| U.S. law generally requires that stolen goods be returned to the
| original owner without compensation to the current holder, even if
| they had been purchased legitimately (from the thief or his agent) by
| an innocent third party.
This is incorrect. The law draws a distinction between recognized sellers
of the good in question, and other sellers. If you buy a washer from a guy
who comes up to you and offers you a great deal on something from the back
of
his truck, and it turns out to be stolen, you lose. If you go to an
appliance
store and buy a washer that turned out to be stolen, it's yours. Buy a gold
ring from the salesman at the same store, and you better hope he didn't
steal
it.
As in any real-world situation, there are fuzzy areas at the edges; and
there
are exceptions. (Some more expensive objects transfer by title - mainly
houses and cars. You don't get any claim on the object unless you have a
state-issued title.) But the general intent is clear and reasonable.
| Likewise a payment system with traceable
| money might find itself subject to legal orders to reverse subsequent
| transactions, confiscate value held by third parties and return the
| ill-gotten gains to the victim of theft or fraud. Depending on the
| full operational details of the system, Daniel Nagy's epoints might be
| vulnerable to such legal actions.
This is no different from the case with cash today. If there is a way to
prove - in the legal sense, not some abstract mathematical sense - that a
transfer took place, the legal system may reverse it. This comes up in
contexts like improper transfers of assets before a bankruptcy declaration,
or
when people try to hide money during a divorce.
-- Jerry
