3 ms·

I feel like the people who wonder why this is a crime are missing something pretty important: this isn't the SEC attempting to regulate a crypto market by prose

I feel like the people who wonder why this is a crime are missing something pretty important: this isn't the SEC attempting to regulate a crypto market by prosecuting securities fraud, it's the DOJ prosecuting straight-up old fashioned fraud. The crime is changing the terms of the transaction within the 12 second time frame after it had begun but before it had finished, and ultimately selling something different than what was promised. It doesn't matter that it's crypto, you could similarly be prosecuted for fraud by selling counterfeit pokemon cards if prosecutors could prove you knew that you were misrepresenting the cards as genuine cards. Here, the prosecutors have all the evidence they need from the code, and the Google searches showing what their intent was in writing that code.

b0r3datw0rk 2y ago
how is the blockchain under the purview of the us govt? these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government all these code is law folks are constantly exposed as just looking to get rich quick
- tmn 2y ago
  They did decide they’re entitled to taxes on transactions..
  - aj3 2y ago
    I bet this indictment will be used as a case study to justify the need for government oversight and taxation.
- lbwtaylor 2y ago
  The fraudsters are American so the US Government certainly has jurisdiction over their actions. Blockchain doesn't really matter to that.
- Arrath 2y ago
  > how is the blockchain under the purview of the us govt? Likely some inter-state commerce clause that gets used to bring many things under the purview of the feds. It may be more appropriate to ask how it was supposed to not be under the rule of law? > these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government Simply creating a blockchain with that intent in mind seems to be no more effective than a sovereign citizen ranting to a LEO that they are 'traveling by conveyance' in their car and thus not subject to traffic laws.
- Electricniko 2y ago
  The brothers did the act while in the US, so they're still under the jurisdiction of the US legal system. You can agree by contract to have contractual disputes handled under a certain jurisdiction, arbitration, or within the contractual agreement that defines all rights in a dispute, but you can't just will yourself out of criminal legal culpability by saying that no laws apply to you, even if the victim also were to say no laws should apply. Think about it from another practical perspective: if immunity from laws could be granted by the victim of a crime, imagine the pressure criminals would put on victims to state that they consented to the crime.
- paxys 2y ago
  All fraud conducted in the US or related to the US in any way is under the purview of the US government. The specifics of how it was done doesn't really matter.
aj3 2y ago
But you're not signing EULA's in order to participate in the network. Moreover, there are no real "laws / regulations" within the network either, specifying what you are or are not allowed to do. Ethereum standards merely determine how the software is supposed to work, but even then I'm sure Ethereum devs would oppose treating their docs as an agreement (because they don't offer any warranty, licensing or attestation). Moreover, there is an express goal to have a diverse set of software clients, so even developing your own software to be interoperable with existing standards can't be constructed as "an attack". All this to say, I just fail to say how this can be constructed as "changing the terms of the transaction". There was no legal agreement between parties and no existing precedent to treat this as a malicious attack at all. All I see is a Wall Street establishment pulling strings in order to protect their investment, by asking for a sudden government oversight in the system that was built with the express goal of not requiring any government oversight.
- voakbasda 2y ago
  > asking for a sudden government oversight in the system that was built with the express goal of not requiring any government oversight. Clearly, it has failed at that goal. This should not be surprising in the slightest. Government gunna govern.
beaugunderson 2y ago
prior to MEV-relay arbitrage bots and generalized frontrunners did this in the public mempool via the gas auction... MEV-relay allows them to instead submit bundles of transactions ordered in the way that makes them the maximum amount of profit by offering bribes to validators to include those bundles. those bundles cost money for other network participants, because you can take a swap transaction from the public mempool and include it in a bundle where you swap before and after that transaction and profit from the slippage. this is done decreed by law but because it appeals to the financial self-interest of the searchers and validators involved. the submitted bundles are supposed to be secret--the defendants in this case figured out how to force the validators to leak the proposed blocks by signing them with an invalid header. they could then submit their own bundle that cost the original submitter money by frontrunning their attempted frontrunning. you used to be able to trick sandwich bots without having to rely on this level of hack, see for example: https://www.coindesk.com/tech/2021/03/22/bad-sandwich-defi-trader-poisons-front-running-miners-for-250k-profit/ https://www.coindesk.com/tech/2021/03/22/bad-sandwich-defi-t... so of course (smart) sandwich bot authors immediately started writing checks for poison tokens. i'm honestly shocked that they're being prosecuted for this since it's a slight escalation on behavior that has evolved many times in ethereum's past.

