moomin 9y ago
        The behaviour of the founders would almost certainly mean the phrase was interpreted as advertising rather than a legal commitment.
        jessaustin 9y ago
        Advertisers are occasionally held to some sort of legal commitment with respect to statements made in their ads. The "hackers" in this case might claim they wouldn't have invested their money if they hadn't believed the ad...
        PeterisP 9y ago
        The actual law is the law, and contract law (and criminal law i.e. regarding fraud) states that the intent does matter. The DAO website doesn't make legislation - the code may specify the rules about which transactions the Ethereum system will approve, but in the real world the actual laws matter and they will determine whether some people will have their stuff taken away, their movement restricted, or be forced to do some transactions in the Ethereum system.
        stale2002 9y ago
        Sure, the law cares about intent. But the question that is to be debated is, was the intention of the DAO too follow the code of the contract EVEN IF it had a bug. There is an argument to make that, given that "the code is law" was plastered all over the DAO, that being hacked and having all their money stolen, was explicitly allowed.
      - ghaff 9y ago
        Which is one of the issues with smart contracts. Yes, written contracts are the contract in the physical world. And sometimes people get outlawyered or just plain screw up and lose money because of circumstances that they didn't foresee. But when things come to court, there's still generally some oversight usually provided through the court system or mediators to put the brakes on clearly absurd and/or unfair results. Which is generally considered a positive thing.
        vkreso 9y ago
        Of course! Customs and other legal (based on moral) norms are basically the primary source of law or of its interpretation. Human systems based on rigid, or even utopian (that is totalitarian in practice) rules simply cannot handle the complexity of the real world. The system may seem good and functional at first but with the first problem which would because of the nature of complexity and chaotic system dynamics of human interactions inevitably happen, the system would crash (or in this case, get forked) since it would not offer any flexibility. Without getting too abstract, even traffic lights or zebras, from the perspective of a pedesetrian, (as an example of a simple system) would be a horrendous and extremely time consuming experience if its rules were enforced by the letter. Imagine if you could >only< pass the road accross the zebras... Human made systems need to be imperfect and the rules need to be flexible or the system will fail.
      - portent 9y ago
        The "Computer Fraud and Abuse Act" applies to the US. What if the hacker lives somewhere else? Then that law does not apply to him, and the action was not illegal.
        TomMarius 9y ago
        Are you familiar with the individual known as Kim Dotcom?
        ryanlol 9y ago
        The guy that the US has been unable to get to for years and who could flee NZ at any time to a friendlier jurisdiction if he so wished? Yeah.
        TomMarius 9y ago
        I have a feeling that it wasn't exactly problem-free for him.
        ryanlol 9y ago
        Nothing in life is exactly problem-free. It's just easy to overestimate his troubles, which at this point are almost exclusively financial in nature.
        TheSpiceIsLife 9y ago
        I would assume all allied countries have similar laws and therefore share extradition treaties. Even countries that don't have shared extradition treaties don't always ignore criminals within their borders, even if the criminal activity is occurring outside.
  - skinnymuch 9y ago
    Can't you ask for a case to be heard only by a judge? So the judge actually has to understand everything and go strictly by the law?
    - pmyteh 9y ago
      Depends on the jurisdiction (and the crime). In the UK, for the most serious (indictable-only) crimes, then no. But you can ask the judge to end the trial after the prosecution case if no reasonable jury could convict, including if as a matter of law no crime has been committed.
wwwv 9y ago
The principle of Ethereum is that code is law, the "hacker" followed the law to the letter and acted in a prescribed manner. What's the crime here exactly?
- DINKDINK 9y ago
  The ethereum foundations reaction to the DAO hack proved that the "code is the contract" is not true. Which questions the very value of smart contracts on the ethereum blockchain because it's proven that they're immutable now This is a good discussion: https://www.bloomberg.com/view/articles/2016-06-17/blockchain-company-s-smart-contracts-were-dumb https://www.bloomberg.com/view/articles/2016-06-17/blockchai...
