Bad faith but no crime. Arrested in February 2022, the two brothers prosecuted for the siphoning of funds from the Platypus Finance platform have just been acquitted by the 13th criminal chamber of the Paris judicial court, noted ZDNET.fr. The prosecution had requested a five-year prison sentence, three of which were suspended for the older brother and six months suspended for his younger brother.
“This is not a blank check,” however, warned President Lasserre-Jeannin during the reading of the deliberations, addressed to the two former defendants. “You did not behave as an ethical hacker, you executed the contract in bad faith”, but without this being a criminal offense, she notes.
Flaw in the smart contract
At the hearing at the end of October, Mohamed M., a self-taught computer enthusiast, explained how he was able, by programming a series of instructions in a smart contract, to get his hands on the funds of Platypus Finance. A first flash loan on the decentralized finance protocol Aave V3 initially allowed him to deposit 44 million USDC, a stable coin pegged to the US dollar, on Platypus Finance.
These funds had been used as collateral to borrow 41.7 million USP, another token. This money was intended to be exchanged with the stable coins presented in the platform’s liquidity pool. In the meantime, the emergency withdrawal clause had been activated, making it possible to repay the initial flash loan while keeping control of the cryptos obtained on Platypus.
“Miscoded”
But for the court, if this maneuver may amount to “bad faith”, it is not a scam, “even if it is detrimental” for the company. “The smart contract was poorly coded by Platypus, so that this allowed the respondent to benefit from it,” summarizes President Lasserre-Jeannin.
The judges also ruled that it was not a case of theft, as the cryptos did not belong to the company – they were the tokens of the people who had deposited their funds in the crypto pool. Finally, prosecutions for computer hacking were also dismissed. The national police expert conceded that it was primarily an interaction with the smart contract, rather than fraudulent access to an automated data processing system.
However, the story is not over for Mohamed M. In addition to a possible appeal from the prosecution, the latter could now have to repay the loan taken out with Platypus, underlined the president of the court. A point which, however, remains very vague, between the funds lost in one of the smart contracts and a token which is no longer tradable on most market places.