Exchange accidentally sent 512 bitcoins after coding error

[mizerydearia]

Please add the following, obtained through public information aggregation site:
Myspace: http://www.myspace.com/42020322
Twitter: http://myspace.com/benjohnson503

Employer: SAVANT CCA
111 SW 5TH AVE, STE 4090
PORTLAND,  OR  97204-3648
(503) 914-5584

Updated https://bitcointalk.org/index.php?topic=40934.msg500238#msg500238

[pekv2]

Please add the following, obtained through public information aggregation site:
Myspace: http://www.myspace.com/42020322
Twitter: http://myspace.com/benjohnson503

Employer: SAVANT CCA
111 SW 5TH AVE, STE 4090
PORTLAND,  OR  97204-3648
(503) 914-5584

Updated https://bitcointalk.org/index.php?topic=40934.msg500238#msg500238

Amazing, cannot wait to see how this turns out, hopefully great for rightful owner.

[mikegogulski]

I bet 100 BTC this guy has a legally enforceable right in Oregon to recover his right of access or it's worth in money.

I appreciate the spirit, but still...

If that wager can be defined as:

---
I will pay you 100 BTC,
 if and when any Oregon court issues a judgment stipulating that
  BenDavis (whoever that is, legally in Oregon) is ordered to return the amount of Bitcoins received (call it 511 +/- 5%), or
  BenDavis is ordered pay plaintiff the market value (+/- 5%) at any given point in time of the Bitcoins received, or
  BenDavis is ordered to restore or otherwise facilitate the recovery of the "right of access" you mention here;
 provided such judgment is posted or referenced here, and
 the period of leave to file an appeal against the judgment has expired; BUT

On the other side, you will pay me 100 BTC,
 if and when there is a final disposition of an Oregon cause of legal action brought against BenDavis in this matter, and
 if that disposition does not include any of the three substantive orders specified above; BUT

That a transfer of this case to a US Federal court or other court outside of Oregon shall null the wager, AND
That the only monetary or performance sums considered for purposes of determining the winner of the wager shall be the Bitcoins in question or their equivalent in other currency and not any sums related to service of process, court fees, fines, trial costs, legal fees, etc.
---

Then I'll take that wager.

I'm  not wagering on the outcome of a case. Way to add various terms and conditions.
Like I said, I will wager on whether or not he has a legally enforceable right to recover what was lost or it's monetary equivalent in the state of Oregon.  To win on my part, all the claim has to do is to survive a demurrer, if he loses a demurrer, I lose.

A demurrer is challenge about the law and does not touch the facts. It's a suckers bet because I fairly certain his lawyer won't demurrer in the first place because it's a sure loser.

Give me wording and I still might go for it. I'm also amending my wager proposition above to include an exception whereby I don't lose if BenWhatever loses the case by default absent appearance or otherwise by default. There must be a contest.

[hightax]

This thread is the most delicious example of trying to play it both ways.

• Were the coins sent to Ben, or did Ben take them?
• Since there is no physical or intellectually unique property involved, nor copyright breech, nor patent violated - is this a case of tort conversion, or a criminal case?

[w00ly]

I agree with geebus' point, though would also agree that davis should send the BTC back. The issue at hand is when the coins were sent, the ownership of the coin is always is removed from the sender and given to the receiver, mistakenly or not. By the very nature of the way bitcoin was made he cannot *have* the btc if he does not *own* it, unless he stole the wallet, which would certainly be good legal grounds, but that is not the case here. I dont understand why so many are comparing it to tangible items. If a real world item or currency is sent mistakenly, ownership does not necessarily change. With bitcoin however there is no way for BTC be sent and verified without a transfer of ownership!

I mean christ, every single one of us here (and the sender) know full well that once sent, bitcoin offers NO form of chargeback, regardless if it's due to fraud, services not rendered, or an accidental transfer. Knowing this basic fact and willingly participating in bitcoin, then it is clear that the fault is on intersango due to negligence and they are the ones responsible (to their exchange customers)

[skilo]

I dont see this going very far considering the cost of hiring an attorney to go after someone in another country for accidentally receiving bitcoins and refusing to return the bitcoins.

The cost of the lawyer alone would far outweigh 511 BTC.

I think any further attempts at trying to get those BTC back are futile.

I'm sure this thread will just keep going on and on though.

[Xaxo]

Well ... The important thing is confidence in the community, and today I have sent almost 100 euros Intersango by SEPA to my account with them, I hope they continue in the business of this great idea and great experiment that is bitcoin!

