[fc-discuss] Financial Cryptography Update: On Digital Cash-l ike Payment Systems

leichter_jerrold at emc.com leichter_jerrold at emc.com
Tue Oct 25 14:58:22 EDT 2005

| U.S. law generally requires that stolen goods be returned to the
| original owner without compensation to the current holder, even if
| they had been purchased legitimately (from the thief or his agent) by
| an innocent third party.
This is incorrect.  The law draws a distinction between recognized sellers 
of the good in question, and other sellers.  If you buy a washer from a guy 
who comes up to you and offers you a great deal on something from the back
his truck, and it turns out to be stolen, you lose.  If you go to an
store and buy a washer that turned out to be stolen, it's yours.  Buy a gold

ring from the salesman at the same store, and you better hope he didn't

As in any real-world situation, there are fuzzy areas at the edges; and
are exceptions.  (Some more expensive objects transfer by title - mainly 
houses and cars.  You don't get any claim on the object unless you have a 
state-issued title.)  But the general intent is clear and reasonable.

|                          Likewise a payment system with traceable
| money might find itself subject to legal orders to reverse subsequent
| transactions, confiscate value held by third parties and return the
| ill-gotten gains to the victim of theft or fraud. Depending on the
| full operational details of the system, Daniel Nagy's epoints might be
| vulnerable to such legal actions.
This is no different from the case with cash today.  If there is a way to 
prove - in the legal sense, not some abstract mathematical sense - that a 
transfer took place, the legal system may reverse it.  This comes up in 
contexts like improper transfers of assets before a bankruptcy declaration,
when people try to hide money during a divorce.
							-- Jerry

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