A French court recently determined that Code Is Law. Essentially. And the decision — somewhat ironically for an industry that usually accepts that exploits happen (and may even be a necessary step towards advancing protocol security) — has put DeFi in a bind.
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In February, the Avalanche-based automated market maker Platypus Finance was breached, with the thieves making away with $8.5 million. As is now routine, the attackers were quickly identified and the stolen funds traced down.
What happened next is somewhat atypical, with the ultimate results possibly setting a troublesome precedent: Platypus’ operators and community decided to pursue legal action against brothers Mohammed and Benamar M. (last name redacted in court documents).
While not the first time blockchain thieves have been brought to court, the situation is something of an enigma considering that crypto, at least as initially conceived, is designed to operate outside the bounds of the law.
The Bitcoin blockchain doesn’t need a money transmitter license to function, it just needs to exist. Likewise, since the earliest days of the crypto industry, the goal has usually been to design systems that work for all — open, global, censor-resistant platforms do what they do whether used by a crook or a saint.
See also: Calling a Hack an Exploit Minimizes Human Error | The Node
Key to this egalitarian standard has been the idea that the code is the code, and that is what matters most. Judges, regulators and politicians may try to set parameters around what types of financial services can be accessed and by whom, but in crypto, such restrictions cannot apply (except to the extent that centralized companies, like Coinbase, must implement KYC/AML procedures).
There is some debate whether Mohammed was being sincere when he argued in court that he was a “white hat” hacker, only looking to keep 10% of the proceeds for discovering a vulnerability in the code. He claimed he was an “ethical hacker” who took the “endangered funds” so the protocol would learn a lesson and plug its hole.
Likewise, there is an argument to be had whether Platypus acted rightly in seeking…
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