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Citibank mistakenly sent $900M to a bunch of hedge funds. Many refused to return it. Citi lost the court case. https://www.cnn.com/2021/02/16/business/citibank

Citibank mistakenly sent $900M to a bunch of hedge funds. Many refused to return it. Citi lost the court 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...

rat9988 4y ago
They sent their lender the exact sum of the loan. It's kind of a different case.
daniel-cussen 4y ago
Yeah like the other guy replied, they intended internally to send it to a wash fund but mistakenly (due to a UI glitch) paid the debt back to the lenders. Now that UI glitch was their fault too, so...the courts said, cry all you want. And they're a gigantic bank, it's the original digital business, every banker knows a single arithmetic error is dangerous. Just bankers being inept.
colinmhayes 4y ago
They accidentally repaid their loan early, which was explicitly allowed in the contract. The hedge funds were under no obligation to pay them back, since the money was now rightfully theirs.
- sjtindell 4y ago
  And everything done in this case was in a smart contract. That’s the idea.
  - colinmhayes 4y ago
    I don't think the smart contract explicitly said "there's this arbitrage opportunity available", but it's definitely a fine line.
    - Dylan16807 4y ago
      This kind of automated index fund seems pretty suggestive of arbitrage to me. And flash loan contracts are a bright neon sign saying "arbitrage opportunity!"
- not2b 4y ago
  Yes, exactly. They sent the money to their creditors. Had they accidentally sent it to someone who they didn't owe money to, the courts would order the money to be returned.
- Dylan16807 4y ago
  They repaid someone else's loan early.
ummonk 4y ago
A single judge ruled against Citi. It's under appeal.
DangitBobby 4y ago
I agree that this case was obviously ruled on incorrectly. The institutions broke the law (stole) by not returning the money, and the judge wanted to give a hot take instead of a legitimate ruling. Not allowing someone to retrieve money or property which was clearly given to you by mistake is theft. The end.

rat9988 4y ago

They sent their lender the exact sum of the loan. It's kind of a different case.

daniel-cussen 4y ago

Yeah like the other guy replied, they intended internally to send it to a wash fund but mistakenly (due to a UI glitch) paid the debt back to the lenders. Now that UI glitch was their fault too, so...the courts said, cry all you want. And they're a gigantic bank, it's the original digital business, every banker knows a single arithmetic error is dangerous. Just bankers being inept.

colinmhayes 4y ago

They accidentally repaid their loan early, which was explicitly allowed in the contract. The hedge funds were under no obligation to pay them back, since the money was now rightfully theirs.

sjtindell 4y ago
And everything done in this case was in a smart contract. That’s the idea.
- colinmhayes 4y ago
  I don't think the smart contract explicitly said "there's this arbitrage opportunity available", but it's definitely a fine line.
  - Dylan16807 4y ago
    This kind of automated index fund seems pretty suggestive of arbitrage to me. And flash loan contracts are a bright neon sign saying "arbitrage opportunity!"
not2b 4y ago
Yes, exactly. They sent the money to their creditors. Had they accidentally sent it to someone who they didn't owe money to, the courts would order the money to be returned.
Dylan16807 4y ago
They repaid someone else's loan early.

ummonk 4y ago

A single judge ruled against Citi. It's under appeal.

DangitBobby 4y ago

I agree that this case was obviously ruled on incorrectly. The institutions broke the law (stole) by not returning the money, and the judge wanted to give a hot take instead of a legitimate ruling. Not allowing someone to retrieve money or property which was clearly given to you by mistake is theft. The end.