Inside ‘Code Is Law:’ When Hackers Make Millions From DeFi, Is It Legal?

The documentary 'Code Is Law' explores significant DeFi smart contract exploits, examining the legal and philosophical debate surrounding the 'code is law' principle through the stories of hackers, developers, and victims.

• The 'Code Is Law' documentary explores the legal and philosophical implications of smart contract exploits.

• Teenage hacker Andean Mujedovic used the 'code is law' defense for his exploits and deliberately left clues identifying him.

• The DAO hack was a foundational moment, creating a philosophical divide in the crypto community over whether code's outcomes should be absolute.

James Craig, director of 'Code Is Law,' discusses his new documentary which delves into major smart contract exploits like the DAO, Index Finance, Kyber Swap, and Mango Markets. The film explores the 'code is law' philosophy, tracing its evolution from an internet meme to a potential courtroom defense, particularly through the case of teenage hacker Andean Mujedovic. Craig aims for the film to present the debate neutrally, allowing viewers to consider whether code's rules should supersede traditional legal frameworks in decentralized finance.

The 'Code Is Law' Film

• 00:01:10 James Craig's documentary 'Code Is Law' examines significant smart contract exploits and their impact on the 'code is law' philosophy, which posits that code's rules should govern outcomes. The film details incidents such as the DAO, Index Finance, Kyber Swap, and Mango Markets hacks, focusing on the perspectives of developers, investigators, and victims. A central figure is Andean Mujedovic, a teenage hacker responsible for $65 million in exploits, who has been evading the FBI.

Andean Mujedovic's Exploits

• 00:06:07 Andean Mujedovic, an 18-year-old at the time, hacked Index Finance for $16 million in 2021, publicly doxing himself and attempting to legally defend his actions under 'code is law.' After losing the stolen funds due to a vulnerability in a vanity wallet tool, he later committed a larger $48 million hack on Kyber Swap while on the run. Despite never admitting the Kyber Swap hack, he was charged by the FBI, and his father reportedly defended his son's actions using the 'code is law' argument, stating there was a 'hole in the contract'.

The DAO Hack's Legacy

• 00:11:24 The DAO hack was pivotal, highlighting a fundamental paradox in early Ethereum's idealistic community. After a record-breaking $160 million crowdfund, the hack revealed a deep schism, with many arguing that the exploit was simply a feature of the code, not a hack, encapsulating the nascent 'code is law' ethos. This event, while not originating the concept, brought the 'code is law' idea into direct conflict with the reality of financial loss and the need for remediation, shaping crypto philosophy.

Hacker Motivations and Signatures

• 00:14:50 Hackers like Andean Mujedovic and the alleged DAO hacker, Toby Honish, often have prior contact or even contractor relationships with the projects they exploit. Mujedovic, known for his ego, not only left breadcrumbs that identified him in the Index Finance hack through a Wikipedia entry but also deliberately linked his Kyber Swap exploit to his previous Index Finance theft. This behavior suggests a desire for acknowledgment and control rather than just anonymity, indicating a unique psychology at play beyond simple financial gain.