7 ms·

If someone accidentally wires you too much money, or wires money to the wrong account, is it not illegal to keep the money?

easytiger 5y ago
That's certainly the case in the UK at least
elliekelly 5y ago
Usually, yes. But banks have a process for reclaiming funds that have been incorrectly wired so it’s pretty unusual for the “legality” of it to be litigated.[1] Blockchain has no such process. By design. [1] A recent high-profile example where the facts and circumstances meant the wrongly wired funds were legally kept by the recipient: https://www.theregister.com/2021/02/19/citibank_money_mistake/ https://www.theregister.com/2021/02/19/citibank_money_mistak...
- gitfan86 5y ago
  Most things in life are a tradeoff. You can't just get rid of 100% of bad things about regulation and keep 100% of the good things about regulations. It reminds me of people who start open relationships. The upside sounds great, but there is a huge potential for downside and you may not fully appreciate that until it happens.
  - silexia 5y ago
    Yet another example of how the speculative bubble of crypto is mostly a scam at this point. Just imagine a bug that granted far more than was granted here. How many of us write software that has occasional bugs? Do you really want to trust your net worth that a software bug won't blow you out of the water?
perryizgr8 5y ago
Not always. Remember the Citibank Revlon case? https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...
- wombatmobile 5y ago
  In the Citibank case, the beneficiaries were entitled to the money because they were the original lenders, and did not know that (what appeared to be) the repayment had been accidentally wired.
  - zinekeller 5y ago
    Correct. This is equivalent to you paying your bills early. Sure, it sucks to be stuck in a money crunch if you found it out later, but your financial mismanagement doesn't automatically mean that the you have the right to ask your utilities to return the money.
    - princeb 5y ago
      hmm i don't know. generally speaking, money today is not the same as money tomorrow. and so, if you think about money as a commodity, to be consumed, transformed, redeployed, similar to let's say... corn. what would you do, as a grain processor, if your supplier decided to show up with 500k bushels six months too early?
      - zinekeller 5y ago
        I think that the analogy is reasonable, mainly because both examples are the type of debts that can be serviced (i.e. repaid) anytime (unless your utilities needs to be pre-paid before you can use it, which in case it breaks down because it becomes a bought thing, not a borrowed thing). There are recommended schedules to pay them, as well as a hard deadline, but you can usually pay them early (and sometimes those early payments can be rewarded, for example by reduced interests). Your example mainly deals with futures (a type of financial instrument), mainly because you have agreed to pay within a tight schedule, which does not allow you to service them too early nor too late. Also, you forgot that money was invented to be widely fungible (okay, you can argue if this is true in this age but I argue it's still largely is) meaning that it can be (relatively speaking) easier to convert to corn, stocks, or generators (for example), which is different from corn which is only usable to a subset of people, meaning that you can only deal with those people which needs or wants corn (for example, you cannot easily get generators with corn).
mikepurvis 5y ago
But isn't the whole point of crypto to throw off all these inconvenient and unjust regulatory shackles? That technology has perfectly solved transacting in a trustless way, so that we no longer need or want agents of the state threatening citizens with violence in order to compel actions from them?
- fksadfji12 5y ago
  They have all of their users information - in compliance with KYC.. so no.
- withinboredom 5y ago
  Good luck with that
SkeuomorphicBee 5y ago
No one knows for sure. This question is still not answered in the judiciary (of any country afaik) when it comes to cripto contracts and protocols. It is not as simple as "money wired to a wrong account", those protocols are based on smart contracts, and the concept that the code is the contract (something that also is not tested in court). So a bug in the smart contract code would be akin to signing a contract without properly reading it, and it ends up having a clause you didn't originally want (but you did sign), that kind of "buggy" contract may be 100% enforceable or not depending on the country and the situation. Other analogy that may be relevant are cases where casinos had slot machines with bugs awarding more prizes than the casino intended. In some cases/jurisdictions the courts ruled in favor of casinos, that the money was awarded incorrectly and should be returned; but in other cases/jurisdictions favored the winner, saying that the winner did everything right according to the rules of the game and should keep the winnings. Also the Pepsi 349 Scandal in the Philippines in 1992 comes to mind [1]. In that case courts side with Pepsi, but I suspect that money has some inertia in Judges minds, so it was easy to side with Pepsi when it haven't paid yet. I suspect that if all that money had actually been automatically transfered to the many winners, then Pepsi would have a much harder task to convince the judges to make everyone transfer the money back. [1] https://en.wikipedia.org/wiki/Pepsi_Number_Fever https://en.wikipedia.org/wiki/Pepsi_Number_Fever
- avereveard 5y ago
  I'm going to add smart contact providers have a strong incentive not to get the concept of smart contact tested in court, as if invalidated it would render them unfit for their purported use.
cecilpl2 5y ago
But in this case the Compound contract specified this was intended to happen, therefore it's not an accident nor was the money transferred to the wrong account. The whole point of the contract is that it's a perfect, unambiguous, clear representation of intent. Right?
- BigRedDog1669 5y ago
  Yes, exactly. If it's specified in the smart contract, that's what everyone signed up for, even if they didn't understand the bug. If people signed a paper contract and a software system was designed to implement the contract, but the software system erroneously (through a bug) did something that went against the contract, that would be an erroneous payment. But if the code is the contract in a smart contract, bugs aren't contract errors.
lottin 5y ago
A wire transfer involves a money transmitter, who provides a service according to some terms & conditions. In case of a dispute, a court will have the final word. None of this applies to cryptocurrencies, because cryptocurrency transactions are final. They can't be overridden by a judge. If they could, they wouldn't be censorship resistant. You can have censorship resistance or rule of law, choose one.
- jliptzin 5y ago
  Just because there’s technically no mechanism within the protocol to reverse the transaction does not suddenly make it legal to keep the money right? You could spend all the money accidentally wired to you and have nothing left to your name, but you still owe that money. So you could keep the ill-gotten crypto but still be liable for civil or criminal charges.
  - 8note 5y ago
    You'd be making the argument that the contract was followed perfectly, and it decided that you should have the money. If the code is the contract, the bugs are what everyone signed up for.
- int_19h 5y ago
  They can be overridden by the judge in the same exact way cash transactions are: by forcing the offender to make a transfer in the amount that they owe, and/or selling off their other property to pay that debt. The thing about crypto and ownership is that the blockchain is not the final arbiter of legal ownership, and that qualifier matters in a lot of cases.
- tlogan 5y ago
  I believe the US law inforcement will criminally prosecute you if you receive money you have no reason to believe it should be yours (money mule laws, using stolen property, etc.).
colinmhayes 5y ago
But isn't the point of smart contracts that "code is law" and therefore there are no accidents?
tlogan 5y ago
Yes. In 99% of cases it is illegal. There are some cases when it ok to keep it (like if one pays off their loan too early [1]) but you will be criminally prosecuted if you do not return money you have no reason to believe it should be yours [2]. [1] https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws... [2] https://www.ktvu.com/news/woman-jailed-after-refusing-to-return-1-2-million-mistakenly-put-into-her-bank-account https://www.ktvu.com/news/woman-jailed-after-refusing-to-ret...
deleted 5y ago
[deleted]
hotsauceror 5y ago
I'm not sure about the 'wrong account' scenario, but there was a case last year where Citibank accidentally paid off 'too much' of an outstanding debt to one of their creditors, and tried to recoup the money in court. They lost. But of course, they legitimately owed the money.

