Well, he would lose in court and I personally never received a "cease and desist letter." If it forks, it's the community that's forking it....he'd have to send everybody a "cease and desist." And, the intent of the contract is what will take precedence in a court and it was obviously not intended for the exploiter to steal all our funds. Maybe he'd get one count of wire fraud per investor frauded....He should take the profits from his ETH short and run before a hot curling iron introduces his butt hairs to a perm, IMHO!
How would he lose? He did avid by the rules of the DAO smart contract, he did not modify anything as far as I know, so being strict the definition of decentralized smart contract, he did not do anything illegal... very tricky scenario.
The argument is there is no one the court could pinpoint to enforce such a ruling on. The miners, exchanges, users, and devs would all play a role in the community outcome, yet no one can be identified as responsible for that outcome.
Whereas, if the developers and foundation push for a fork and politik for a 51% attack on the protocol, then the attacker potentially accuse them of being in control of the enterprise and sue them. So that is why I say it is very risky for them to fork. OTOH, if they don't fork, they might be vulnerable to a class action suit from the n00bs who had their ETH taken from them by the "smart" (too smart = dumb) contract. This is why I made
a thread to ask if the developers who have promoted this so carelessly without conspicuous warnings, could be in deep legal trouble now? They appear to me perhaps the easiest to target with a lawsuit, but IANAL so I am pondering what is their risk?
But note the "attacker" may have committed an illegal action or at least violated contract law, so in that case is unlikely to reveal identity and sue. Thus I was thinking the safest is to fork, but that has the risk of the n00bs potentially accusing them of being in control of the coin and class action sue them for the exchange rate losses. So it seems those who created and promoted ETH and DAO (without sufficient warnings of risks) may have a legal quagmire, but IANAL so I am just hoping they have retained adequate counsel.
Bitcoin is an interesting case here. In general, it seems to be much closer to a DAO than a DO. However, there was one incident in 2013 where the reality proved to be rather different. What happened was that an exceptional block was (at least we hope) accidentally produced, which was treated as valid according to the BitcoinQt 0.8 clients, but invalid according to the rules of BitcoinQt 0.7. The blockchain forked, with some nodes following the blockchain after this exceptional block (well call this chain B1), and the other nodes that saw that block as invalid working on a separate blockchain (which well call B2). Most mining pools had upgraded to BitcoinQt 0.8, so they followed B1, but most users were still on 0.7 and so followed B2. The mining pool operators came together on IRC chat, and agreed to switch their pools to mining on B2, since that outcome would be simpler for users because it would not require them to upgrade, and after six hours the B2 chain overtook B1 as a result of this deliberate action, and B1 fell away. Thus, in this case, there was a deliberate 51% attack which was seen by the community as legitimate, making Bitcoin a DO rather than a DAO. In most cases, however, this does not happen, so the best way to classify Bitcoin would be as a DAO with an imperfection in its implementation of autonomy.