Vitalik and Tual going to end up in jail?

[iamnotback]

Looks to me that they got themselves in deep legal shit...

a) The terms and conditions of the particular smart contract supersedes hundreds of years of US legal contract law, not! Directly or indirectly, this has been fudded all over the internet. 100% of the legal consensus is that  in the US, US contract law is the guiding agent. Who has jurisdiction is another matter, but in whatever jurisdiction, that jurisdiction's legal system is the controlling entity. You are not waving away the US court system with words written in magic pixie dust on a piece of paper.

b) It''s clear that the Ethereum foundation immediately needs to consult with legal experts in the areas of contract law and security and exchange law in order to clarify in their talks what exactly they can and cannot claim/promise. CEO's never say anything for public attribution without clearing it with legal.

Absolutely!

Why do they fail if they fork?

Seems to me the fanboys who buy anything that sounds good, don't really care about whether it is decentralized, because we were writing for months in the Ethereum Paradox thread that Casper would be moving it towards centralization. They only believe what they want to believe.

So why would recovering the funds for the fanboys be worse than not from the perspective of sustaining Ethereum?

They can state that the rules weren't well elucidated and that in the future, all users must understand that contracts are not warranted to perform as advertised.

Tual has potentially a big problem if they didn't do adequate disclosure. This can end up in lawsuits and he can end up prosecuted under securities regulations. If they did make very clear and conspicuous disclosure about risks, then they definitely shouldn't fork because no one will ever again know what the rules are (as they will be open to change at-will).

All about fungibility and centralization. It sucks, and I don't think anyone could honestly argue that the attacker deserves the coins, but intervening would be disastrous to the long term prospects of ETH. There's plenty of precedent to suggest that intervention like this would be a death sentence. The "fanboys" wouldn't care, but as far as long term adoption and all that goes, you're really shooting yourself in the foot. Those in it for the quick money are no doubt pissed off, but anyone in it for the long haul should be staunchly against a fork.

I think the "attacker" deserves the funds, because and assuming he did nothing illegal (but I am not even sure if he didn't violate some obscure law). But we are discussing about perceptions of what the risks are. Please re-read my prior post as I added to it. For me, it hinges on whether they had adequately explained/disclosed the risks to the DAO and ETH investors. I suspect not (otherwise why $168m invested[1]). Thus I argue they can fork and then make the conspicuous and repeated disclosure so that it is clear they will be consistent from here on. And they pretty much have to fork in that case, else they throw themselves under the legal liability bus (but due to the decline in the ETH price they are fucked legally no matter what they do). As for the threats of lawsuits from the "attacker", these can be ignored because they can claim that the majority has the Byzantine power to fork and everyone who uses CC knows that.

Or they can take the stance that all CC investors should know the risks and that they are the owners, because it is decentralized. In that case, they shouldn't fork, but I think they will lose this argument in court perhaps. The DAO investors can file a class action lawsuit for example (which btw supercedes every international jurisdiction!) and claim to be n00bs who trusted Vitalik and Tual their idols.

I believe this clusterfuck is going to lead to securities regulation of CC.  

Vitalik is growing up very fast I think right about now.


[1] Where are the statements about how participants could lose everything if there is a bug? They should have scared away some of the money. I read 18,000 investors for $168 million, so several $1000s each.

Luckily there is Common law. Contracts are all about consent; abusing a gap/hole/vulnerability in a contract is obviously non-consentual and thus illegal. Without such a legal framework, no contract in the world could exist. No contract is perfect.

Agreed.

My father specializes in contract law, graduated top of his class at L.S.U. and was former West Coast Division Attorney for Exxon.

I once was fretting over the fine print of a contract for a $205,000 license I sold for CoolPage in 2001, and he advised to not kill the contract negotiations because he said the court would not enforce a one-sided contract.

So contract law interprets what is the intent, not just what is written in the contract.

Do you mean the intent of the DAO is not to enrich somebody by $50 million by exploiting a hole in the coding?

No. leopard2 and I mean that the intent of the DAO contract is roughly not to allow 1 user take all the value out without consensus voting.

