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After ‘Stealing’ $16M, This Teen Hacker Seems Intent on Testing ‘Code Is Law’ in the Courts

After ‘Stealing’ $16M, This Teen Hacker Seems Intent on Testing ‘Code Is Law’ in the Courts

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Some $16 million in cryptocurrency was pilfered in an exploit of a decentralized finance (DeFi) protocol last week, and the victims believe they know exactly who did it.

Despite threats from the team, however, the alleged attacker – a Canadian teenage graduate student – is refusing to return the funds, potentially setting the stage for a groundbreaking legal confrontation.

On one side of the conflict is a child math prodigy and an outspoken champion of DeFi’s self-regulating “code is law” ethos. On the different, a pair of DeFi builders and their advisors who felt compelled to make an unprecedented collection of troubling moral decisions on behalf of a DAO group.

At stake in the combat are various thorny points which have up to now been efficiently obscured by DeFi’s explosive progress: What is the position of legislation enforcement in an unregulated $220 billion sector? When, if in any respect, ought to the gendarmes be summoned? And, most significantly, is the notion of “code is law” ample to grapple with all of DeFi’s moral complexities?

First breach

On Oct. 14, the official Twitter account for Indexed, a DAO-governed DeFi protocol, reported an error with two of its index fund-style routinely rebalancing liquidity swimming pools, one which had drained almost half of Indexed’s $34 million in whole worth locked.

An evaluation from exploit-focused publication Rekt reveals that the error was in truth an assault launched from an Ethereum tackle funded by privateness mixer Tornado Cash. From that tackle, an attacker used flash loans to knock the stability of the swimming pools akilter and purchase out part belongings at a closely discounted charge.

In the days since, the Indexed workforce and an ad-hoc “war room” of business specialists convened to mitigate the injury and collect data. And in the course of their investigation they consider they’ve discovered the attacker’s real-world id: It’s an 18-year-old arithmetic prodigy who goes by “Andy.”

Both the Indexed core workforce and DeFi group members who declare to have spoken with Andy say that he has refused to return the funds, and that he intends to face any legal fees ensuing from his exploit in courtroom – arguing that he merely executed a totally authorized arbitrage commerce.

A tweet thread from an account claiming to belong to Andy thanked well-wishers for his or her feedback over the previous week and requested for lawyer suggestions on Thursday. Likewise, in an electronic mail change with CoinDesk, Andy didn’t affirm that he had performed the assault, however did say that he was searching for authorized counsel. (Andy has since stopped returning CoinDesk’s emails although different makes an attempt have been made to contact him.)

If the case does go earlier than a choose, it might be a check of “code is law” – a well-liked phrase in DeFi circles referring to a standard mindset. In the absence of regulation, the considering goes, the DeFi ecosystem is solely adversarial and something permissible by code can be by nature ethically permittable; the place one man may see an exploit, one other may see “crypto trading.”

Various authorized specialists who spoke to CoinDesk dismissed this notion, nevertheless, and stated that whereas a case is likely to be advanced and maybe novel, a courtroom is not going to essentially cede to DeFi’s unofficial ethos.

‘War room’

Shortly after the assault was found, the core Indexed workforce discovered various clues main them to consider that they’d recognized the hacker: a younger developer who had been talking with workforce member Laurence Day for months.

“It was perfectly affable, friendly, smiles, lots of emojis. A perfectly normal dude,” Day stated of Andy in an interview with CoinDesk.

While Day didn’t write the code for the protocol, he maintains it and, consequently, “understands it pretty deeply.”

“I don’t feel like I got catfished or something because I was discussing information that was publicly available, but this did take me by surprise,” Day added.

Once they’d a suspect, the workforce assembled its on-line “war room.” Members included Curve contributor Julien Bouteloup, Rotki founder Lefteris Karapetsas and pseudonymous Yearn.Finance core contributor “Banteg,” amongst others.

In an interview with CoinDesk, Banteg stated the determination to affix the conflict room was a simple one.

“I don’t turn these invitations down because I know how it feels when you find yourself in a situation like this, and I believe I can provide meaningful support and the needed outside perspective to help handle it gracefully and avoid stupid mistakes caused by stress no human should endure alone,” they stated.

Ethical debate

Once the workforce had data on the attacker, they determined to concern an ultimatum: Return the funds or be reported to legislation enforcement authorities.

In the previous, threats of doxxing have confirmed to be efficient. Following a $3 million exploit of a non-fungible token (NFT) drop in September, builders efficiently intimidated the attacker into returning the stolen funds after, amongst different negotiation ways, ordering miso soup to the attacker’s home.