  - wwwv 9y ago
    All obfuscation around a central controlling group that have the ability to reverse any transactions they don't like or negatively financially impact them, in other words.
    - tajen 9y ago
      Said "hacker" could even take Ethereum to a civil court and win a trial for changing the DAO's code: Ethereum long claimed that transactions were unrevokable and only contracts had value, causing tort to the hacker when rules were reversed... Given the number of people involved, it could even be juged as organized crime against one person...
      - vuyani 9y ago
        hmm true. Maybe smart contracts also need a good old fashioned terms & conditions signed. At least that protects against unknown bugs and exploits?
        MereInterest 9y ago
        In that case, they are no longer smart contracts. The entire appeal was that they would be knowable in their entirety, automatically executed, and irrevocable. The goal as I understood it was too have something that would enforce itself, not needing an external authority to interpret it. Instead, as others have pointed out, the hard fork demonstrated that this was not at all the case. Ethereum contracts can be voided, and the entire premise is therefore flawed. Terms and conditions would just be another way that contracts could be voided, another flaw.
AJRF 9y ago
It isn't, if you take the case under contractual law there is absolutely no basis to charge the person who extracted the $55m. The contract had 'flaws' but it was the contract, so tough cookies it agreed to something you didn't like, but you wrote it! (Except we know now it was too big to fail, which in turn means centralization) The DAO was pumped up by VCs and friends of the founder of Ethereum, which, before the launch, attracted some people who had clout from the big banks and enterprises, ergo, if the DAO failed then Ethereum failed in the eyes of the most lucrative customers & developers there. The thing that pissed of purists so much was, that when it first came out it was marketed as this beautiful "world computer" that would be incorruptible by anyone, but the hard fork made it apparent that the values of the Ethereum community had changed to value support of banks & business over that idea. I was at a conference this week and watched a lecture by one of the founding board members of the Enterprise Ethereum Alliance, who was getting the crowd fired up about the idea of ICO's, and then directly after his talk, David Birch from Consult Hyperion came on and said that people who are involved in the launch of new tokens in this current feverish phase are extremely likely to go to jail for fraud. Was hilarious
- Jabanga 9y ago
  David Birch has been bashing cryptocurrency since around 2012. It seriously goes that far back for some of these ideologues. Edit, just to give people an idea of where he's coming from ideologically, these are some of his comments that show the kind of world he wants to see: https://youtu.be/c8mdr8iwX20?t=6m49s https://youtu.be/c8mdr8iwX20?t=6m49s "law-abiding taxpayers like me are subsidizing criminals to use cash and not pay taxes" https://youtu.be/c8mdr8iwX20?t=10m47s https://youtu.be/c8mdr8iwX20?t=10m47s "so getting rid of cash has some other benefits which will lead to unexpected changes. For example for economists, getting rid of cash means that you lose the zero lower bound on interest rates. You can't have interest below zero because if you drop interest rates below zero people will just draw out the cash and just hold it. If you don't have cash you can have negative real interest rates. So getting rid of cash has a lot of benefits." https://youtu.be/c8mdr8iwX20?t=13m55s https://youtu.be/c8mdr8iwX20?t=13m55s "So if you allow us technologists to build the stuff so we build something like Bitcoin which let's pretend it's anonymous. Do you know what you get if you let us build that? You get a giant electronic Somalia. If you want to live in a society which is entirely driven by anonymous cash, where the rich aren't accountable anymore, where whoever's got the most money can be the warlord and do what they like, well that's what you're letting us build now" His demonization of cash remind me of this: "The cashless society – which more accurately should be called the bank-payments society – is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge" https://aeon.co/essays/if-plastic-replaces-cash-much-that-is-good-will-be-lost https://aeon.co/essays/if-plastic-replaces-cash-much-that-is...