And contract law will likely enforce rule for that intent, regardless of an weakness in the code which prevents enforcing that intent.

Edit: but note it is not clear whether the law could enforce it.

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[mandica]

Vitalik just proposed a solution to the crisis. If the Ethereum community accepts that, it is the responsibility of the community. The community will go to the prison.

[iamnotback]

Vitalik just proposed a solution to the crisis. If the Ethereum community accepts that, it is the responsibility of the community. The community will go to the prison.

Who was doing the promotion that caused the $168m to blindly invest? Who were those n00bs entrusting their faith in?

These are the issues that matter in securities law.

I been warning everyone for the past months that they needed to put very conspicuous warnings else they risk the wrath of the law.

Hey I am an (min)anarchist, so I agree with you except I can't deny that the State and the Law exist. I agree that the n00bs should be responsible for their own actions. And that they are the community so they are in charge of the open source protocol outcome. But the problem is the minority is subject to the will of the majority. So the minority could still file a class action lawsuit alleging that for example (and there are many others) Minecache told them that Vitalik is a genius:

Fantastic article on Vitalik. He is quite a genius and we are all so proud that he works on the Ethereum project.

https://backchannel.com/the-uncanny-mind-that-built-ethereum-9b448dc9d14f#.jckispyvx

They should have warned all those DAO investors that they could lose everything. They should have made that very very conspicuous.

Vitalik and Tual need to lawyer up if they haven't already done so.

I suspect they MUST do a fork and then communicate much more vigorously the risks to the users of this system going forward (which would also perhaps dampen enthusiasm but maybe not if they are word crafty). I think once the Ethereum Foundation consults with lawyers, they will realize this. Then they have to convince the stakeholders. And hope none of the users file a class action lawsuit (but I expect TPTB planted their own users already and the class action lawsuit is coming).

[iamnotback]

This is not your fight. ETH can and will be fine. If it had been a bug in the EVM, fork-away. It wasn't, and all you have done with your meddling is destroy any trust anyone had, in running a trust-less system.

If Vitalik wasn't also a Curator and thus implied promoter of the DAO, then I'd agree with you 100%[1]. Let Tual et al, take any legal liability. But I am thinking maybe Vitalik is legally in deep shit also:

https://bitcointalk.org/index.php?topic=1517223.0

But maybe you are correct and the lawyers will advise the Ethereum Foundation to do nothing, so as to not admit they are the ones "securing" the investments of the users so they don't fall under purview of the securities law. But I still think they are going to damned because they didn't make adequate disclosures.

Nobody from their camp warned anything while the DAO was accumulating $168m. I and others were warning that this huge pot of egold ripe for losses (either exchange value losses or outright technological losses) and not making proper disclosure was going to end up a legal clusterfuck. So now here we are.

Bitcoin didn't have a key personality as a promoter.


[1] But that would mean I also agree the majority can do a 51% attack and change the protocol.

[bathrobehero]

Except Vitalik has nothing to do with US laws (fortunately).

[Minecache]

What a load of bitter FUD.

[iamnotback]

Hey guys I hope they are not in any legal trouble.

Why does every inquiry have to be labeled FUD?

These are legitimate thoughts. Whether they are likely or not, I am not sure.

Bitter about what? Why would I be bitter? I haven't lost anything. I haven't gloated either.

I read that class action lawsuits filed (in the USA or any where) supercede all nations' jurisdictions and they can under international law then subpoena in any nation. I read that on Armstrong's website recently.

[charleshoskinson]

Nothing to do with US laws. Hahaha hahaha, God you're funny. Best joke I've heard all day. Look up US Securities treaties

[Auponef]

Vitalik just proposed a solution to the crisis. If the Ethereum community accepts that, it is the responsibility of the community. The community will go to the prison.

Who was doing the promotion that caused the $168m to blindly invest? Who were those n00bs entrusting their faith in?

These are the issues that matter in securities law.

So all the scam coin creators should go to jail. But everyday, there are numerous scam coins created to scam people.

[hv_]

Tone Vays at 15:00. ( best at 18:30!)

https://youtu.be/ULF4qMcokLg

Not more to say...

