From today's #MoneyStuff, the question is raised: if Elon Musk is found to have violated securities law and must disgorge $143m in unjust earnings, but not enough specific victims can be found, what should happen?

High priced lawyers are busy arguing that courts cannot order repayment unless it goes to specific victims. And if no such victims can be identified then Elon gets to keep his cash, presumably. Giving the money back to the market makers who were the last link I the sale seems like an unjustified windfall. I am fine with the Treasury just keeping it, but I can see how that moves the cash from one category of penalty to another.

This I think is an area where cryptocurrency does actually have a useful innovation to contribute. If Mr. Musk has contributed a fraud on the market at large (a large distributed system in which it is hard to apportion losses.that match his gains) then we turn that around and spread the restitution out in a similar distributed fashion. Elon should have to buy a basket of equities and the "burn" it, reducing the number of shares that exist and thus increasing value for everyone else. (And also for him too, but we can solve that with the right math.)

There are no doubt some practical obstacles to overcome but I don't see any block in principle to the clearinghouse agreeing that those shares no longer exist.

#financialcrimes