stale2002 9y ago

Whether something is "illegal" is a function of the court system. So the question is, could you convince a jury that it is illegal?

dboreham 9y ago
That's an easy "yes".
- wwwv 9y ago
  Should be easy to describe then.
  - yorwba 9y ago
    IANAL, but here is how I would argue: The DAO was created with the intention to allocate its funds according to a certain voting scheme, with everyone's power determined by the number of tokens they held. But the program did not correctly implement this intention, and the DAO hack exploited the difference to bring the funds under control of the attacker. This most likely violated the Computer Fraud and Abuse Act, and was thus illegal.
    - Zarath 9y ago
      As I understand it, the DAO website explicitly stated that the code of the contract superseded any written or stated intent. Basically: The code is the law.
      - bhaak 9y ago
        I can write anything on a website. That doesn't mean that it is legally binding.
        moomin 9y ago
        The behaviour of the founders would almost certainly mean the phrase was interpreted as advertising rather than a legal commitment.
        jessaustin 9y ago
        Advertisers are occasionally held to some sort of legal commitment with respect to statements made in their ads. The "hackers" in this case might claim they wouldn't have invested their money if they hadn't believed the ad...
      - PeterisP 9y ago
        The actual law is the law, and contract law (and criminal law i.e. regarding fraud) states that the intent does matter. The DAO website doesn't make legislation - the code may specify the rules about which transactions the Ethereum system will approve, but in the real world the actual laws matter and they will determine whether some people will have their stuff taken away, their movement restricted, or be forced to do some transactions in the Ethereum system.
        stale2002 9y ago
        Sure, the law cares about intent. But the question that is to be debated is, was the intention of the DAO too follow the code of the contract EVEN IF it had a bug. There is an argument to make that, given that "the code is law" was plastered all over the DAO, that being hacked and having all their money stolen, was explicitly allowed.
    - ghaff 9y ago
      Which is one of the issues with smart contracts. Yes, written contracts are the contract in the physical world. And sometimes people get outlawyered or just plain screw up and lose money because of circumstances that they didn't foresee. But when things come to court, there's still generally some oversight usually provided through the court system or mediators to put the brakes on clearly absurd and/or unfair results. Which is generally considered a positive thing.
      - vkreso 9y ago
        Of course! Customs and other legal (based on moral) norms are basically the primary source of law or of its interpretation. Human systems based on rigid, or even utopian (that is totalitarian in practice) rules simply cannot handle the complexity of the real world. The system may seem good and functional at first but with the first problem which would because of the nature of complexity and chaotic system dynamics of human interactions inevitably happen, the system would crash (or in this case, get forked) since it would not offer any flexibility. Without getting too abstract, even traffic lights or zebras, from the perspective of a pedesetrian, (as an example of a simple system) would be a horrendous and extremely time consuming experience if its rules were enforced by the letter. Imagine if you could >only< pass the road accross the zebras... Human made systems need to be imperfect and the rules need to be flexible or the system will fail.
    - portent 9y ago
      The "Computer Fraud and Abuse Act" applies to the US. What if the hacker lives somewhere else? Then that law does not apply to him, and the action was not illegal.
      - TomMarius 9y ago
        Are you familiar with the individual known as Kim Dotcom?
        ryanlol 9y ago
        The guy that the US has been unable to get to for years and who could flee NZ at any time to a friendlier jurisdiction if he so wished? Yeah.
        TomMarius 9y ago
        I have a feeling that it wasn't exactly problem-free for him.
        ryanlol 9y ago
        Nothing in life is exactly problem-free. It's just easy to overestimate his troubles, which at this point are almost exclusively financial in nature.
      - TheSpiceIsLife 9y ago
        I would assume all allied countries have similar laws and therefore share extradition treaties. Even countries that don't have shared extradition treaties don't always ignore criminals within their borders, even if the criminal activity is occurring outside.
- skinnymuch 9y ago
  Can't you ask for a case to be heard only by a judge? So the judge actually has to understand everything and go strictly by the law?
  - pmyteh 9y ago
    Depends on the jurisdiction (and the crime). In the UK, for the most serious (indictable-only) crimes, then no. But you can ask the judge to end the trial after the prosecution case if no reasonable jury could convict, including if as a matter of law no crime has been committed.

wwwv 9y ago

The principle of Ethereum is that code is law, the "hacker" followed the law to the letter and acted in a prescribed manner. What's the crime here exactly?