easytiger 5y ago

That's certainly the case in the UK at least

elliekelly 5y ago

Usually, yes. But banks have a process for reclaiming funds that have been incorrectly wired so it’s pretty unusual for the “legality” of it to be litigated.[1] Blockchain has no such process. By design. [1] A recent high-profile example where the facts and circumstances meant the wrongly wired funds were legally kept by the recipient: https://www.theregister.com/2021/02/19/citibank_money_mistake/ https://www.theregister.com/2021/02/19/citibank_money_mistak...

gitfan86 5y ago
Most things in life are a tradeoff. You can't just get rid of 100% of bad things about regulation and keep 100% of the good things about regulations. It reminds me of people who start open relationships. The upside sounds great, but there is a huge potential for downside and you may not fully appreciate that until it happens.
- silexia 5y ago
  Yet another example of how the speculative bubble of crypto is mostly a scam at this point. Just imagine a bug that granted far more than was granted here. How many of us write software that has occasional bugs? Do you really want to trust your net worth that a software bug won't blow you out of the water?

perryizgr8 5y ago

Not always. Remember the Citibank Revlon case? https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...

wombatmobile 5y ago
In the Citibank case, the beneficiaries were entitled to the money because they were the original lenders, and did not know that (what appeared to be) the repayment had been accidentally wired.
- zinekeller 5y ago
  Correct. This is equivalent to you paying your bills early. Sure, it sucks to be stuck in a money crunch if you found it out later, but your financial mismanagement doesn't automatically mean that the you have the right to ask your utilities to return the money.
  - princeb 5y ago
    hmm i don't know. generally speaking, money today is not the same as money tomorrow. and so, if you think about money as a commodity, to be consumed, transformed, redeployed, similar to let's say... corn. what would you do, as a grain processor, if your supplier decided to show up with 500k bushels six months too early?
    - zinekeller 5y ago
      I think that the analogy is reasonable, mainly because both examples are the type of debts that can be serviced (i.e. repaid) anytime (unless your utilities needs to be pre-paid before you can use it, which in case it breaks down because it becomes a bought thing, not a borrowed thing). There are recommended schedules to pay them, as well as a hard deadline, but you can usually pay them early (and sometimes those early payments can be rewarded, for example by reduced interests). Your example mainly deals with futures (a type of financial instrument), mainly because you have agreed to pay within a tight schedule, which does not allow you to service them too early nor too late. Also, you forgot that money was invented to be widely fungible (okay, you can argue if this is true in this age but I argue it's still largely is) meaning that it can be (relatively speaking) easier to convert to corn, stocks, or generators (for example), which is different from corn which is only usable to a subset of people, meaning that you can only deal with those people which needs or wants corn (for example, you cannot easily get generators with corn).

