Tech Brew Ride Home - Mon. 11/21 – More Crypto Trouble?

Starting point is 00:00:00 On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMean right home for Monday, November 21st, 2022. I'm Brian McCullough today. Rutro, Storm Clouds gathering in Cryptoland again.

Starting point is 00:00:43 This time it's DCG and Genesis. The shocking CEO change over at Disney, the surprising return of Swiftke, what you miss this weekend in Twitter, and you've heard of stable diffusion. Let me introduce you to unstable diffusion. Stable diffusion, but for porn. Here's what you missed today in the world of tech. Well, there seems to have been more store. storm clouds a gathering in the crypto world. They seem to be circling around DCG and Genesis.

Starting point is 00:01:14 DCG's gray scale has refused to share proof of reserves, citing, quote, security concerns as gray scale Bitcoin Trust reaches new lows, and DCG's Genesis has halted withdrawals, quoting the block. The firm acknowledged its decision to keep its reserve information private would be a disappointment to some investors. Crypto firms are being pressed to show more information about their reserves after Crypto Behemoth FTX filed for bankruptcy protection earlier this month. But panic sparked by others is not a good enough reason to circumvent complex security arrangements that have kept our investors' assets safe for years, Grayscale said. Grayscale Bitcoin Trust, or GBTC hit a record low on Thursday as did its E-T-H-E product.

Starting point is 00:02:00 The firm's parent company Digital Currency Group has brushed off contagion fears after the shocking collapse of FTX. At the same time, however, another entity affiliated with Grayscale recently halted withdrawals. Genesis Global Capital is linked to Grayscale through Digital Currency Group, end quote. Quoting from CNBC, Grayscale's flagship fund is the Grayscale Bitcoin Trust, known by its GBTC ticker. Even as Bitcoin trades at a multi-year low of around $16,000, GBTC is trading at a 45% discount to the price of its underlying asset. While Bitcoin is down 72% over the last 12 months, GBT has recorded an 82% loss in that same period as of last Friday. The spread reflects a significant disparity between the value of the trust's sole holding and the open market price

Starting point is 00:02:49 for a share in the trust. In its statement on Friday, Grace Gill said each of its digital asset products is set up as a, quote, separate legal entity and reiterated that those digital asset products are, quote, stored under the custody of Coinbase Custody Trust Company, end quote. The firm pointed to a letter sent by Coinbase CFO Elisa Haas on November 18th, which breaks down an accounting of the tokens held at Coinbase custody. Currently, Coinbase holds around $635,235 Bitcoin on behalf of Grayscale or $10.2 billion. In a tweet, the firm added that the, quote, laws, regulations, and documents that define Grayscale's digital asset products prohibit the digital assets underlying the products from being lent, borrowed, or otherwise encumbered, end quote.

Starting point is 00:03:34 Barry Silbert's Digital Currency Group is the parent company of Grayscale, Genesis, and Coin Desk. Last week, the lending arm of the Crypto Investment Bank Genesis Global Trading paused new loan originations and redemptions. The lending arm of the bank serves an institutional client base and is known as Genesis Global Capital. At the end of its third quarter, it had more than $2.8 billion in total active loans, according to the company's website, end quote. A lot of these contagion concerns revolve around the fact that court documents have shown FTX still owes $3.1 billion to its 50 biggest unsecured creditors with claims ranging from $21 million to $226 million. Ten claims are over $100 million each.

Starting point is 00:04:17 Once again, there was a time when we wouldn't have covered this, but the Walt Disney Company's board of directors made a shock announcement that Bob Chapec will step down as CEO of Disney and be replaced by Bob Iger for two years effective immediately. Disney's stock jumped more than 8% on the news of former CEO Iger's return, quoting the Hollywood reporter. In a stunning turn of events, the Walt Disney company says that Bob Chaepec will step down as CEO with Bob Iger returning to lead the company. Disney's board of directors announced the decision Sunday night. We thank Bob Chapeck for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic, said Susan Arnold,

Starting point is 00:05:05 chairman of the board in a statement. The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Eiger is uniquely situated to lead the company through this pivotal period, end quote. JPEC had just signed a new multi-year contract in June, after speculation following the ouster of TV chief Peter Rice earlier that month, prompted the board to issue a notable public statement backing the CEO after the move. move. Iger even acknowledged in an email to Disney employees Sunday that he is returning, quote, with an incredible sense of gratitude and humility, and I must admit, a bit of amazement, end quote. While Iger will be returning to his old role, the board also made it clear that his new term will be a

Starting point is 00:05:45 temporary one. Iger, quote, has agreed to serve as Disney CEO for two years with a mandate from the board to set the strategic direction for renewed growth and to work closely with the board in developing a successor to lead the company at the completion of his term, the board said. The revival of the Who Will Be Iger's successor question is one that sure to be hotly debated, given that much of the prior decades saw a wave of executives be speculated about as a possibility, only to exit or be passed over. Iger stepped aside as CEO in February 2020, handing the reins to Chepec, who previously led the company's theme parks and consumer products division.

