charged with the crime of “spoofing”—that is, in this instance, using an algorithm to trick a market. Thakkar was accused of creating an algorithm that enabled a London trader to artificially overstate demand for stock market futures. Aided by another developer’s software, this tactic sparked the 2010 “flash crash” that saw the US stock market lose $1 trillion in value in just 36 minutes.
Stephen J. Obie is a partner at Jones Day and a leader of the firm’s blockchain initiative. This article represents the personal views and opinions of the author and not necessarily those of the law firm with which he is associated.
Consider Thakkar’s case a warning to programmers the world over. They might assume they’re protected by the First Amendment when writing code, but that might not be the case. Computer coders would also be wrong to think they face no potential liability if they’ve been employed by someone else making decisions about how a product is used.
Programmers, in fact, might very well be held liable for the products they write—a point underscored this past November, when the Securities and Exchange Commission hit the creator of a purported cryptocurrency trading platform with a $388,000 fine for contributing to the operation of an unregistered exchange. In response, the Electronic Frontier Foundation, a digital free speech group, expressed worry that the decision was written in a way that “could be read to imply that persons engaged in merely writing and publishing computer code could run afoul of US securities law.”
Well, there is no “could” about it. This is, without doubt, a new realm of legal exposure.
Traditionally, market manipulation cases have been filed against the person or people doing the a
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