A cryptocurrency
enthusiast who exploited a bug in the ICON network to mint a large
amount of its native ICX token can pursue entitlement claims according
to a California federal judge.

On Monday, Aug. 9, U.S. District
Judge William H. Orrick said that the case raises novel questions about
digital property. He added that plaintiff Mark Shin had adequately
alleged that the ICON Foundation was wrong to freeze his crypto asset
accounts after he took advantage of its flawed code.

According to Law360,
the allegations were enough to allow the case to go forward, with Judge
Orrick denying the bulk of ICON Foundation's motion to dismiss the
claims.

According to court filings,
Shin discovered a bug in the ICON Network's code after a software
update in August 2020. When attempting to transfer staked tokens, Shin
discovered that 25,000 new native ICX tokens had appeared in his wallet.

He
thought that there was a “visual bug with the wallet software” and
attempted the process again whereby another 25,000 ICX tokens were
generated.

The code flaw allowed Shin to create a total of 14 million new ICX tokens
worth around $7.8 million at the time. Many of those tokens he then
transferred to the Kraken and Binance cryptocurrency exchanges.

According
to the court order, Shin acknowledged that “the authors and developers
of the [software update] may not have intended for the network proposal
to behave as it did,” but argued that he was the new lawful owner of the
tokens since the code changes had been adopted.

He claimed that ICON
disagreed and asked Binance and Kraken to have his accounts frozen,
saying that he had attacked the network. The judge agreed with the
plaintiff’s claims of possible token ownership rights allowing the case
to proceed, stating:

“The inquiry at this stage, however,
is whether Shin has plausibly alleged possessory interest in the ICX
tokens. I find that he has.”

Ted Normand of Roche
Freedman who is representing Shin added that the case raises questions
over decentralization claims some networks make:

“If you're a DeFi company issuing assets… you can't have a decentralized ecosystem only when it's convenient.”

The
South Korean blockchain project has fallen from its previous lofty
positions in the market capitalization charts as ICX tokens have tumbled
in price and largely missed out on this bull market. Today, ICX trades
at $1.12, down 91.5% from its January 2018 all-time high of a little
over $13.

Related: ICON (ICX) unaffected by South Korean tax investigation into ICONLOOP, says chairman

source link : https://cointelegraph.com/news/man-who-minted-14m-icx-tokens-due-to-a-bug-can-pursue-lawsuit-to-keep-them