1

We quite frequently hear about some cryptocurrency company losing money because their software was exploited. From example today we have Qubit losing $80 million:

The protocol was exploited by; 0xd01ae1a708614948b2b5e0b7ab5be6afa01325c7 The hacker minted unlimited xETH to borrow on BSC. The team is currently working with security and network partners on next steps.

My understanding of what happened is that a smart contract was created by someone, accepted by Qubit and completed according to the rules created by Qubit. However it did not have the result expected by Qubit, though presumably expected by the someone.

In general, where there is a difference in the understanding of a contract it is the wording that is held to be valid, rather than either parties understanding. This will be familiar to many people, as companies frequently craft contracts in their interest and people do not read them.

In the case of a smart contract, where the actual meaning is in no doubt (as it is executed programmatically) but it is understood to mean something different by one of the parties, it it actually valid? Ie. in such a case would the someone have legal ownership of the $80 million cryptocurrency that they were assigned upon the completion of the smart contract?

1
  • 1
    'In general, where there is a difference in the understanding of a contract it is the wording that is held to be valid, rather than either parties understanding." Generally the reverse is true outside some pretty unusual circumstances. Contracts are interpreted in an effort to reflect the intent of the parties as evidenced by the express language of the document and context. Courts will not enforce absurd interpretations even if literally supported by the language, and will look to extrinsic evidence beyond the four corners of the contract language when a contract is ambiguous.
    – ohwilleke
    Feb 1, 2022 at 20:56

1 Answer 1

5

In the case of a smart contract ... it it actually valid?

The question is based on the misconception that the terms "smart contract" (technical term) and "contract" (legal term) directly relate or have much in common. They don't.

If anything, smart contracts are essentially modern replacement for papers and signatures.

But paper contracts have never been contracts themselves either. They are merely evidence of the contracts, and this evidence is often not even necessary for the contracts to be valid: most contracts are not even required to be in writing.

So, the story in your example is just the 21st century's analogue of good old paper contract foul play like signature forgery, disappearing ink and so on.

Legally it is handled with no difference: investigate what happened, find out who intended what and judge what has to be done. Gavel bangs!

5
  • only with one difference: one party is essentially unknown.
    – Trish
    Jan 31, 2022 at 16:07
  • @also, no one uses gavels anymore
    – Dale M
    Jan 31, 2022 at 22:18
  • 1
    @DaleM Lawyers still do in their firm logos lol.
    – Greendrake
    Jan 31, 2022 at 22:37
  • 3
    @DaleM Every judge I've encountered and all legislative presiding officers where I live still use gavels.
    – ohwilleke
    Feb 1, 2022 at 21:00
  • 1
    @ohwilleke well, every one here doesn’t. But they do still wear wigs.
    – Dale M
    Feb 2, 2022 at 7:14

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .