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The fact that getting taxed is even considered a “threat” is weird and disturbing. It’s not even a downside — 60% of a pile of free money is still a pile of fre

by wrs 5y ago

The fact that getting taxed is even considered a “threat” is weird and disturbing. It’s not even a downside — 60% of a pile of free money is still a pile of free money.

toomuchtodo 5y ago
You are assuming it has enough value at the time you liquidate to pay the taxes at the cost basis the transfer took place. Very similar to stock options ending up worthless you owe $large_sum_of_taxes on because the value declined after exercise but before liquidity. 1099ing recipients and causing a race to unload would nuke them.
- burrows 5y ago
  So, cash out right now?
  - toomuchtodo 5y ago
    I cannot recommend selling stolen property, whether to pay taxes on the ill gotten gain or to evade taxes. The government considers these assets either commodities (CFTC) or securities (SEC), so prosecution is straightforward.
    - systemsignal 5y ago
      What makes it stolen property? If the smart contract allowed it…
      - toomuchtodo 5y ago
        The sender did not mean to send it, making it misappropriation or unjust enrichment. Edit: (Re Revlon) https://www.npr.org/2021/07/23/1019909860/banque-worms https://www.npr.org/2021/07/23/1019909860/banque-worms (NPR piece on the Revlon incident) > Elisabeth de Fontenay is a professor at Duke University's law school, and she used to be a corporate lawyer. > DE FONTENAY: When payments are made, for example, from banks to individuals like all of us in error, we have to give it back. And in fact, if we don't give it back, the banks actually will come after you. They will sue you, and sometimes they will bring criminal cases against you.
        spenczar5 5y ago
        Look at the Citibank Revlon case from last year [0]. In a clerical error, Citi sent $900m to a bunch of hedge funds, related to some Revlon debt. It asked for it back. It got about $400m. It sued for the other $500m… and lost in court. I’m not saying this is identical to that case, which depended upon New York law. But it is far from clear-cut and I think you are being way too confident in your view, since nothing like this has ever appeared in court. [0] the decision: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rrBrQQPB7_i8/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rrBrQQPB...
        ricketycricket 5y ago
        The document you cited actually supports toomuchtodo’s position: “The law generally treats a failure to return money that is wired by mistake as unjust enrichment or conversion and requires that the recipient return such money to its sender. Under New York law (which applies here), however, there is an exception to this rule: The recipient is allowed to keep the funds if they discharge a valid debt, the recipient made no misrepresentations to induce the payment, and the recipient did not have notice of the mistake.” I’m assuming no debt was owed to these random people.
        sumedh 5y ago
        If I am not mistaken, In Citi's case the hedge funds were going to get that money anyway but a bit later, they thought they got the money early, so they kept it.
        mindslight 5y ago
        The entire question is whether this executed smart contract will be treated as an actual binding contract. I see no reason why it should not be - parties entered into it freely for adequate consideration. Parties were well aware they were entering into a contract ("smart contract"), and by the technical format of the contract did contemplate that they could end up with an unfavorable result due to "bugs" or other unforgiving consequences of its extremely formal definition. This is the crux of the matter. If you've got a reason why this smart contract could possibly not end up being treated as a contract, then you need to make that argument. You can't just keep asserting that the payments are mistaken transfers without an actual argument. Furthermore, unless/until setting aside smart contracts were to become well established case law, recipients of the windfall should be able to rely on such reasoning, making keeping the tokens decidedly not fraud or conversion.
    - burrows 5y ago
      “Theft” is a legal phenomena so let’s not get ahead of ourselves and declare the relevant digital assets as “stolen”.

by wrs 5y ago

The fact that getting taxed is even considered a “threat” is weird and disturbing. It’s not even a downside — 60% of a pile of free money is still a pile of free money.

toomuchtodo 5y ago

You are assuming it has enough value at the time you liquidate to pay the taxes at the cost basis the transfer took place. Very similar to stock options ending up worthless you owe $large_sum_of_taxes on because the value declined after exercise but before liquidity. 1099ing recipients and causing a race to unload would nuke them.

burrows 5y ago
So, cash out right now?
- toomuchtodo 5y ago
  I cannot recommend selling stolen property, whether to pay taxes on the ill gotten gain or to evade taxes. The government considers these assets either commodities (CFTC) or securities (SEC), so prosecution is straightforward.
  - systemsignal 5y ago
    What makes it stolen property? If the smart contract allowed it…
    - toomuchtodo 5y ago
      The sender did not mean to send it, making it misappropriation or unjust enrichment. Edit: (Re Revlon) https://www.npr.org/2021/07/23/1019909860/banque-worms https://www.npr.org/2021/07/23/1019909860/banque-worms (NPR piece on the Revlon incident) > Elisabeth de Fontenay is a professor at Duke University's law school, and she used to be a corporate lawyer. > DE FONTENAY: When payments are made, for example, from banks to individuals like all of us in error, we have to give it back. And in fact, if we don't give it back, the banks actually will come after you. They will sue you, and sometimes they will bring criminal cases against you.
      - spenczar5 5y ago
        Look at the Citibank Revlon case from last year [0]. In a clerical error, Citi sent $900m to a bunch of hedge funds, related to some Revlon debt. It asked for it back. It got about $400m. It sued for the other $500m… and lost in court. I’m not saying this is identical to that case, which depended upon New York law. But it is far from clear-cut and I think you are being way too confident in your view, since nothing like this has ever appeared in court. [0] the decision: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rrBrQQPB7_i8/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rrBrQQPB...
        ricketycricket 5y ago
        The document you cited actually supports toomuchtodo’s position: “The law generally treats a failure to return money that is wired by mistake as unjust enrichment or conversion and requires that the recipient return such money to its sender. Under New York law (which applies here), however, there is an exception to this rule: The recipient is allowed to keep the funds if they discharge a valid debt, the recipient made no misrepresentations to induce the payment, and the recipient did not have notice of the mistake.” I’m assuming no debt was owed to these random people.
        sumedh 5y ago
        If I am not mistaken, In Citi's case the hedge funds were going to get that money anyway but a bit later, they thought they got the money early, so they kept it.
      - mindslight 5y ago
        The entire question is whether this executed smart contract will be treated as an actual binding contract. I see no reason why it should not be - parties entered into it freely for adequate consideration. Parties were well aware they were entering into a contract ("smart contract"), and by the technical format of the contract did contemplate that they could end up with an unfavorable result due to "bugs" or other unforgiving consequences of its extremely formal definition. This is the crux of the matter. If you've got a reason why this smart contract could possibly not end up being treated as a contract, then you need to make that argument. You can't just keep asserting that the payments are mistaken transfers without an actual argument. Furthermore, unless/until setting aside smart contracts were to become well established case law, recipients of the windfall should be able to rely on such reasoning, making keeping the tokens decidedly not fraud or conversion.
  - burrows 5y ago
    “Theft” is a legal phenomena so let’s not get ahead of ourselves and declare the relevant digital assets as “stolen”.