Impact of crypto litigation

This entry is a Spanish translation of the original CleanApp article published in Medium on July 16 by 2018. The translation is authorized by the author. The Legal Crypto and / or its members do not necessarily share the position and / or arguments contained in the original article. You can see the original article here.

crypto litigation smart contracts

Why will DLT developers have to take "smart contracts" to court?

The debate over "smart contracts" is in full swing right now. If DLT developers don't want, can't or aren't ready to put out the fire they started, it might make sense to take some of these fights to court.

Debates on the "essence" of "smart contracts"

Advocates and opponents of this technology face each other to discuss whether "smart contracts" can really be trustless, sure, how they should be "oracleados", if they really give utility, and so on.

At this level, these debates are really about the current capabilities of the different technology platforms that call themselves “smart contracts”.

The Truth About Smart Contracts Jimmy Song is a great example of this type of intervention. He asks the key question that all of us should be asking:

«What the hell is a smart contract?»

But the answer then goes in a technical direction. There are some valuable comparisons on how "normal contracts" are supposed to work in several idealized versions of legal systems to resolve contractual disputes. In general, the previous discussions do not relate to the legal essence of "smart contracts," which is where we believe the true action is.

To obtain smart contracts, you must commit to the law

A small but growing part of the debate on the "smart contract" refers to whether the "smart contracts" they are legal and, if so, what does that mean, who decides and what is next.

We believe that the legal status, limits, functions and potential of the so-called "smart contracts" distributed registry technologies (DLT) is the most important front in the battle for the New Internet.

Our position on the term "smart contract" should be very clara. What we consider today as "smart contracts" is a brilliant technology and a great marketing tactic. However, from a strategic and legal perspective, the “smart contract” banner is a very silly choice.

By grouping complex private directives, machine processes and operational logic along with existing legislation on contract formation, interpretation, choice of law, choice of forum (and thousands of other essentially legal issues), DLT developers are only increasing their Legal risk profiles

In law, as in life, words matter

Even the mere use of the term "smart contract" is a problem: it sows conceptual chaos, adds transaction costs and hinders innovation.

Thinking instrumentally in terms of long-term development strategy, and in terms of actions to be taken, "smart contract" is a unnecessarily risky and dangerous term.

Our most recent analysis will guide you through these risks by going beyond the headlines of the newspapers to analyze the so-called "smart contract legislation".

In our article, Against Smart Contracts, we analyzed the bill 1662 of the Tennessee Senate, which was signed several months ago by the governor of Tennessee.

What we find is dissonance and a recipe to create legal problems. A clearer map of the minefield allows us to see the next safest steps.

Taking the "smart contracts" by the antlers

Due to the CleanApp Foundation's experience with law and legal institutions, we see multiple ways in which the legal aspects of the “smart contract” discussions will be clarified a bit (note: “clarified” not “resolved” - because these Legal matters will never be resolved conclusively):

  1. We can wait until many small disputes (for example, when scammed investors start suing token and cryptocurrency issuers) begin to seep into different jurisdictions worldwide, and we receive "common law" or "doctrinal guidance." interpretive »made by judges.
  2. We can wait until a high profile dispute arises between or within the DLT platform development teams that changes the post-dispute paradigm in a material respect for the entire industry.
  3. We can wait for a work product of type "negotiated regulation" from places like the Stanford Blockchain Research Center or other think tanks inter-DLT.
  4. We can make the law we want adopted.
  5. Etc.

Impact of crypto litigation?

As a nonprofit organization incorporated in Tennessee, our ability to raise crypto resources through simple appeals such as the one presented below is directly affected by new laws such as Tennessee's "smart contract law."

This means that we have the right to sue to get the clarity we need to do the work we must do ... to save the world in our vision of how the world needs to be saved. At this time, we are not actively preparing for a legal challenge to the SB 1662 law, although one could be justified.

The reality on the ground of crypto crowdsourcing is changing so quickly that we might need to review our own legal exposure; At that time, it may be worthwhile to demand or pursue other direct legal risk mitigation strategies.

The reason we are sharing this publicly is simple: if you are reading this, it means that you care about "smart contracts," conceptual rigor, DLT and risk reduction.

And if people are considering going to court in their own territory to start getting judicial clarity about the meaning of "smart contract" in light of existing precedents - then you should see that the situation is quite serious. Before it gets better, unfortunately, it will get much worse.

DLT developers should be spending their resources on studying economics, incentive structures and innovation. Due to the nature of CleanApp projects, the study of legal risk mitigation is innovation. But we know that this is not the case with many other teams.

You already know what to do if you want to protect yourself in a world called "smart contract." You have to go back to it basic.

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