Read extra: $3M Was Stolen, however the Real Steal Is These Kia Sedonas, Say Anonymous Developers

Actually following by way of with the risk is probably novel, nevertheless, and the determination prompted important inner debate amongst the workforce.

According to core Indexed contributor Dillon Kellar, the nature of Indexed’s DAO construction performed closely into the workforce’s considering.

“Once he made it clear that he’s not gonna give up, that he doesn’t care we’ve found this damning evidence on him, at that point we had a difficult decision because if we just go to law enforcement, if we keep that information to ourselves, we’re effectively taking ownership of the situation ourselves, and we couldn’t do that”, Kellar stated.

Other DAO members could want to individually or collectively pursue remuneration in civil courtroom, and if core workforce members withheld Andy’s private data, it might stop them from doing so – finally prompting an ethical argument in favor of doxxing.

“We’re not comfortable with the idea of publicly doxxing, but Indexed is not a legal entity – it’s a DAO. And Dillon and I don’t have the right to solely own this information, or to take ownership of the legal battle. This is a cornered response,” stated Day.

Banteg likewise expressed discomfort with the determination, however backed going ahead with it.

“It’s unprecedented. Ethics-wise, as you can imagine, all this feels quite uneasy. I believe Indexed gave the hacker more than enough ways out, but he thinks he’s invincible.”

In the finish, the conflict room had a full consensus.

“There’s no one in the room that’s given serious pushback to the route that’s been taken. We know we’ve done everything we can,” stated Day. “I don’t care for the edgelords and the frogs. Anyone who has something valuable to say on this is with us.”

Child prodigy

However, as the workforce’s deadline handed with no phrase from Andy, Banteg made a shock discovery: The attacker isn’t simply “immensely talented” – at simply 18 years outdated, he’s a teenage genius.

According to a cached model of his now-defunct private web site, Andy will quickly full his grasp’s diploma in arithmetic from the University of Waterloo (additionally Ethereum co-founder Vitalik Buterin’s alma mater); he has authored papers on “Enumerating Smooth Schubert Varieties” and “Grothendieck’s Classification of Line Bundles over the Riemann Sphere” amongst different advanced topics; and in line with a 2016 article from Canada’s Globe and Mail, he accomplished high-school math at simply 13 years outdated.

His on-line presence additionally signifies a vainglorious streak. On a Wikipedia discussion board in 2016, Andy referred to himself as an “expert in mathematics and theoretical physics.” He even entered himself in a recreation present wiki as a “notable mathematician.”

The declare is now a “dark joke” in the Indexed conflict room, Day stated: He’s turn out to be precisely that, although not for his scholarship.

“I guess he out-manifested all of us,” Day added.

Paternal considerations

This discovery offered the conflict room with yet one more moral conundrum, as many felt that reporting an adolescent carried further weight. The new data prevented them from “dropping the hammer” instantly, as Kellar put it.

“I taught computer science, and I never had someone quite of Andy’s level, but I know the type. When you’re this particular type of person – look, 18 is a man in the eyes of the law, but mentally you’re still a child,” stated Day. “I don’t know if that comes off as denigrating to him or whether I’m sounding excessively sympathetic, but I think this is a case of vast, vast skill at the expense of almost everything else.”

Likewise, Jason Gottlieb of U.S. legislation agency Morrison Cohen framed the state of affairs in paternalistic phrases. Gottlieb was retained by Day and Kellar to signify Indexed in reporting the crimes to legislation enforcement.

“I think the fact that he is only 18 is something that could be some cause for empathy. I have a son who is close to that age, so from a dad’s viewpoint I have some empathy, knowing that teenagers can do stupid things. I know I did stupid things as a teenager,” stated Gottlieb.

However, the new data led the workforce to new leads, together with the discovery that Andy had allegedly been frequenting extremist circles on-line. During the investigation the workforce discovered he was a part of a knowledge leak from an internet service internet hosting alt-right communities.

There are additionally a number of different clues suggesting hateful ideologies: the calldata for Andy’s assault included a racial slur; the attacking Ethereum tackle begins with “BA5Ed1488,” a numerological reference to a neo-Nazi slogan; a weird tweet thread from ZetaZero included bracketing sure phrases in triple brackets, a well-liked anti-Semitic canine whistle.

Additionally, the ZetaZero account lately retweeted a put up referring to Andy as “the Dylan Roof of Balancer pools,” a reference to a white supremacist terrorist who killed 9 black churchgoers in 2015.

