The current market value of Bitcoin is about $65,000 USD. By virtue of the value ascribed to it by those who purchase it on the blockchain network. It is a digital asset of crypto currency not within the centralised control of the central bank issued like other legal tender. Due to its volatility, it has been referenced as a speculative asset by security and exchange commissions around the world. But since it is continually being mined, it has attained the status of property worth having. However, since it exists in cyberspace with characteristics of intangibility, can it be said to be “property” capable of being stolen? Who will be held liable both individually or vicariously, corporately or otherwise, or should the veil of “blockchainability” be lifted? So as to identify the users on the network.
“It is strongly advised that individuals and businesses need, as a matter of urgency, to develop a robust e-commerce strategy for their marketing and promotions online and evolve a legal checklist so as to avoid huge money lawsuits that can cripple a company’s activities.”
Property considerations:
Under English law, property refers to that which is intrinsically capable of ownership by a person or group of persons; absolutely, (1) owners therefore enjoy possessory rights to a thing; it is often said in law that possession is prima facie evidence of ownership. Bitcoin can therefore be said to be property capable of ownership when it has been purchased by a buyer from a crypto currency exchange and kept in a digital wallet by its owner, who accesses the digital wallet with his private key. However, can the digital wallet be hacked and his precious bitcoin stolen by unidentified individuals? In spite of the blockchain ledger network being supervised by various miners around the world. Property law is therefore created to regulate the relationship of a person to a thing or things, thereby providing security for the acquisition, enjoyment, or disposal of a thing, asset, or wealth (2).
Decentralised finance and crypto:
Decentralised finance, as is the case with most crypto-currencies, is essentially not within the regulatory purview of most centralised authorities like a central bank; therefore, within the blockchain network of a decentralised financial system, digital money is traded and/or exchanged in cyberspace with complex algorithms, encryption methods, and operational rules to keep bad actors offline. But we know the work of hackers has gained notoriety globally, and billions of bitcoins have been stolen, leaving victims with little or no legal remedy. In 2021, the US securities and exchange commission charged crypto company LBRY with selling unregistered securities. Of course, securities are highly regulated globally, but LBRY was a decentralised publishing platform with over 10,000,000 users. The question therefore arises: who should you approach when your decentralisation goes awry? This was perhaps the argument of the CBN and SEC in 2017/2018 when crypto was considered a risky asset and worthy of any investment consideration. This was before the era of (CBDC) Central Bank Digital Currencies that ushered in E-Naira as a digital equivalent of the legal tender Naira as a unit of value. In 2018, Europe witnessed the laundering of £4,000,000,000 worth of crypto currencies; this and other cyber crimes will lower investors confidence in digital assets (3). A prominent American economist, Paul Krugman, and a Nobel Prize winner had in 2021 described crypto as a long-running Ponzi scheme, comparing it to the strategies of Benie Madoff. However, the chairman of international banking law and finance at the University of Edinburgh, Professor Emilos Argouleas, opines that tighter regulation may be a panacea for wide crypto use (4).
Furthermore, $600,000,000 USD was stolen in what was considered the biggest crypto currency theft ever, when hackers exploited a vulnerability in a certain poly-network—a platform that connected different blockchains. Although half of the funds were returned by the hackers, the legal question, however, is, who were these hackers and how do we identify them digitally? (5) Also, in August 2023, the FBI warned crypto currency companies of recent blockchain activity connected to the theft of hundreds of millions of dollars in crypto currency stolen by the Democratic Republic of Korea (DPRK), also known as the Lazarus Group, who stole bitcoin worth more than $40,000,000 USD. They had moved approximately 1,580 bitcoin in several heists and held the bitcoin in several encrypted bitcoin addresses. However, the US Department of Treasury Office of Foreign Asset Control sanctioned the Lazarus Group as far back as 2019. In a very complex and sophisticated money laundering scheme in Manhattan City in the US, two individuals (husband and wife) were arrested and charged in 2016 for conspiracy to launder virtual currency to the tune of $4,500,000,000 USD, but the law enforcement agency was able to seize $3,600,000,000 USD. Cryptocurrency is no longer a safe haven for criminals. The Binance dance in Nigeria shows that a class of plaintiffs whose digital assets have been stolen filed a class action against Binance and its founder, alleging that Binance wilfully allowed their digital asset hackers to use Binance.com to launder stolen assets in order to profit from these shading transactions. The Nigerian government has explained that Binance executives were arrested and detained after a probe revealed money laundering, tax evasion, and terrorism financing activities on its platform. It is worthy to note that the same federal government has withdrawn all the aforementioned charges against Binance and makes the international business community consider Nigeria as an unserious business destination.
The concept of stealing:
Consequently, a person is guilty of stealing if the said individual dishonestly appropriates property (Bitcoin) belonging to another with the intention of permanently depriving the owner of the property. (6) Converts the properties of another for his own use, and in the case of money, an intent to use the money for his own benefit. It was the great jurist Dennis Lloyd in his book “Idea of Law” who posed the jurisprudential question: “Law, is it a repressive evil or a social necessity?” Technologist appears to echo the former in the sense that law represses innovation and does not allow technological advancement to thrive, while the latter view, as proposed by jurists like Professor Glanville Williams, says that law is a social imperative and instrument of social change. Technology enthusiasts are of the view that because of the complex algorithms and encryption protocols of the blockchain and bitcoin mining difficulties, which require tonnes of electricity to accomplish, bitcoin cannot be stolen without the community of network watchers being aware of a hack by any bad actor with criminal intentions.
The blockchain ledger system is therefore code-tight. However, jurists are of the view that where a community of persons exists, what governs their relations is law; therefore, any adverse behaviour offline can also be imputed with liability online. In very early legal systems, it was proverbially expressed that “if you kill a man while you are drunk, you will be hanged when you are sober” (7). This perhaps gives justification to the operation of law in an e-commerce context where individuals and businesses thrive for profit. “Parties will definitely infringe on each other’s rights,” be it a copyright or trademark infringement, libel, defamation, or sale of personal data to a third party, as was the case with Meta (Facebook, Whatsapp, and Instagram) and Nigeria‘s Federal Competition and Consumer Protection Commission (FCCPC) to the tune of $220,000,000 USD. It is now a fallacy to believe that jurisdictional and sovereign boundaries exist to stop governments, states, and regulators from catching any would-be violator of the law. It is strongly advised that individuals and businesses need, as a matter of urgency, to develop a robust e-commerce strategy for their marketing and promotions online and evolve a legal checklist so as to avoid huge money lawsuits that can cripple a company’s activities (8). An honest or unharmful email from a male colleague to a female subordinate may result in a sexual harassment lawsuit with damaging financial consequences both to the individuals involved and the company’s reputation and goodwill. In today’s digital and AI-enabled world, the many hydra-headed and multiple arms of the law like that of the octopus can catch you at any location.
Adetokunbo Onikosi Esq.; Executive Partner, AOCATERNIZ: [email protected]
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