| 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