While members of the conflict room stated they may not determine a selected second the place they made the agency determination to launch Andy’s data regardless of his age, the ties to extremism performed into their considering.

“The frustrating thing is, until he had made all these ugly parts of himself known – the white supremacy, the anti-Semitism, the general, unbearable dickish nature of him – if he had returned 90% and kept a bounty, we would have at least asked him to audit code. And had he disclosed this stuff with us, we would have given him $50K to $100K and had him join the team in a heartbeat,” stated Day.

Kellar additionally stated that age alone couldn’t distract from the gravity of Andy’s actions.

“For a regular 18-year-old, I would have concerns about releasing his information. And it’s not to say I still don’t, but the fact is he’s a very advanced 18-year-old. He has a master’s degree. He finished high school at 13. And he has taken the action of stealing $16 million. And if he’s going to be adult enough to do those things, he’s adult enough to face the legal consequences,” stated Kellar.


In the eyes of some members of the DeFi group, nevertheless, Andy didn’t steal something in any respect.

A well-liked rallying cry for a lot of DeFi die-hards is “code is law,” typically derisively known as “codeslaw.” This view, maybe greatest elucidated in an essay by pseudonymous e-Girl Capital intern “Odette,” holds that there is no such thing as a such factor as a “hack” or a “rug pull” in DeFi, and that it’s the accountability of every actor to totally vet all on-chain actions – in the event you lose cash to a hack or a defective contract, it’s on you.

Because all data is freely out there on-chain and actions on-chain are immutable, DeFi is finally then a self-contained and deterministic setting working outdoors of regular regulatory and moral parameters, or so the considering goes.

Day worries {that a} faction of the DeFi group who believes in code is legislation is now egging Andy on.

“I think he’s listening to a legion of frogs. They’re calling him based, and asking him for money, and hailing him as a hero,” he stated.

Admirers flocking to profitable hackers isn’t uncommon. In the wake of the $613 million Poly Network hack, panhandlers and admirers used messages on the Ethereum community to cheer the wrongdoer on.

Social consensus

However, in follow, the notion of “code is law” could have already been disproven.

“Frankly, it’s tiring,” Lefteris Karapetsas advised CoinDesk. “We had this fight five years ago.”

Back in 2016, Karapetsas was the technical lead for, a startup that spearheaded The DAO – a infamous early funding experiment whose failure led to a sequence break up that led to the creation of Ethereum Classic.

“The ‘code is law’ version of Ethereum was born out of that. It’s called ETC and it still exists. The coleslaw proponents can just go play there,” Karapetsas stated.

The present, canonical Ethereum chain is the results of the group reaching social consensus to successfully “undo” The DAO hack slightly than let code be absolutely deterministic – and that’s factor, in line with Karapetsas.

Read extra: The DAO Hack Is Still a Mystery

“No builder in this space in their right mind believes that code is law. It’s just a meme that is perpetuated by anon on-lookers who just like to see chaos unfold,” he stated.

He added that if the group had been to embrace such ideas, the finish outcome would shortly flip dystopian.

“If code was law then this field would just be a playground for hackers who will be continuously trying to steal funds out of protocols. They would be eponymous and idolized. While the users would be blamed for ‘not reading the code well enough.’ Which is essentially what every coleslaw proponent says,” he stated.

Legal wrinkles

The query now turns to if “code is law” will maintain up in a courtroom of legislation.

Gottlieb confirmed to CoinDesk that he has turned over all related data to a number of legislation enforcement businesses, however declined to specify which.

While it’s an open query as to if these businesses could have the technical experience to research the case and concern an arrest warrant, Gottlieb prompt they’re additional alongside than some DeFi-natives may suppose.

“I wouldn’t assume that the authorities are not familiar with these sorts of things,” he stated. “I’ve already reached out to contacts that I have in various agencies in law enforcement, and there are folks in law enforcement who deal with cryptocurrency hacks and thefts.”

Gottlieb famous that the people he’s spoken to are “very sophisticated” in their understanding of the house and that they’re “interested” in the case.

Regardless of whether or not he’s arrested, Andy might also have grounds to file counter-charges.

Matt Burgoyne, a securities and crypto lawyer at Canadian agency McLeod Law LLP, stated that even earlier than the case will get earlier than a choose there might already be issues. Burgoyne advised CoinDesk he isn’t representing Andy.

“Doxxing can be illegal in Canada and the extent of legal consequences depends on the circumstances. Doxxing can give rise to charges of criminal harassment, invasion of privacy and stalking. I don’t believe this will go to court and if it did, I’m sure there would be damages on both sides,” he stated.