mikepurvis 5y ago

But isn't the whole point of crypto to throw off all these inconvenient and unjust regulatory shackles? That technology has perfectly solved transacting in a trustless way, so that we no longer need or want agents of the state threatening citizens with violence in order to compel actions from them?

fksadfji12 5y ago
They have all of their users information - in compliance with KYC.. so no.
withinboredom 5y ago
Good luck with that

SkeuomorphicBee 5y ago

No one knows for sure. This question is still not answered in the judiciary (of any country afaik) when it comes to cripto contracts and protocols. It is not as simple as "money wired to a wrong account", those protocols are based on smart contracts, and the concept that the code is the contract (something that also is not tested in court). So a bug in the smart contract code would be akin to signing a contract without properly reading it, and it ends up having a clause you didn't originally want (but you did sign), that kind of "buggy" contract may be 100% enforceable or not depending on the country and the situation. Other analogy that may be relevant are cases where casinos had slot machines with bugs awarding more prizes than the casino intended. In some cases/jurisdictions the courts ruled in favor of casinos, that the money was awarded incorrectly and should be returned; but in other cases/jurisdictions favored the winner, saying that the winner did everything right according to the rules of the game and should keep the winnings. Also the Pepsi 349 Scandal in the Philippines in 1992 comes to mind [1]. In that case courts side with Pepsi, but I suspect that money has some inertia in Judges minds, so it was easy to side with Pepsi when it haven't paid yet. I suspect that if all that money had actually been automatically transfered to the many winners, then Pepsi would have a much harder task to convince the judges to make everyone transfer the money back. [1] https://en.wikipedia.org/wiki/Pepsi_Number_Fever https://en.wikipedia.org/wiki/Pepsi_Number_Fever

avereveard 5y ago
I'm going to add smart contact providers have a strong incentive not to get the concept of smart contact tested in court, as if invalidated it would render them unfit for their purported use.

cecilpl2 5y ago

But in this case the Compound contract specified this was intended to happen, therefore it's not an accident nor was the money transferred to the wrong account. The whole point of the contract is that it's a perfect, unambiguous, clear representation of intent. Right?

BigRedDog1669 5y ago
Yes, exactly. If it's specified in the smart contract, that's what everyone signed up for, even if they didn't understand the bug. If people signed a paper contract and a software system was designed to implement the contract, but the software system erroneously (through a bug) did something that went against the contract, that would be an erroneous payment. But if the code is the contract in a smart contract, bugs aren't contract errors.

lottin 5y ago

A wire transfer involves a money transmitter, who provides a service according to some terms & conditions. In case of a dispute, a court will have the final word. None of this applies to cryptocurrencies, because cryptocurrency transactions are final. They can't be overridden by a judge. If they could, they wouldn't be censorship resistant. You can have censorship resistance or rule of law, choose one.

jliptzin 5y ago
Just because there’s technically no mechanism within the protocol to reverse the transaction does not suddenly make it legal to keep the money right? You could spend all the money accidentally wired to you and have nothing left to your name, but you still owe that money. So you could keep the ill-gotten crypto but still be liable for civil or criminal charges.
- 8note 5y ago
  You'd be making the argument that the contract was followed perfectly, and it decided that you should have the money. If the code is the contract, the bugs are what everyone signed up for.
int_19h 5y ago
They can be overridden by the judge in the same exact way cash transactions are: by forcing the offender to make a transfer in the amount that they owe, and/or selling off their other property to pay that debt. The thing about crypto and ownership is that the blockchain is not the final arbiter of legal ownership, and that qualifier matters in a lot of cases.
tlogan 5y ago
I believe the US law inforcement will criminally prosecute you if you receive money you have no reason to believe it should be yours (money mule laws, using stolen property, etc.).

colinmhayes 5y ago

But isn't the point of smart contracts that "code is law" and therefore there are no accidents?

tlogan 5y ago

Yes. In 99% of cases it is illegal. There are some cases when it ok to keep it (like if one pays off their loan too early [1]) but you will be criminally prosecuted if you do not return money you have no reason to believe it should be yours [2]. [1] https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws... [2] https://www.ktvu.com/news/woman-jailed-after-refusing-to-return-1-2-million-mistakenly-put-into-her-bank-account https://www.ktvu.com/news/woman-jailed-after-refusing-to-ret...

deleted 5y ago

[deleted]

hotsauceror 5y ago

I'm not sure about the 'wrong account' scenario, but there was a case last year where Citibank accidentally paid off 'too much' of an outstanding debt to one of their creditors, and tried to recoup the money in court. They lost. But of course, they legitimately owed the money.