[iamnotback]

Nothing to do with US laws. Hahaha hahaha, God you're funny. Best joke I've heard all day. Look up US Securities treaties

Who are you addressing this to? Is this addressed to bathrobehero or to me or to the person I quoted in the OP?

I have not made reference specifically to USA law. I am quoting in the OP about common law as it pertains to contracts. There are many common law countries on earth.

The point I am making is that when class action lawsuits are pressed (in the case of the potential security), that is often when securities regulators are compelled to become involved (at least in the USA and I don't know about other countries but I presume they have some securities regulation also).

Ethereum and the DAO I presume are held by people in many nations on earth, so laws can filed in any of those nations. And I also understand that class action lawsuits from the USA are sometimes endorsed in other countries (but not that I am claiming any class action lawsuit has to originate from the USA):

http://brooklynworks.brooklaw.edu/cgi/viewcontent.cgi?article=1098&context=bjil

http://lsr.nellco.org/cgi/viewcontent.cgi?article=1388&context=nyu_lewp#page=4

I don't know to what extent international securities treaties exclude jurisdiction for example issuance of ETH tokens from Switzerland or Germany to non-accredited USA users. Ditto DAO tokens. Could you enlighten us? I've read that foreign issuers are subject to US Securities Law when issuing to USA persons, but I think there may be some exceptions. Maybe you can shed more light on this for us?

But again, I wasn't focusing solely on the USA jurisdiction.

[iamnotback]

So all the scam coin creators should go to jail.

I never wrote what should or shouldn't happen. I am trying to ascertain what the risks are.

Why blame me for wanting to know? It is as if you are thinking that I am saying all scam coin creators should go to jail, when in fact I just finished the prior day a public passionate discussion with smooth wherein I stated exactly the opposite stance to what you imply I am promulgating.

Do you not see the Subject of this thread has a question mark.

There is a distinction between inquiry and accusation. I suppose I don't need to remind you gentlemen how to use a dictionary.

[2dogs]

Tone Vays at 15:00. ( best at 18:30!)

https://youtu.be/ULF4qMcokLg

Not more to say...

Absolutely spot on!

[iamnotback]

Tone Vays at 15:00. ( best at 18:30!)

https://youtu.be/ULF4qMcokLg

Not more to say...

Absolutely spot on!

He has inconsistencies in his logic.

[iamnotback]

Yeah just that you cannot legally give away stolen funds...so the miners would make themselves legally vulnerable.

Vulnerable to what, a lawsuit? That's about as fanciful as the idea the daoattacker will sue the Ethereum Foundation really. It would also bring in to question the whole legality and regulation (or lack thereof) of TheDAO.

This doesn't mean I think they'll accept it of course.

If mining is decentralized, I think it is impossible to enforce a court decision on the miners because new miners can pop up any where. You'd need some totalitarian total world control over the Internet and block the protocol.

Doesn't seem plausible near-term in current state of the world.

More likely any court decision would be enforced on the exchanges. New exchanges could pop up, but they can also be regulated.

Perhaps any class action suit if any might attempt to name any of those prominant insiders who have profited by promoting and selling ETH such as Vitalik, Tual, etc.. I am not sure if a lawyer would advise that or not, and whether it could be successful. I hope they've retained counsel.

Well, he would lose in court and I personally never received a "cease and desist letter."  If it forks, it's the community that's forking it....he'd have to send everybody a "cease and desist."  And, the intent of the contract is what will take precedence in a court and it was obviously not intended for the exploiter to steal all our funds. Maybe he'd get one count of wire fraud per investor frauded....He should take the profits from his ETH short and run before a hot curling iron introduces his butt hairs to a perm, IMHO!

How would he lose? He did avid by the rules of the DAO smart contract, he did not modify anything as far as I know, so being strict the definition of decentralized smart contract, he did not do anything illegal... very tricky scenario.

The argument is there is no one the court could pinpoint to enforce such a ruling on. The miners, exchanges, users, and devs would all play a role in the community outcome, yet no one can be identified as responsible for that outcome.