Erich Dylus, a authorized engineer for the oracle community API3, voiced private discomfort with doxxing and likewise stated it could result in counter-charges.

“I think public doxxing can be extremely dangerous and often leads to undesirable misplaced vigilantism or trial by public opinion. Not to mention potentially opening avenues of liability for the doxxers,” he stated.

In a tweet on Thursday, Kellar stated that Andy and his household have been receiving threats, and referred to as on the group stop with the abuse and to pursue different “legal remedies.”

Stealing from the assortment plate

Once these grievances have been parsed, nevertheless, the query then turns as to if a courtroom can grapple with the complexity of weighted AMMs, flash loans, and so-called “economic exploits.”

Geoff Costeloe, an affiliate at Canadian agency Lindsey MacCarthy LLP and LexDAO member, stated that Indexed’s DAO construction might result in hiccups.

“I’m going to be following the recovery side of the matter,” he stated. “Because Indexed is a decentralized DAO, I am curious to see how they file their claim and how they describe their relation to the protocol and other DAO members. Will they say it is a partnership or a corporation? Or will they say they are individuals?”

Gottlieb, the Indexed lawyer, brushed these considerations apart. He in contrast the exploit to a church congregation which had raised funds for some trigger: if stolen, it’s no much less of against the law simply because it might be tough to trace exactly who owned what at a particular time.

Pure delusion

Of the half-dozen attorneys CoinDesk spoke to, all agreed that whereas the potential case could seem as if it can set various precedents at first blush, the actuality is {that a} courtroom will seemingly consider the exploit in easy phrases.

Crypto legal professional Stephen Palley warned that if the case does make it to courtroom, it might be a second that definitively ends DeFi’s fanciful notions of self-regulation.

“It’s the height of stupidity to say ‘code is law’ in this situation. It’s a magical incantation that means nothing,” the Anderson Kill lawyer advised CoinDesk.

“There’s nothing terribly new here,” he added. “Old wine, new bottles; self-serving human greed. Is robbing a bank an ‘economic exploit?’ Saying that is frigging stupid. There’s nothing about this, if handled properly, that is groundbreaking precedent.”

Multiple attorneys and Indexed core workforce members pointed in explicit in direction of indicators of Andy’s intent that may erode his protection.

“This wasn’t some case where there was a contract that just had a simple mistake, what some people are calling an economic exploit,” stated Kellar, the Indexed core workforce member. “He didn’t pull a lever that spit out too many coins, it was a sophisticated attack that exploited a very specific vulnerability that nobody found for a year.””

A sequence of actions main into the assault will undermine any try by Andy to border the exploit as a “happy accident,” Kellar added.

“If a [bank] teller or system makes an error and someone gets unjustly enriched, that certainly doesn’t impose criminal sanctions on the individual who received a boon,” stated Costeloe, the MacCarthy LLP lawyer. “They may have been unjustly enriched but they were also innocently enriched, with no intention on their part. The situation with Indexed is a bit different than that because the hacker wrote code and attacked the protocol in a way that shows clear intent to enrich him or herself.”

In the finish, a number of attorneys dismissed the “code is law” argument, referring to it as “delusion” and holding it as “delusional.”

Grim dedication

On Thursday morning, Andy’s alleged ZetaZero Twitter account posted a brief thread in which he framed the forthcoming authorized battle as a “duel.”

Despite the seeming inertia tilting in direction of a authorized confrontation, each Gottlieb and Palley famous that if Andy had been to return the funds there’s an opportunity the incident may not need to be litigated.

Palley stated that returning the funds “doesn’t undo the crime,” nevertheless it may lead a prosecutor to say no to pursue fees.

The core Indexed workforce, nevertheless, has reached some extent of “grim determination,” in line with Day.

“I’ve had the time to process all of this now, and there’s going to me a maelstrom that kicks up on Twitter, but on the balance of things I know this was the right thing to do. Dillon [Kellar] and I will be pariahs in parts of the space now, but it was the right thing to do,” he stated of doxxing Andy.

Kellar made it clear that they’re additionally viewing courtroom as an more and more seemingly end result.

“Some people have said he might move to Venezuela or some place without extradition – I don’t think that will happen. It really seems like he wants this to be a precedent-building case, so if he doesn’t returns the funds I expect this to go to court,” stated Kellar.

“He’s trying to stamp his name in history, and he’s going to get it, but ruinously so,” stated Day. “It’s a little bit heartbreaking. A colossal waste of talent, time and money. And for what? I just want to say to him, ‘God damn it, Andy, why have you made us do this?’”


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