There is a widespread — not universal, but widespread — view in crypto that decentralization is good, and law and regulation are bad. Governments should not be able to tell anyone what to do, and certainly they should stay out of voluntary transactions between individuals. “What if those transactions turn out to be scams,” is the obvious question, and people who hold these views have a range of different responses. Here are sketches of a few of them:
- “Code is law”: Scams will be prevented by everyone doing their transactions using transparent audited code, with adversarial hardening of that code quickly working to make scams impossible.
- “Code is law”: Anything that happens is by definition not a scam. If two people agree to a transaction, and one of them was lying, well, it turns out that those are the rules of the game they played, and no one can complain.
- Economic incentives, social sanctions, reputation, altruism, etc. will prevent scams: Most people in most of the world mostly don’t do scams, not because they worry about going to prison but because it is hard to do scams, no one will like you if you do one, and you’ll feel bad about yourself. Why shouldn’t that be true in crypto?
- Okay fine a little regulation, but not, like, registration of tokens as securities.
All of those answers have some merit, and they can work in various combinations. But I suppose you could extend the decentralized ethos of crypto further, to something like:
- If someone does a scam, the victims of the scam can form a decentralized autonomous organization to track him down. All the members of the DAO participate in hunting the scammer, and the more they contribute to the manhunt the more DAO governance tokens they get, and if they catch him a majority vote of the tokens can determine what to do with him. And I suppose you can trade the DAO tokens for money, and I suppose the value of the tokens will fluctuate with the odds of catching him?
Replace law enforcement with decentralized vigilantism on the blockchain.
I am mostly kidding but here’s this:
Kang Hyung-suk’s faith in cryptocurrencies was shattered by the $40bn collapse of Do Kwon’s cryptocurrency operator Terraform Labs, where he used to work in Seoul. Now he is looking for payback.
In about 10 days, Kang is flying to Dubai, the capital of the crypto-friendly United Arab Emirates, where he believes Kwon is hiding. “Finding him could be easier than thought,” said Kang.
The 26-year-old software engineer belongs to the UST Restitution Group, an association of nearly 4,400 crypto investors trying to track down Kwon, who is wanted in South Korea on charges of financial fraud.
“I want to recruit other people to join the search,” said Kang. “There’s a 50-50 chance of getting him in Dubai.” …
Another URG member nicknamed HKTrader said he worked for a fintech company headquartered in Hong Kong and had blown his savings for a house on terraUSD. He said he spent a month organising a Singapore class action lawsuit against Kwon and discovered his whereabouts in the country by hiring a private detective.
“We tracked [him] down pretty well when he was in Singapore,” HKTrader said, but he added that his group lost track of Kwon after he left the city-state.
I kind of can’t believe they don’t have a token?