DINKDINK 9y ago
The ethereum foundations reaction to the DAO hack proved that the "code is the contract" is not true. Which questions the very value of smart contracts on the ethereum blockchain because it's proven that they're immutable now This is a good discussion: https://www.bloomberg.com/view/articles/2016-06-17/blockchain-company-s-smart-contracts-were-dumb https://www.bloomberg.com/view/articles/2016-06-17/blockchai...
- wwwv 9y ago
  All obfuscation around a central controlling group that have the ability to reverse any transactions they don't like or negatively financially impact them, in other words.
  - tajen 9y ago
    Said "hacker" could even take Ethereum to a civil court and win a trial for changing the DAO's code: Ethereum long claimed that transactions were unrevokable and only contracts had value, causing tort to the hacker when rules were reversed... Given the number of people involved, it could even be juged as organized crime against one person...
    - vuyani 9y ago
      hmm true. Maybe smart contracts also need a good old fashioned terms & conditions signed. At least that protects against unknown bugs and exploits?
      - MereInterest 9y ago
        In that case, they are no longer smart contracts. The entire appeal was that they would be knowable in their entirety, automatically executed, and irrevocable. The goal as I understood it was too have something that would enforce itself, not needing an external authority to interpret it. Instead, as others have pointed out, the hard fork demonstrated that this was not at all the case. Ethereum contracts can be voided, and the entire premise is therefore flawed. Terms and conditions would just be another way that contracts could be voided, another flaw.

AJRF 9y ago

It isn't, if you take the case under contractual law there is absolutely no basis to charge the person who extracted the $55m. The contract had 'flaws' but it was the contract, so tough cookies it agreed to something you didn't like, but you wrote it! (Except we know now it was too big to fail, which in turn means centralization) The DAO was pumped up by VCs and friends of the founder of Ethereum, which, before the launch, attracted some people who had clout from the big banks and enterprises, ergo, if the DAO failed then Ethereum failed in the eyes of the most lucrative customers & developers there. The thing that pissed of purists so much was, that when it first came out it was marketed as this beautiful "world computer" that would be incorruptible by anyone, but the hard fork made it apparent that the values of the Ethereum community had changed to value support of banks & business over that idea. I was at a conference this week and watched a lecture by one of the founding board members of the Enterprise Ethereum Alliance, who was getting the crowd fired up about the idea of ICO's, and then directly after his talk, David Birch from Consult Hyperion came on and said that people who are involved in the launch of new tokens in this current feverish phase are extremely likely to go to jail for fraud. Was hilarious

Jabanga 9y ago
David Birch has been bashing cryptocurrency since around 2012. It seriously goes that far back for some of these ideologues. Edit, just to give people an idea of where he's coming from ideologically, these are some of his comments that show the kind of world he wants to see: https://youtu.be/c8mdr8iwX20?t=6m49s https://youtu.be/c8mdr8iwX20?t=6m49s "law-abiding taxpayers like me are subsidizing criminals to use cash and not pay taxes" https://youtu.be/c8mdr8iwX20?t=10m47s https://youtu.be/c8mdr8iwX20?t=10m47s "so getting rid of cash has some other benefits which will lead to unexpected changes. For example for economists, getting rid of cash means that you lose the zero lower bound on interest rates. You can't have interest below zero because if you drop interest rates below zero people will just draw out the cash and just hold it. If you don't have cash you can have negative real interest rates. So getting rid of cash has a lot of benefits." https://youtu.be/c8mdr8iwX20?t=13m55s https://youtu.be/c8mdr8iwX20?t=13m55s "So if you allow us technologists to build the stuff so we build something like Bitcoin which let's pretend it's anonymous. Do you know what you get if you let us build that? You get a giant electronic Somalia. If you want to live in a society which is entirely driven by anonymous cash, where the rich aren't accountable anymore, where whoever's got the most money can be the warlord and do what they like, well that's what you're letting us build now" His demonization of cash remind me of this: "The cashless society – which more accurately should be called the bank-payments society – is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge" https://aeon.co/essays/if-plastic-replaces-cash-much-that-is-good-will-be-lost https://aeon.co/essays/if-plastic-replaces-cash-much-that-is...