Greetings to all.

[Gabi]

The important thing is, why there was a bug that allowed so many bitcoins to be sent to the WRONG person?

[mizerydearia]

It's an odd situation.

Clearly, an honest person would do the decent thing and return the coins. In response to that, a genuine business would then pay a proportion of those coins back again, in compensation for the time and hassle.

But if it's too easy for businesses to get back coins that they accidentally send, they're going to keep accidentally sending them. If they don't get the coins back, you can be sure they'll make sure it doesn't happen again.

I would imagine that if an organization were to experience this situation recurringly, that after second and third times of repeating the same mistake would establish recognition that it may be a form of scheming and considered rather scandalous or malicious and affect the reputation of that organization.  Encouraging and promoting option of pursuing illegal activities (e.g. not returning the coins) in relation to 'teaching lesson' effort seems kinda ... well...  uhh...  hmm, criminal?  (for lack of a better description)

But if it's too easy for businesses to get back coins that they accidentally send, they're going to keep accidentally sending them.

Are you sure the condition for that if statement is accurate?

if (too easy for businesses to get back coins accidentally sent) { accidentallysendcoins(); }
if (not easy for businesses to get back coins accidentally sent) { tryanotherstrategy(); }

Are you sure 'businesses" is correct way to reference these types of ethics/morals?  Perhaps something more evil or scammalicious is suitable in place of "business?"  Or, perhaps an additional descriptive word before business?  Although, there are many consensually agreed upon businesses that are evil (e.g. Sony, Microsoft, SCO, etc.), yet, trying to think of a business that is opposite, good, actually seems a bit difficult.  Even Nintendo has its share of evils.  Therefore, perhaps "business" alone is indication of evilness?

[defxor]

I agree with geebus' point

There's nothing to agree with, no special rules or regulations that somehow only apply to Bitcoin etc. The law is very clear on this matter, and the fact that so many who post here seem ignorant on the law doesn't change it

[joepie91]

The important thing is, why there was a bug that allowed so many bitcoins to be sent to the WRONG person?

Because bugs happen. Even in tested systems.

[mizerydearia]

The important thing is, why there was a bug that allowed so many bitcoins to be sent to the WRONG person?

Congratulations!  You have become better at reading! +1

[mizerydearia]

I agree with geebus' point

There's nothing to agree with, no special rules or regulations that somehow only apply to Bitcoin etc. The law is very clear on this matter, and the fact that so many who post here seem ignorant on the law doesn't change it

Actually..... I think he's on to something.  For example one could disprove gravity by jumping until they no longer fall each time.  Similarly, one could disprove other laws in similar fashions.

[mizerydearia]

Re: this issue, ED anyone?

[willphase]

Seems pretty black and white to me.  Ben received the coins in error, he realises and admits the coins are in error, the sending party has made contact and Ben refuses to give it back, and any court would agree that the coins have a real value.  To be honest though, I doubt the costs of getting a lawyer to argue this in court is worth the $1000 though....

Will

[mizerydearia]

he realises and admits the coins are in error

https://bitcointalk.org/index.php?topic=40934.msg500176#msg500176

[04:52] <@BenDavis> But I don't know what you are talking about!
[04:54] <@BenDavis> Patrick Strateman, I have no clue what you are talking about.
[04:54] <@BenDavis> I don't even mine for coins.
[04:55] <@BenDavis> I have no clue what you are talking about!
[04:57] <@BenDavis> Yeah, I do not believe I took anything.
[04:58] <@BenDavis> Can you tell me how I took anything?

[the joint]

Interesting...didn't read the whole thread, but here's my initial thought.

Ethically, I think it'd be nice if the Bitcoins were returned.

However, technically speaking, I'm not sure this is legally required.

The 'mistakenly' sent Bitcoins constitute one transaction.  Bitcoins are not yet a legal currency.  When the BTC was then converted to USD, this seems to constitute a 2nd and separate transaction.  Since there was obviously no mistake in the conversion of BTC to USD, there is nothing wrong with this transaction.  And, since the first transaction, the transfer of BTC, is a distinct and separate transaction not involving a legal form of currency, I'm not really sure if there can be any legal claim.  In other words, the first transaction consisted of a transfer of BTC in which the value of the BTC was NOT tied to USD.  However, in the 2nd transaction, the BTC was sold for and therefore valued in USD.