Starting point is 00:06:20 He continued to serve as executive chairman of the company, stepping down from that position just 11 months ago. Since that time, he found a part-time gig at a venture capital firm, Thrive Capital, as a partner and had been working on a follow-up book to his 2019 tome ride of a lifetime. Cheapek announced on November 11th that the company would freeze hiring and stop all non-essential travel with layoffs likely to follow as his executive team sought to trim costs. And while Disney gains subscribers at a rapid clip, some 235 million across Disney Plus ESPN and Hulu, the company's streaming losses have continued to grow to nearly $1.5 billion in its most recent quarter,

Starting point is 00:06:58 making it that much more challenging to hit its profitability target, end quote. Quoting Scott Gustin on Twitter, many top Disney execs learned of the news by reading the Sunday email, some of them reading it on their phones while at Elton John's Disney concert. According to the Wall Street Journal negotiations between Iger and Disney started in recent days, end quote. JPEC had apparently been scheduled to intro Elton at that concert, but didn't show, I guess. Quoting Derek Thompson on Twitter,

Starting point is 00:07:28 TLDR, Bob Chappek did a bad job, but he did a bad job with a hand that Iger kind of dealt him. Iger is a genius, but he faces a huge challenge with Disney transitioning between a declining profitable business and a growing unprofitable business, end quote. And another surprise, Microsoft has brought Swiftkey back to the iOS App Store, citing customer feedback after delisting the keyboard app

Starting point is 00:07:57 back on just October 5th. Quoting the verge. Based on customer feedback, Swift Key iOS has been relisted on the Apple App Store, Microsoft's Caitlin Ralston said in a statement to The Verge. Please visit support.Swiftkey.com for more information. Despite the return, Swiftke's latest update is still from August 11th, 2021. It's unclear if or when it will be updated. Users had complained about issues ahead of the discontinuation, but it seems like there

Starting point is 00:08:26 will be some changes to look forward to. Vishnu Nath. Microsoft's VP and GM of OneNote and the Office Product Group, encourage fans to, quote, stay tuned to what the team has in store, end quote. Bedram Rizai, Microsoft's CTO of its Maps and Local Services Division, said the company will be, quote, investing heavily in the keyboard, end quote. Swift Key originally became popular on Android and eventually launched on iOS in 2014 with the release of iOS 8, which enabled users to install third-party keyboards.

Starting point is 00:08:57 Microsoft then acquired Swift Key in 2016, the Apple. has remained available on Android, end quote. This weekend in Twitter news, Twitter's automated copyright strike system appears to be broken, as users have been uploading full movies to the service, one tweet at a time, quoting Forbes. Last night, it became apparent that Twitter's automated copyright strike slash takedown system was no longer functional. A user went viral for uploading the entirety of the Fast and Furious Tokyo Drift in two-minute chunks over a 50-tweet thread. While it's offline this morning, here's where things get weirder still. The media itself was never taken down. Usually, you used to see a, this media cannot be displayed message when a takedown happens.

Starting point is 00:09:46 The tweet and account will be up, but the media is stripped. In this case, it appears someone at Twitter had to manually suspend the entire account. And as evidence of a further bug right now on mobile, I can still see the tweets from the suspended account. As in, the movie is literally playing in a tweet I am watching on my phone right now, some lingering artifact of account suspension. I can't see it on desktop, but the tweets I favored it last night to write this article this morning are still actively viewable. And again, fundamentally, the copyright system does seem broken. Yes, this specific account was suspended, but only because it went viral and was spotted by someone working there, I think. A separate user has uploaded another full movie, 1995's hackers, two minutes

Starting point is 00:10:27 at a time in a similar thread, and that remains online at the time of this writing, end quote. Also, you might have heard over the weekend that Twitter has reinstated Donald Trump's account after Elon Musk ran a Twitter poll where 51.8% of more than 15 million users voted yes on reinstatement. And Musk later said the people had spoken, though Trump hasn't tweeted yet and in fact said he sees, quote, a lot of problems at Twitter, end quote, and therefore doesn't see any reason to return as he plans to stick to his truth. social, social network. And while other banned accounts have been reinstated and have come back to life over the weekend, in a tweet reply this morning, Elon said Alex Jones will not be on band, as he, Elon has, quote, no mercy for anyone who would use the deaths of children for gain, politics, or fame, end quote. This is interesting. Kite, a startup that uses AI to help developers code has shut down, saying state-of-the-art machine learning models don't understand code structure