b0r3datw0rk 2y ago

how is the blockchain under the purview of the us govt? these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government all these code is law folks are constantly exposed as just looking to get rich quick

tmn 2y ago
They did decide they’re entitled to taxes on transactions..
- aj3 2y ago
  I bet this indictment will be used as a case study to justify the need for government oversight and taxation.
lbwtaylor 2y ago
The fraudsters are American so the US Government certainly has jurisdiction over their actions. Blockchain doesn't really matter to that.
Arrath 2y ago
> how is the blockchain under the purview of the us govt? Likely some inter-state commerce clause that gets used to bring many things under the purview of the feds. It may be more appropriate to ask how it was supposed to not be under the rule of law? > these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government Simply creating a blockchain with that intent in mind seems to be no more effective than a sovereign citizen ranting to a LEO that they are 'traveling by conveyance' in their car and thus not subject to traffic laws.
Electricniko 2y ago
The brothers did the act while in the US, so they're still under the jurisdiction of the US legal system. You can agree by contract to have contractual disputes handled under a certain jurisdiction, arbitration, or within the contractual agreement that defines all rights in a dispute, but you can't just will yourself out of criminal legal culpability by saying that no laws apply to you, even if the victim also were to say no laws should apply. Think about it from another practical perspective: if immunity from laws could be granted by the victim of a crime, imagine the pressure criminals would put on victims to state that they consented to the crime.
paxys 2y ago
All fraud conducted in the US or related to the US in any way is under the purview of the US government. The specifics of how it was done doesn't really matter.

aj3 2y ago

But you're not signing EULA's in order to participate in the network. Moreover, there are no real "laws / regulations" within the network either, specifying what you are or are not allowed to do. Ethereum standards merely determine how the software is supposed to work, but even then I'm sure Ethereum devs would oppose treating their docs as an agreement (because they don't offer any warranty, licensing or attestation). Moreover, there is an express goal to have a diverse set of software clients, so even developing your own software to be interoperable with existing standards can't be constructed as "an attack". All this to say, I just fail to say how this can be constructed as "changing the terms of the transaction". There was no legal agreement between parties and no existing precedent to treat this as a malicious attack at all. All I see is a Wall Street establishment pulling strings in order to protect their investment, by asking for a sudden government oversight in the system that was built with the express goal of not requiring any government oversight.

voakbasda 2y ago
> asking for a sudden government oversight in the system that was built with the express goal of not requiring any government oversight. Clearly, it has failed at that goal. This should not be surprising in the slightest. Government gunna govern.

beaugunderson 2y ago

prior to MEV-relay arbitrage bots and generalized frontrunners did this in the public mempool via the gas auction... MEV-relay allows them to instead submit bundles of transactions ordered in the way that makes them the maximum amount of profit by offering bribes to validators to include those bundles. those bundles cost money for other network participants, because you can take a swap transaction from the public mempool and include it in a bundle where you swap before and after that transaction and profit from the slippage. this is done decreed by law but because it appeals to the financial self-interest of the searchers and validators involved. the submitted bundles are supposed to be secret--the defendants in this case figured out how to force the validators to leak the proposed blocks by signing them with an invalid header. they could then submit their own bundle that cost the original submitter money by frontrunning their attempted frontrunning. you used to be able to trick sandwich bots without having to rely on this level of hack, see for example: https://www.coindesk.com/tech/2021/03/22/bad-sandwich-defi-trader-poisons-front-running-miners-for-250k-profit/ https://www.coindesk.com/tech/2021/03/22/bad-sandwich-defi-t... so of course (smart) sandwich bot authors immediately started writing checks for poison tokens. i'm honestly shocked that they're being prosecuted for this since it's a slight escalation on behavior that has evolved many times in ethereum's past.