Punishing the Byzantine Fault: Application of US law to a 51% attack (or threat)

The 51% attack is the blockchain equivalent of a terrorist action. Not only is there the direct threat of the attacker illicitly acquiring or double spending tokens, but also the less direct, but likely bigger threat of gravely damaging public confidence in the impugned blockchain protocol. The attacker could likely make more money shorting a cryptocurrency on an exchange in advance of announcing a successful attack than they can make directly through the attack. Such ill-gotten gains would also be harder to trace. Notwithstanding the potential damage, United States law may not be ready for application to the prevention and reparation of 51% attacks.

It does not happen often, but it can happen

About a month ago, Vertcoin suffered a successful 51% attack. The Proof of Work based decentralized cryptocurrency saw 603 genuine blocks replaced with 553 artificial blocks. It was the second such successful attack in a year. Vertcoin itself claims to be a Bitcoin alternative targeted at achieving wider decentralization of blockchain participants through a user friendly mining protocol. Putting aside the merits of Vertcoin itself, the hack raises the question of what laws are violated (in the United States) when a single entity[1] gets control of 51% of the…