Starting point is 00:11:36 well enough and too few people were paying for the product. Quoting from the Kite blog, while we built next generation experiences for developers, our business failed in two important ways. First, we failed to deliver our vision of AI-assisted programming because we were more than 10 years too early to market, i.e., the tech is not ready yet. We built the most advanced AI for helping developers at the time, but it fell short of the 10x improvement required to break through because the state-of-the-art for machine learning on code is not good enough. You can see this in GitHub Copilot, which is built by GitHub in collaboration with OpenAI. As of late 2020, copilot shows a lot of promise, but still has a long way to go. The largest issue is that state-of-the-art

Starting point is 00:12:19 models don't understand the structure of code, such as non-local context. We made some progress toward better models for code, but the problem is very engineering intensive. may cost over $100 million to build a production quality tool capable of synthesizing code reliably, and nobody has tried that quite yet. Nonetheless, we could have built a successful business without 10xing developer productivity using AI, and we did not do that. We failed to build a business because our product did not monetize, and it took too long to figure that out. Then our product failed to generate revenue. Our 500,000 developers would not pay to use it. Our diagnosis is that individual developers do not pay for tools. Their manager,

Starting point is 00:12:58 might, but engineering managers only want to pay for discrete new capabilities, i.e., making their developers 18% faster when writing code, did not resonate strongly enough, end quote. Which, if you're bullish on this new generation of AI tools, that is a concerning development. But speaking of AI generative tools, finally today, TechCrunch has a look at unstable diffusion, which is trying to monetize AI porn generators. The group migrated from a subreddit to a discord where it now has over 45,000 members. Quote, when stable diffusion, the text-to-image AI developed by startup stability AI was open-sourced earlier this year. It didn't take long for the internet to wield it for porn-creating purposes. Communities across Reddit and 4chan tap the AI system to generate

Starting point is 00:13:52 realistic and anime-style images of nude characters, mostly women, as well as non-consensual fake nude imagery of celebrities. But while Reddit quickly shut down many of the subreddits dedicated to AI porn, the communities like Newgrounds, which allow some forms of adult art, banned AI-generated artwork altogether, new forums emerged to fill the gap. By far, the largest is unstable diffusion, whose operators are building a business around AI systems tailored to generate high-quality porn. The server's Patreon started to keep the server running, as well as fund general development, is currently raking in over $2,500 a month from several hundred donors. While the use of AI to create porn isn't new, TechCrunch covered an AI porn-generating app just a few

Starting point is 00:14:37 months ago, Unstable Diffusions models are capable of generating higher fidelity examples than most. The generated porn could have negative consequences, particularly for marginalized groups. The ethicists say, including the artists and adult actors who make a living creating porn to fulfill customers' fantasies. Early on, Unstable Diffusion served as a place simply for sharing AI. generated porn and methods to bypass the content filters of various image-generating apps. Soon though, several of the server's admins began exploring ways to build their own AI systems for porn generation on top of existing open-source tools.

Starting point is 00:15:10 Stable diffusion lent itself to their efforts. The model wasn't built to generate porn per se, but Stability AI doesn't explicitly prohibit developers from customizing Stable Diffusion to create porn, so long as the porn doesn't violate laws or clearly harm others. Even then, the company has adopted a laissez-faire approach to governance, placing the onus on the AI community to use stable diffusion responsibly. Stability AI didn't respond to a request for comment. Only a small percentage of Stable Diffusion's data set, about 2.9% contains not-safe-for-work material, given the model little to go on when it comes to explicit content. So, the unstable diffusion admins recruited volunteers, mostly members of the Discord server, to create porn datasets for fine-tuning stable-deafusion. fusion the way you would give it more pictures of couches and chairs if you wanted to make a furniture

Starting point is 00:16:00 generation AI. Much of the work is ongoing, but the group tells me that some of it has already come to fruition, including a technique to, quote, repair distorted faces and arms in AI-generated nudes. We are recording and addressing challenges that all AI systems run into, namely collecting a diverse data set that is high in image quality, captioned richly with text, covering the gamut of preferences of our users. The group added. Unstable diffusion claims to have generated over 4,375,000 images to date on a semi-regular basis. The group hosts competitions that challenge members to recreate images using the bot, the results of which are used in turn to improve unstable diffusions models, end quote. Running a bit behind today, I got to come up with a better system for working whilst

Starting point is 00:16:53 watching the World Cup at the same time. Yay, England. Talk to you tomorrow.

Tech Brew Ride Home - Mon. 11/21 – More Crypto Trouble?

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