Australian

Australian Financial Authorities Look Into Ethereum’s Conflicts of Interest

This week Bitcoin.com spoke with an anonymous individual from Australia who has been in contact with the Australian Securities and Investments Commission concerning Ethereum’s (ETH) possible violation of financial laws that originated from the DAO hack and the ETH hard fork last year.

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Ethereum’s Conflict of Interest

Australian Financial Authorities Look Into Ethereum's Conflict of InterestThe rise of Ethereum and Initial Coin Investments (ICO), or token sales stemming from the network, has been discussed heavily in recent months due to the vast amount of funds raised by ICOs. Some people are excited for the future of crowd sales while others believe this type of funding is raising a lot of red flags. Bitcoin.com’s anonymous contact who goes by the name ‘Murdock’ believes Ethereum developers are already in trouble due to violating “conflict of interest” laws during last years DAO hack and the network’s subsequent hard fork.

Violating Existing Financial Laws and Breaking the Trustless Machine

Bitcoin.com was shown an email from the Australian Securities and Investments Commission (ASIC) who says they have assigned a specialist to Murdock’s complaint. The native Australian has also told us that he has also contacted other financial authorities from Germany, France, and other EU-based financial officials. Because the Ethereum Foundation is registered in Zug, Switzerland, Murdock has also contacted the Swiss government. Murdock explains why he was prompted to reach out to his country’s financial regulators with concerns about the recent Ethereum/DAO debacle.

“What prompted me to do this was my understanding of financial laws, business laws, and my background in the crypto-space since 2011,” explains Murdock. “The whole project violates financial laws like ‘conflict of interest.’ This comes from developers protecting their investments after they were warned that the network should have just let the theft play out.”

The trustless machine was broken with the hard fork of Ethereum.

Ethereum Creates a Bad Precedent

Murdock believes Ethereum developers have broken many traditional finance laws and they should be held accountable. If the Ethereum team is not held responsible for breaking these laws Murdock thinks the organization will set a dangerous precedent for blockchain technology and cryptocurrency solutions in general. He also believes that beyond the DAO situation, developers will have other conflicts of interest in the near future.

“I want better laws for blockchains and cryptocurrencies that provide a better code of ethics,” Murdock details. “Governments should intervene and regulate these companies using Ethereum. It’s also about trust, blockchain contracts are supposed to be ‘code is law.’ But Ethereum can just keep doing more hard forks? For their own benefit? Bitcoin forks in the past were to improve the code and not for personal gain.”

Below is a copy of the email sent to Murdock from the ASIC agency and the country’s Minister of Finance. Murdock explains he will be keeping us informed of any more developments with his complaints.

Australian Financial Authorities Look Into Ethereum's Conflict of Interest

What do you think about Murdock’s complaint? Do you think he has a valid case against Ethereum? Let us know in the comments below.


Images via Shutterstock, Murdock, and the ASIC website. 


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  • Siknight

    I don’t get it – what authority can ASIC wield over Ethereum? From what you are reporting he is trying to get blockchain devs to adhere to a code of ethics when countries are still debating the relative merits of crypto currencies and blockchain technology. We can’t even get our journalists, politicians and law enforcement to adhere to a code of ethics so good luck on that one mate! The real question is how much did Murdock lose in the Dao debacle?

  • Kz

    “The whole project violates financial laws like ‘conflict of interest.”

    Sure…this guy DEFINITELY knows what he’s talking about, I mean only a financial scholar knows such specific laws.

    • Jon Scott Boroughs

      I get the code is law thing. I thought the DAO fork was a big mistake. People knew the flaws and invested anyway. I wish I could get a ‘Do over’ button in life so I didn’t have to take responsibility for my own actions. Should the thief have stolen DAO money, no. Should people take enough personal responsibility by following a project’s progress before they invest, yes. Should the fork from the DAO debacle have happened, no. By forking ETH because of the DAO the dev team and everyone in the community who voted for it deprived a great many people a valuable life lesson…personal and financial repsonsibility

      • Dbt123

        I don’t think the ‘fork’ deprived anyone of any lesson… There’s plenty of wise counsel available, if people open their ears and listen and learn and then apply that wisdom to their decisions. Living itself is a fluid situation, yes you can set parameters, but some situations call for differing measures.