Whereas, if the developers and foundation push for a fork and politik for a 51% attack on the protocol, then the attacker potentially accuse them of being in control of the enterprise and sue them. So that is why I say it is very risky for them to fork. OTOH, if they don't fork, they might be vulnerable to a class action suit from the n00bs who had their ETH taken from them by the "smart" (too smart = dumb) contract. This is why I made a thread  to ask if the developers who have promoted this so carelessly without conspicuous warnings, could be in deep legal trouble now? They appear to me perhaps the easiest to target with a lawsuit, but IANAL so I am pondering what is their risk?

But note the "attacker" may have committed an illegal action or at least violated contract law, so in that case is unlikely to reveal identity and sue. Thus I was thinking the safest is to fork, but that has the risk of the n00bs potentially accusing them of being in control of the coin and class action sue them for the exchange rate losses. So it seems those who created and promoted ETH and DAO (without sufficient warnings of risks) may have a legal quagmire, but IANAL so I am just hoping they have retained adequate counsel.

Bitcoin is an interesting case here. In general, it seems to be much closer to a DAO than a DO. However, there was one incident in 2013 where the reality proved to be rather different. What happened was that an exceptional block was (at least we hope) accidentally produced, which was treated as valid according to the BitcoinQt 0.8 clients, but invalid according to the rules of BitcoinQt 0.7. The blockchain forked, with some nodes following the blockchain after this exceptional block (we’ll call this chain B1), and the other nodes that saw that block as invalid working on a separate blockchain (which we’ll call B2). Most mining pools had upgraded to BitcoinQt 0.8, so they followed B1, but most users were still on 0.7 and so followed B2. The mining pool operators came together on IRC chat, and agreed to switch their pools to mining on B2, since that outcome would be simpler for users because it would not require them to upgrade, and after six hours the B2 chain overtook B1 as a result of this deliberate action, and B1 fell away. Thus, in this case, there was a deliberate 51% attack which was seen by the community as legitimate, making Bitcoin a DO rather than a DAO. In most cases, however, this does not happen, so the best way to classify Bitcoin would be as a DAO with an imperfection in its implementation of autonomy.

If 51% of the miners decide to fork, I think I will follow the majority and support the fork to get back the money from the attacker.

Satoshi had a term for that, he called it attacking the network:

As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network ...
  - Satoshi Nakamoto (bitcoin.pdf)

So, no, there has been no "hack" or "attack" so far, but Vitalik, Tual, and their cronies are working on one.

Soft forks are 51% attacks. At best, when done for relatively-benign upgrade purposes, they demonstrate a vulnerability of the network and should still raise some level of concern that the developers and miners are able to conspire to pull off a 51% attack. When done transfer control over coins, that is outright theft.

Smooth if forks are authorized by a protocol that was designed in the coin from the start, i.e. an ability to vote on changes by stake holders for a PoS coin (e.g. DASH), then that appears to not be a 51% attack. But otherwise I agree with you, and when you have the same group of devs from the ICO able to control the politik then they are essentially running the enterprise.

There is a grey area where someone from the outside creates a fork and the users and miners spontaneously decide to switch over to it. This can be argued to be a feature of decentralization and open source, and necessary to correct deficiencies. Yet it is still a 51% attack. If done with proof-of-burn, then it is not a 51% attack.

But your analysis of the issues here seems to be oversimplified because the law interacts with all this to create more complex scenarios. Please read this:

https://bitcointalk.org/index.php?topic=1517223.msg15271289#msg15271289

[cryptonfly]

Except Vitalik has nothing to do with US laws (fortunately).

Fuck The Law

[iamnotback]

Re: BREAKING NEWS: DAO Attacker Identified!!

Judging by this, the maverick Mircea Popescu seems to be taking credit:

http://trilema.com/2016/to-the-dao-and-the-ethereum-community-fuck-you/

I didn't verify the Keccak hash (which is apparently why others thought the hash didn't match because they were assuming SHA256?). If it matches, then I would expect MP could be the one to pull this off. He has also told the SEC go to fuck themselves. You all may remember AnonyMint once debated MP on BCT about his cavalier attitude towards the SEC.