'Mistakenly' sent is also debatable.  If a bank mistakenly sends someone an extra $500, it means that someone accidentally typed in a wrong input into some computer -- a human error.  The BTC transfer however was described as being due to a 'bug.'  The BTC was then sent according to the parameters of whatever code was currently operating.  The sender, being the exchange owner, should be aware of these parameters.

Here's an analogy (albeit a little confusing) to consider.  Suppose the owner got drunk and there was a 'bug' in his thinking and this led to him 'mistakenly' transferring 511 BTC, then claimed he wanted them back.  Had he not been drunk, the parameters guiding his thinking would not allow for such an occurrence.  But, being drunk, the parameters were different and this accounted for the BTC transfer to occur.  Similarly, it seems as if in the case of described in the OP, the ignorance of the code's parameters is akin to the owner getting drunk.   The code acted according to its current state and carried out the transaction.  This is NOT a matter of the sender accidentally inputting a wrong number, but rather the code carrying out the transaction in its current state.  The owner should have been responsible for knowing how this code would affect the transfer of BTC.  

In the case of a wrong-number input, the code remains the same, but the USER messes up in that he/she mistakenly input a wrong number.  However, in this case, if there is bug claimed to be in the code, then this bug in the code is a separate mistake.  The transaction was NOT a mistake.  That is, the mistake only relates to the code, and NOT the transfer since this transfer was simply a consequence of the original mistake.  Relating back to the analogy, the mistake was to get drunk.  Anything that occurs after this is a consequence of getting drunk.

Edit:  My apologies.  This is probably one of the most poorly-written posts I've ever made lol.  The last paragraph is the gist of what I'm getting at.

[mizerydearia]

Ethically, I think it'd be nice if the Bitcoins were returned.
However, technically speaking, I'm not sure this is legally required.

here's the Oregon law on the matter: http://www.leg.state.or.us/ors/164.html

I'll quote the relevant section (164.015):

     (2) Commits theft of property lost, mislaid or delivered by mistake as provided in ORS 164.065;

Furthermore, because its value is greater than $1000 (164.055), it counts as a theft in the first degree.

Oregon State's definition of "Thief":

64.005 Definitions. As used in chapter 743, Oregon Laws 1971, unless the context requires otherwise:
      (1) “Appropriate property of another to oneself or a third person” or “appropriate” means to:
      (a) Exercise control over property of another, or to aid a third person to exercise control over property of another, permanently or for so extended a period or under such circumstances as to acquire the major portion of the economic value or benefit of such property; or
      (b) Dispose of the property of another for the benefit of oneself or a third person.
      (2) “Deprive another of property” or “deprive” means to:
      (a) Withhold property of another or cause property of another to be withheld from that person permanently or for so extended a period or under such circumstances that the major portion of its economic value or benefit is lost to that person; or
      (b) Dispose of the property in such manner or under such circumstances as to render it unlikely that an owner will recover such property.
      (3) “Obtain” includes, but is not limited to, the bringing about of a transfer or purported transfer of property or of a legal interest therein, whether to the obtainer or another.
      (4) “Owner of property taken, obtained or withheld” or “owner” means any person who has a right to possession thereof superior to that of the taker, obtainer or withholder.
      (5) “Property” means any article, substance or thing of value, including, but not limited to, money, tangible and intangible personal property, real property, choses-in-action, evidence of debt or of contract. [1971 c.743 §121]

You all might wanna chew on this especially the thief.
Popular law library, Putney... By Albert Hutchinson Putney

Section 76. Delivered By Mistake.
Where the owner of money or property delivers it to another by mistake and that person, knowing the mistake at the time he receives it, conceals the mistake intending at the time to appropriate it to his own use, he is guilty of larceny. Thus for example, when a bank by mistake handed the accused five hundred dollars more than his check called for, and the accused at the time he received the money
"Johnson vs. People, 113 111., 103. Hughes, Cr. Law, Sec. 402.
Section 77. Finding Goods And Appropriating.
So if one finds the goods of the owner in the highway or elsewhere, containing marks which identify the owner, and the one finding them converts the same to his own use with criminal intent, he is guilty of larceny; but otherwise if there be no marks to identify the owner.29
Section 80. Value Of The Property Taken.
The article or thing taken must be of some value to make it the subject of larceny and the value must be alleged and proven. It is especially necessary to prove the value of the property stolen for the purpose of determining whether the offense is grand or petit larceny; for grand larceny is a felony and petit larceny a misdemeanor.
But the value of several articles stolen at different times by distinct acts, although from the same person, cannot be added together to make the offense grand larceny.34
The value of an article or thing is its market value, and not what it may be worth to the owner.

