> Elisabeth de Fontenay is a professor at Duke University's law school, and she used to be a corporate lawyer.
> DE FONTENAY: When payments are made, for example, from banks to individuals like all of us in error, we have to give it back. And in fact, if we don't give it back, the banks actually will come after you. They will sue you, and sometimes they will bring criminal cases against you.
Look at the Citibank Revlon case from last year [0]. In a clerical error, Citi sent $900m to a bunch of hedge funds, related to some Revlon debt. It asked for it back. It got about $400m. It sued for the other $500m… and lost in court.
I’m not saying this is identical to that case, which depended upon New York law. But it is far from clear-cut and I think you are being way too confident in your view, since nothing like this has ever appeared in court.
The document you cited actually supports toomuchtodo’s position:
“The law generally treats a failure to return money that is wired by mistake as unjust enrichment or conversion and requires that the recipient return such money to its sender. Under New York law (which applies here), however, there is an exception to this rule: The recipient is allowed to keep the funds if they discharge a valid debt, the recipient made no misrepresentations to induce the payment, and the recipient did not have notice of the mistake.”
I’m assuming no debt was owed to these random people.
If I am not mistaken, In Citi's case the hedge funds were going to get that money anyway but a bit later, they thought they got the money early, so they kept it.
The entire question is whether this executed smart contract will be treated as an actual binding contract.
I see no reason why it should not be - parties entered into it freely for adequate consideration. Parties were well aware they were entering into a contract ("smart contract"), and by the technical format of the contract did contemplate that they could end up with an unfavorable result due to "bugs" or other unforgiving consequences of its extremely formal definition.
This is the crux of the matter. If you've got a reason why this smart contract could possibly not end up being treated as a contract, then you need to make that argument. You can't just keep asserting that the payments are mistaken transfers without an actual argument.
Furthermore, unless/until setting aside smart contracts were to become well established case law, recipients of the windfall should be able to rely on such reasoning, making keeping the tokens decidedly not fraud or conversion.
I'm arguing the opposite. Your assertion is that a smart contract will be treated as a binding contract. Provide case law and statute that that is the case. Your belief at the moment is hope that a smart contract will be interpreted favorably by the judiciary. If you can't provide such citations, backing your assertions, it seems disingenuous to attempt to twist contract law to fit crypto reality ("taking the money and running is legal"), and even worse to advise people who have received ill gotten gains through unjust enrichment to keep them.
As always, the question is not only, "what does the contract say?" but also "how will the judge interpret the claim?" I've provided citations throughout this thread for my claims relying on existing case law.
There is no case law or statute declaring it permissible to write down a contract on a piece of drywall in French, yet it would be safe to assume that doing so would be valid. Courts generally grant wide leeway to private parties to contract how they'd like. These parties chose to enter into a contract with a highly formal definition - with all its benefits and drawbacks.
In short, I think you're the one arguing uphill. In what way does this smart contract fail to meet the standards of a bona fide contract?
The only thing I can see from you in this thread is that the "sender didn't mean to". But this isn't some value transfer external to the contract, but rather due to operation of the contract that the CEO did intend to enter (the purchaser of an options contract similarly doesn't intend to lose money). So restating that in the framework of the contract would be something like the CEO didn't contemplate the possibility of a bug causing a significant loss. I could see that having legs in the case of investors losing money, but isn't the losing party here the one that drafted the contract?
edit: I didn't delete my comment. I've got delay = 5 in my profile, and I guess there's a way you can see my comment before 5 minutes are up? It might be cleaner if you move your reply to a separate comment.
The government considers these assets either commodities (CFTC) or securities (SEC), so prosecution is straightforward.