The victim fund is speculative at this point. It may need to be created through a Worker Proposal, if it doesn’t make it into the default distribution for June. (It’s not on the roadmap, hence I use the word “speculative.”)

In the absence of such a fund, the thinking is fines / confiscated tokens would be used to compensate victims who could demonstrate actual harm, and the rest would be burned. In the story with Rachel the whistle-blower, she might be paid a portion of confiscated tokens, and the remainder would be burned.

If a victim fund were created, and I for one hope it will, it could be used to pay for restitution where there was a proven loss but the loss couldn’t be 100% recovered directly from the wrongdoer. It would most likely be run in a manner similar to public funds used to help victims in various US states like California. There is a US Federal fund that performs a similar function.

I add that it’s very unlikely to expect every victim of every crime to be 100% compensated for their losses, whether on a blockchain or off. But a victim fund serves as one way the community can help its members.

See also the concept of the Mutual Aid Society, a powerful approach that I believe will play an important role in future blockchain communities.