A treatise on the law of crimes, Volume 2 By William Lawrence Clark, William Lawrence Marshall[/i]
In several cases, for example, it has been held that, when money or property is delivered to a person by mistake, the taking is not complete, and he does not acquire possession, until he discovers the mistake, and that he is guilty of larceny if he then forms and carries out an intent to appropriate the property or money to his own use. Reg. v. Ashwell, 16 Cox, C. C. 1, Beale's Cas. 566; State v. Ducker, S Or. 394.  

 <---LAST CASE IS OREGON


State v. Woll, 668 P. 2d 610 - Wash: Court of Appeals, 2nd Div. 1983

The wrongful appropriation of property mistakenly delivered appears to have been considered larceny at common 565*565 law only if, upon receipt, the recipient knew that it was mistakenly delivered and at that time formed the intent to keep it.[5] However, State v. Olds, 39 Wn.2d 258, 235 P.2d 165 (1951) and State v. Heyes, 44 Wn.2d 579, 269 P.2d 577 (1954), construing Rem. Rev. Stat. § 2601(4) (the statutory forerunner of RCW 9A.56.020(1)(c)), distinguished this statutory offense from common law larceny.[6] In State v. Olds, supra, the court expressly held that, in order to sustain a conviction under Rem. Rev. Stat. § 2601(4), no evidence of original felonious intent was necessary. One noted authority interpreted State v. Olds, supra, as holding that Washington's statutory offense of wrongfully appropriating misdelivered property is distinguishable from common law larceny:

The wrongful withholding of property delivered by mistake, with knowledge of the mistake acquired subsequent to the receipt, may be punishable by statute under the name of larceny, but it is an offense distinct from common law larceny.
(Italics ours.) R. Perkins, Criminal Law 254 n. 76 (2d ed. 1969).

[2] Thus, the common law of larceny required proof that the defendant's intent to steal concurred with his mistaken receipt of the property,[7] whereas, under RCW 9A.56.020(1)(c) 566*566 the "intent to deprive" must exist at the time of the appropriation. In the case at bench, Woll was charged with having committed the crime on or about April 18, 1979. Thus, under the charge and under the trial court's instruction, the prosecution had to prove defendant's intent on the date he transferred the funds — not the date or dates on which he subsequently spent the money. Under Washington law, "[t]he gravamen of the offense is the appropriation of the property after having received it". (Italics ours.) State v. Heyes, 44 Wn.2d at 588.

Bitcoins are not yet a legal currency.

It doesn't matter if the item in question is a currency.  It could have been 511 stuffed animals and the case would still be the same, EXCEPT, this is NOT the stuffed animal community and then would not take place on this forum.




Lastly, it will probably be necessary to repeat this every two or three posts, but https://bitcointalk.org/index.php?topic=40934.msg498999#msg498999

If the bank credits your account by mistake and you withdraw the funds they will come after you. This is probably the same thing.

On the other side of the coin why was this code tested on a live site and not testnet coins ?

This code was thoroughly tested using testnet.

The issue was with the server configuration, the database user did not have the proper permissions and the code failed in an unexpected way.

I have now changed to relevant code such that any failure of any kind will stop the script cold.

[the joint]

It absolutely does matter if it's a currency, since as you state...

5) “Property” means any article, substance or thing of value, including, but not limited to, money, tangible and intangible personal property, real property, choses-in-action, evidence of debt or of contract. [1971 c.743 §121]

While BTC is "intangible," it still must have "value" to be considered property.  There is absolutely no way to establish that BTC has any value whatsoever, though.  That's the thing about a digital but legally-unrecognized currency.  Humans didn't make it.  There is no human value tied to it yet.  You'd have a better chance arguing that it has value to computers since it is the product of a computer's work and is recognized as work by other computers.  It isn't like traditional property (whether tangible or intangible) that is tied to the product of a human and therefore can be given a value in relation to humans.

Computers made BTC.  Although the program was the product of a human, BTCs are not.  They are a product of computers and computers alone, for no human can make BTC.  Because of this, it's even hard to establish that BTC constitutes property.  

The only exception to this is if the BTC were purchased with USD or some other form of property.  If they are purely mined, then I'm not sure they are anyone's property.  So, actually, I'd like to revise what I originally said...

If the sender can prove that these exact BTC were purchased by him using USD or some other property, then I think that legally he has a claim (although then there's still the question of whether or not he 'mistakenly sent them' as I described in my other post).  However, if he cannot prove this, or if in fact these BTC were mined and arrived purely on his exchange through deposits, then they are not even his property to begin with and he has no right to reclaim them.