  • concerndcitizen

    Ethereum, like Bitcoin is a ghost. No one is technically in charge, there is no company and there is no legal contract to use Ethereum that anyone agreed to, no terms of service, etc. The only exception might be the initial coin offering, which while done in Switzerland, is still subject to Swiss laws. I’m not sure there is any current legal basis for this complaint, however well founded it is. However, companies building things on top of Ethereum might very well have a legal or regulatory problem, especially if they are issuing coins backed with assets that need to rely on the integrity of ETH. It has clearly demonstrated that it can not be relied on, as proven in the case of the DAO attack.

    • Dbt123

      Yes okay… Got it… Cannot be relied on? Surely you jest…The developers behind Ethereum are still at work everyday, even though they probably have enough money to retire…That shows me the passion they have for what they do, and I can say the same for Bill Gates and what impressed me about him all along. The man kept working even while being the richest! That is impressive and that passion helped reward all those that invested in His endeavors. I see that same passion in V Buterin and company, as well as those involved with Bitcoin Core.

      • concerndcitizen

        Go look at yesterday’s flash crash. The ETH blockchain is at its limit and it won’t scale. It’s being run by kids with zero experience actually operating anything, apparently.

  • Dbt123

    And why would the mysterious Murdoch be reporting this to the press instead of proceeding into the legal system with his allegations?

  • danystatic

    nothing much I, or you or anyone else can do here…. individually…

  • Dbt123

    It’s astounding to me for what passes a journalism with stories like this. This is similar to chatty Kathy’s hovering around the backyard gossip fence, reporting and repeating items as if they have been vetted for accuracy and legitimatecy. How about some real crypto reporting like interviews with prominent developers, etc., etc.?

  • He has got a point. And, if he is allowed to proceed through Switzerland, then it will be a big mess like the past chasing down TOR sites. The DAO should have played out and a new coin started, if you had a time machine. Just because you are good at Crypto, does not mean you are good and Process, Ethics and Financial Law. I think a big lesson will be played out right before the Crypto Community at a pretty dramatic time. Banks like it and want it and want it Legal. You have their attention and now they are going to show you what legal is and try to take it.

  • Ian O’Neill

    I believe the long road to a fully digital/value economy is likely to include the migration of ‘ethics’ and benchmark decision making involving ethics away from centralized governments and committees into the world of decentralized money. This is an important reason why reshaping the definition of money is arguably the most important task at hand in at least the first quarter of the 21st Century. Money constitutes a key basis for social organization, and this power to organize is now possibly moving into the hands of individuals – perhaps even anyone who chooses to own crypto based money. Collectively and sometimes individually people have the power to influence key developments like a DAO. I predict efforts by ASIC and others like it will ultimately fail to render ethical decisions, much less enforce them. ‘Ethics’ is moving online, and the founders of Ethereum, indeed all developers interested in re-inventing money will see the challenge of ethics arise most powerfully online, not in the face of government action.

    • Good points. Sovereignty and Jurisdiction the individual rights of citizens will be claimed by the FIATs. Citizens are going to have to displace themselves from the sovereignty of a country and the jurisdiction to the government that claims it for a dual citizenship that includes the digital domain. It cannot be an ideal like freedom and liberty or a civil right. It will have to be a clear delineation of ownership and outright secrecy. Most humans think of it a social disorder and anarchy. Cryptography will have to be joined with oneself and as innate to being as their DNA. The Governments and the Power that props them up already know what they will do. War. At first, silent, then as you are seeing, ever more forward into a foggier version.

      • Ian O’Neill

        I think in this struggle there is no ‘us and them’, only us. We are all in this together, and governments are a reflection of us; good and evil is in the heart of every man and woman. It is nature that calls the play, not the hearts of men, and this time, mathematics – technology – indicates the greater possibilities for peace as ethics move online. As I see it, the only solution is a peaceful one. That is not to say the way forward is not long and arduous, I have read history. However I find it hard to believe destiny favours anything less than miraculous survival. Survival is authored by peace, and I suspect peace (ironically I submit,) is written into the ‘DNA’ of cryptography.

      • Dbt123

        Good post. Thank you

  • Liberty88

    Conflicts of interest? Of course there are conflicts of interest – the central bank and their henchmen don’t want a cryptocurrency stealing their lunch bucket.