Canadian teen faces arrest warrant over DeFi hack in ‘code is law’ case

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Is code law? We may finally get a court ruling on this highly debated notion in Canada in a precedent-setting legal battle worth $16 million. At the center of this case is a teenager who is accused of stealing the funds from a DeFi platform and refusing to return the money, whom the Canadian police are in active pursuit of.

Code is law is a belief that true freedom can only be gained in a world where computer code sets rules that can’t be changed, and which supersede any existing legal provisions. Those who hold on to this notion believe that the benefits that decentralized systems present far outweigh the drawbacks, and that government involvement is an impediment.

Dr. Craig Wright has dismissed this belief several times. According to the creator of Bitcoin, this concept is fatally flawed and those who believe in it are the same people who thought that Bitcoin and the blockchain present the possibility of a world without government.

In Canada, this concept is coming under fire in the courts. It all started when 19-year-old Andean “Andy” Medjedovic allegedly exploited Indexed Finance, a DeFi platform, through flash loans and made off with $16 million. He held on to his “code is law” argument after his identity was uncovered and refused to return the money he stole. 

Andy has pledged to fight to the death with Indexed Finance and says he will not return the money.

https://twitter.com/ZetaZeroes/status/1451075788158160903

Indexed took the issue to an Ontario court, which ordered Medjedovic to appear in person last December 21 to answer to the allegations. According to Indexed, the court hearing was related to the freezing of the funds which prevents Medjedovic from sending the stolen digital currencies to mixers or cold wallets. The DeFi platform asked the court to order the funds be moved to a third-party custodian until the case is complete.

Medjedovic didn’t show up in court, and now the court has issued a warrant for his arrest, the first time authorities will go after a DeFi hacker.

And while this is a clear case of theft, which universally is a crime, there are anarchists who hold onto the “code is law” argument and believe the teenager is within his right to refuse to show up in court.

what a boomer take 🙁

code is law if the market is unregulated

welcome to crypto

no place for mistakes

you snooze you lose

— 0xThe無敵的 (@0xTheInvincible) October 21, 2021

The founders of Indexed have also received criticism from some in the digital currency community who believe that proceeding with the case could set a precedent for future digital currency cases, and it won’t favor the “code is law” argument. To them, it’s more important to protect the perception that digital currencies are beyond the regulatory realm than it is for the teenager to return the millions of dollars he stole.

Casey Hewitt, an attorney, is among them. “I completely understand their [Indexed] position but giving the government any reason to extend something like 18 USC 1030 is not great. Limiting the fallout will be important because in the next case the behavior may not be so obviously wrong,” she tweeted. 

The criticism got to Indexed, with one of its founders, Dillon Kellar, even having to defend his company’s action, despite being the victim. He told one outlet that while his company would prefer not to go down the current legal route, it’s only a matter of time before another incident pops up and the ‘code is law’ argument is challenged.

He concluded, “I think Andean will either get tired, show up to court and transfer the assets to the custodian, or be caught by the Canadian police. Either way, we’ll all get our day in court and he’ll have a chance to make his defense.”

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum, 
FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.