Liquid, day two
They kept fifteen per cent, and the word “white hat” did not survive it
The coins came back. What happened in between was a public argument in which one of the most careful people on this network talked himself out of his own position.
The bitcoin has been returned to the Liquid federation, minus a cut. That much is settled. What made Monday worth reading was watching people reason about it in the open, at speed, and change their minds where the facts moved.
waxwing opened for the defence, and did not think it was a stretch: If you see this bug and you don't want every user to lose their money, you are somewhat ethically bound to confiscate it until the devs release a fix.
The argument is real — with the collateral already seized, deploying the patch stops being dangerous, and he put the improvement at a hundredfold.
An hour later he had found the seam in his own case. Announcing you will send most of it back, rather than agreeing a bounty like an adult, is wrong
. By late afternoon he was qualifying even that, and being precise about what the qualification cost:
Taking a big chunk (as apparently they now have done) unilaterally puts them firmly in the criminal category from a legal perspective. IANAL but I think they could have very reasonably and ethically argued that they did not steal, if they hadn't done that.. Now, they cannot.
Matt Corallo arrived at two in the morning and dismantled what was left, on three counts. They left a large amount still exposed rather than securing it. Liquid has a halt mechanism, so simply reporting the bug would probably have locked things down faster than exploiting it could. And then the fee.
Finally, they kept 15%? That's not even remotely white hat behavior. They just wanted to use the term "whitehat" to reduce risk of FBI.
waxwing conceded the ground without fuss: I wrote that before the 15%. The other two points are good. Especially the first one; since they could take anything, it's a particularly good point.
Others had reached the same place with less machinery. Alan Siefert read the whole performance as legal positioning — a negotiated statement from Blockstream that the transaction was in some measure consensual, in the hope that law enforcement takes the hint. A.A.Ron did the arithmetic on the cut: With 600 BTC, they can afford to pay off anyone that would press charges.
Zordon supplied the federation's consolation, which is also the joke of the week: Guys, it's better to be 85% whole than 100% LIQUIDated.