So this changes the complexity of Vitalik's decision process, because he appears convinced that he can win a suit in tort law. He appears to be arguing that splitting was an intended feature and they he did not violate the intent of the contract. Given that The DAO's only purpose was a power vacuum game theory of who could capture the pooled ETH, I am thinking maybe he and his lawyers are correct.

So much drama today.

Also:

https://blog.ethereum.org/2016/06/19/thinking-smart-contract-security/

https://www.reddit.com/r/ethereum/comments/4oqdnc/the_ethereum_foundation_needs_to_distance_itself/

https://www.reddit.com/r/ethereum/comments/4oq6yh/will_stephan_tual_apologize/


Edit: I was very sleepy when I wrote the above. I see now that MP's plan is not to sue in court, but rather to incentivize the miners not to fork:

https://www.cryptocoinsnews.com/exclusive-full-interview-transcript-alleged-dao-attacker/

If the exchanges try to blacklist his ETH, that kills fungibility and ETH will collapse in price.

[iamnotback]

It's different if the remedy comes from within the logic of the DAO code itself. That would be appropriate because that was where the logic failed. But forking at the Ethereum blockchain level is just suicide.

I realise that only the DAO would be affected by the fork but that just makes it even worse because it shows that forks can cherry pick what contracts they want to immute. I'm afraid the damage done in terms of loss of confidence will be irreparable.

Ignoring the legal factors which impact the game theory because that enterprise is not really decentralized (e.g. Vitalik, Tual, et al hyping moonshots to n00b dreamers without sobering disclaimers and the incestuous same set of good ole boys as Curators of The DAO), then I agree with you that the only fork of the Ethereum protocol which would be agnostic would be that which would futilely attempt to "fix" the litany of corner case bugs induced by Turing-complete programming.

[Natoliant]

If the "attacker" exposes him/herself and he/she is in the US as he said in the open letter, I think he could be sent to prison for the hacking with bad intent.

[iamnotback]

If the "attacker" exposes him/herself and he/she is in the US as he said in the open letter, I think he could be sent to prison for the hacking with bad intent.

MP is the person who drained the DAO. Did you read my post above where I wrote to verify the Keccak hash?

MP is the antithesis of Craig Wright. He does not bullshit. MP is the one who did this. He is surely capable of it.

Trivial factoid: MP and rpietila were enemies since before 2013. And in 2013, MP sent AnonyMint a private message offering collaboration.

AnonyMint has grown to respect MP as a maverick peer, and in some respects in awe of MP. MP's support of Blockstream could end up causing a conflict between MP and AnonyMint at some point in the near future.   Titans will do battle. Prepare your cupboard supply of popcorn.

I am confused by MP's support of Blockstream, because I thought he was for small blocks and was willing to kill XT to defend the status quo (i.e. Classic):

DA: The people behind ethereum are deceptive, for example everyone with a clue (Adam Back, Gregory Maxwell) knows that there is 0% chance for “CASPER” proof of stake to work, but yet they advertise it.

Note TPTB_need_war was the first person pointing out that Casper wouldn't work in the Ethereum Paradox thread and also on Reddit. Yet MP gives Blockstream credit for TPTB's research.  

So is that interview legitimate? If so that guy gives zero fucks and is a straight internet gangster. Not my type person, but I kinda admire him.

Mircea Popescu (MP) has a core constitution which is that every person should be responsible for themself. And he originally was adamant that he would attack any Bitcoin fork that raised the block size. He also appears to be against shitcoins and he is a Bitcoin maximalist. He sees himself as a defender of anarchism. He also is motivated by profit. I definitely agree with his anarchism/self-responsibility constitution, but if he is supporting Blockstream's Rube Goldberg complexity future-clusterfuck Troika of SegWit, Side-chains, and Lightning Networks then he and I are going to disagree!

GTFO of ETH at $12 while you still can! The deadcat bounce is topping and lower, lower we will go. Because MP is not a bullshitter. And he has very significant BTC resources > 50,000 BTC.