Feds: Brothers Stole $25m in Crypto in 12 Seconds. Defense: Outsmarted Bots

Wait, maybe that's the point.

The search terms for how to evade fraud is also not going to help them.

I wonder if their lawyer advised them not to take the plea deal, it doesn't sound like they have a high chance of getting away with it.

The prosecution is alleging that there was a "promise" to the victim, which would let the transaction breach the boundaries of the crypto universe and be classified as real world fraud between two individual parties, but I just don't see how there was any sort of "promise" made here. First of all, they traded against an automated trading bot. Second, a bid or ask and market liquidity is not a "promise". I trade for a living and market makers suddenly pull liquidity all the time when it suits them, on millisecond time-frames. Granted, what the brothers did is essentially "spoofing" or posting bids and asks with the intent to move markets, so the question here to me boils down to is crypto spoofing illegal or not. Perhaps that depends on the jurisdiction/and or decentralized nature of the exchange that they were posting the offers on. I would think that if they can get charged for this then the majority of trading on thousands of "shitcoins" is outright illegal activity by extension though.

On a much more simplistic level, if you're coding up in ethereum arbitrage bot, and it makes a bad high frequency arb trade... tough luck? I was under the impression that this was sort of the point of crypto markets, to escape regulations and be a freeform, decentralized trading venue.

Imagine you see Taylor Swift tickets for sale, so you start buying them. Meanwhile, you also start booking a hotel room. The Taylor Swift purchase fails because they are sold out by the time you try to finish your purchase - but at that point the hotel room booking has already succeeded! Should you be able to blame either Ms. Swift or the hotel for having to pay a cancellation fee on the now-worthless room?

From an automated trading perspective it makes sense to execute both orders at once as it minimizes the amount of time you have to hold onto it (during which your potential gain can evaporate or even turn into a loss), but it does expose you to the risk of cancellation. To me that sounds like the cost of doing business?

I have to wonder if there is some deeper connection whereby the introduction of this large not-yet-regulated economic sector actually creates pressure to move our whole society towards an oligarchic mobster/patronage style government. In a steady state where laws are widely known, it's harder to eek out an edge by breaking laws and then buying your way out of trouble - with the law being clear, the Schelling point is to be opposed to you. And an aggrieved counterparty can spend some resources to make sure it stays that way, even if they're not necessarily in favor with the ruling party.

Whereas with this case, nobody actually knows what the law "is" or really even what it "should be". Cryptocurrency was designed on a strong assertion of "code is law". But this doesn't keep governments from inserting their own semantics after the fact. Since there is no clear diving line, most people are not predisposed to thinking it should go one way or the other. This makes having a connection to the big boss man who can put his finger on the scale become much more relevant, and therefore much more valuable.