[mizerydearia]

It absolutely does matter if it's a currency, since as you state...

??

tangible and intangible personal property, ...

There is absolutely no way to establish that BTC has any value whatsoever, though.

??

The value is whatever the high bid price is on the exchanges. It most certainly has a value.

Of course they have value or nobody would waste all the time and electricity required to mine for them. Would you spend the money on the hardware to build a massive bitcoin mining operation if they had no value?

Wrong. bitcoins have value whether it benefits me to say they do or not. If they had no value nobody would buy them or mine them. The fact they have value, as shown on the bid sheets at the exchanges makes them treasure trove and up for grabs. Look at the bid sheets the same as you look at gold and silver charts. If gold is treasure, then so are bitcoins.

If it didn't have value before you sold it, nobody would have bought it from you. You might also want to read things like http://www.austinchronicle.com/columns/2005-12-02/315676/. Whether it's an intangible good or not is also irrelevant. You did not _take_ someone's property, but you did not make a reasonable effort to return it to them, and instead posted on facebook (of which there is documentation) about "free money" and started preaching about how the victim was in the wrong. Definitely not good faith, and it'll look bad when the law gets involved.

I could accidentally send you my collection of used women's panties (hypothetically ) and if you kept it, you'd be liable. No, used panties are not legal tender. No, they have no market value. But you still took my stuff, and made no effort to return it to me. Sure, you wouldn't be liable for much, but you would definitely be in the wrong.

Over $4000? You should be worried.

Nonsense from start to finish.  The exchange of data is a token to memorialize the transfer of the ownership interest in the intangible property.  That ownership interest has a very real value, and the markets are very, very liquid, so the value is quite certain.  Do you think your house has no value because it isn't at this moment undergoing a sale?

That is not true.  They have an easily established value.  All of this talk about "a judge won't recognize these as having value" is complete nonsense.  Absolutely certain of it.

Not only that, but with the way you are brazenly shirking this, the person who may very likely be liable for the lawyer fees in the end is the clown who took the 511 BTC he wasn't entitled to and who claims he "OWNS" them.

Patrick, FYI, I have saved this entire thread to a PDF file, just in case mr. DAOG realizes that deleting his own posts is a wise idea.  I am in the US and am able to produce an affidavit in support of your complaint against this guy, assuming you can identify him, in support of the fact that bitcoins have value and such questions that would be asked by the authorities in Oregon.

Pretty sure it'd be hard to back up, seeing as how it's already documented that you've mined for them, proving that you already think they're of some value (time invested, power spent, etc).  And if you have a record that can be traced back to an Exchange (as in, you've already traded them for currency)... hard to claim you think they're 'worthless' and have 'no value'.

The thing is. The judge will ask not you. The judge will ask an expert witness, probably invited by claimant. The expert will pull out mobile phone check current mtgox rate and say "As of this moment this day and this month of year 2012, based on current exchange rate on leading exchange, which is 356.33 $ per 1 BTC, fair market value of 512 BTC can be estimated as USD182440.96".

Gold has tremendous value

Please tell me the current value of 1 oz of gold, and what you did to get to that value.

I see where you are going with this.  Good point.

egold doesn't have any value until you exchange it either but that didn't stop the Justice Dept and the Treasury from going after them.

i have a business selling specialty socks that i, and my family knit ourselves.
i built a website for selling these socks to people who recognize the inherent comfort and value of such socks.

one day, i accidentally mail 500 socks to a registered buyer on the website.
the socks, unlike gold, are not a 'precious metal', and are not considered a 'currency' by any nation on the planet.
yet they do have a value to my family and i, as it took thread to make, and an investment of our time.
.. therefore, i go ahead and verify that the buyer did indeed receive the amount of socks in question,
and cordially request that the buyer help resolve this mistake amicably.
to which, they become hostile, citing 'finders-keepers'.

i'm not a legal expert,
but i've seen stupider cases on judge judy.
i believe i can sue, since, the original buyer acknowledged the mistake, and kept the product regardless.
to think otherwise is stupidly naive.

...
...

also, the argument that bitcoins are worth nothing is by its nature, flawed,
as, like knitting socks,
there are electrical costs, and an investment of time, required to mine a single bitcoin.
it is this inherent value, that you would be potentially suing for.
..
you would essentially be saying 'pay me the amount in electricity that it would cost to mine another 512 bitcoins, and compensate me for my time', or give back the coins.