Tech Brew Ride Home - Tue. 07/05 – What Did I Miss?

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 Tech meme right home for Tuesday, July 5th, 2020. I'm Brian McCullough today. The crypto crash goes ever onward. Clarna is going on a reality TV show called Now That's what I call a haircut. The hackers have come for the Chinese surveillance state. The World Cup is

Starting point is 00:00:49 going to have robots call off sides. And Steve Jobs is getting the Presidential Medal of Freedom. Here's what you miss today in the world of tech. Well now, what did I miss? Okay, let me see how quickly we can run through this. While I was gone, Three Arrow's Capital filed officially for Chapter 15 bankruptcy, protecting its U.S. assets from creditors while a Virgin Islands court carries out a liquidation. Voyager Digital temporarily suspended trading, deposits, and withdrawals, citing market conditions after issuing a default notice to three arrows capital in June on a $650 million loan. BlockFi said it agreed to an option to be acquired by FTCS for up to $240 million. The deal also includes a $400 million revolving credit facility from FTX.

Starting point is 00:01:44 So again, Sam Bankman-Fried doing the JPMorgan thing. Now, that $240 million is down from the $4.8 billion that BlockFi was valued at in, I don't know, six months ago. And the original rumor was that it was going to be sold for a mere $25 million. So better than that, I guess. What about this morning? Well, crypto lender and exchange vault. has paused withdrawals, trading, and deposits, and says it's exploring a restructuring after users withdrew $197.7 million plus since June 12th. I'll quote from this one since it's the most timely from TechCrunch. The three-year-old startup, which counts Peter Thiel-backed Valar Ventures, Coinbase Ventures, and Pantera Capital among its backers, has raised about $27 million,

Starting point is 00:02:32 said it is facing financial challenges amid the market downturn, which is, is a lot of it said has prompted customer withdrawals of about $198 million since June 12th. Vald founder and chief executive Darshan Bathija said the startup is exploring restructuring options and is engaged with Kroll for financial advice and others for legal advice in India and Singapore. Vald enables customers to earn what it claims to be the, quote, industry's highest interest rates on major cryptocurrencies, end quote. On its website, it says it offers 12.68% annual yields on staking several so-called

Starting point is 00:03:05 stable coins, including USD and BUSD, and 6.7% on Bitcoin and Ethereum tokens. The platform allowed customers to borrow against their tokens and also facilitated several other trading services. On its website, Vald said it offers users the ability to borrow up to an LTV loan to value of 66.67% against their tokens and instantly approves their loans. Like several tech stocks, many crypto tokens have tumbled over 70% in value in the past six months. seek the understanding of customers of the Vald platform that we will not be in a position to process any new or further requests or instructions in this regard. Specific arrangements will be made for customer deposits, as may be necessary for certain customers to meet margin calls

Starting point is 00:03:49 in connection with collateralized loans. Bathija wrote today. The announcement follows Vald cutting its workforce by 30% two weeks ago. The move comes as a surprise, however. On June 16th, Bethigia assured Vald customers that the platform had no exposure to Celsius, another lending startup that is facing increasing financial challenges, and three arrows capital, one of the high-profile crypto hedge funds that filed for Chapter 15 bankruptcy over the weekend, end quote. What else on this beat? Radio Shack was purchased by private equity firm REV in 2020, and it has reintroduced itself as a crypto exchange, trying to attract users with a stream of often profane tweets, which, okay, you know, I guess any

Starting point is 00:04:35 timing is better than no timing? I will note this, though, because it's interesting. After three ACs collapse, centralized lenders with exposure to three arrows have been failing, while their decentralized counterparts have thus far been liquidating collateral relatively successfully and continue operating. So does it turn out decentralized exchanges actually work? I'm going to quote now from an interesting essay from Entrepreneur's Handbook that goes in depth into this in greater detail, but here's the conclusion, quote, when it comes to the crypto lending companies, their only value rests in their client list and a tiny fraction of good loans. If these clients can be retained and sold additional crypto financing products, then it might make sense to purchase the crippled,

Starting point is 00:05:23 centralized crypto lender for a song, and assume their liabilities. Their radioactive loan books might contain a few properly underwritten loans, and those loans can be purchased at attractive prices. The problem is that the longer these lenders go without a lifeline, the less likely it becomes that they will ever reopen and allow their retail depositors to withdraw. The time pressure to conduct due diligence on these opaque entities makes it even harder to accurately assess whether the crypto barons will part with their capital and save these sinners. Surely the Fed or another central bank could bail out these hedge funds and companies, but these entities dealt in crypto. These entities are not part of the club of TBTF financial

Starting point is 00:06:02 institutions and shall therefore die an ignoble death. But let's not shed too many tears, for we have learned through these trials and tribulations that the promise of a new decentralized financial system has weathered yet another test, end quote. Which is something that I have thought, I've also heard people say, and that would be, yes, the carnage has been pretty, pretty bad thus far, but it could be worse. Things haven't gone to zero everywhere. Prices of the biggest cryptos, well, seriously down, are still hovering out around their previous all-time highs. Could this be a bullish sign for crypto overall? I know. I know. And I'm with you. But if this stuff calms down in a few weeks, could this be a sign that the general crypto space is actually more mature than we thought,

Starting point is 00:06:50 mature enough to survive some real bad stuff like it has been doing? Of course, the counter to that argument is the point that I made last week. How can you survive as an industry if you constantly slaughter your early adopters and biggest fans. Like, let's say, crypto survives all this and comes out stronger on the other end, and maybe in a few months or years, say, partially through the lessons learned via this experience, crypto finally produces the DFI ecosystem that the biggest boosters have always been dreaming about. How, even if that happened, would you convince people that it's safe to give it a try again? Never say Mark Zuckerberg doesn't have access to data, doesn't know which way the wind is blowing.

Starting point is 00:07:36 I'm joking. Meta got out of crypto early, but probably for unrelated reasons, other than Mark's gift at prognostication. They were basically pushed out of crypto, right? But further confirmation of all this, meta will shut down Novi. It's digital wallet pilot on September 1st. Users will no longer be able to add money to their account starting July 21st. Bloomberg. Both the Novi app and Novi on WhatsApp will no longer be available, the company said, on the website. Starting July 21st, users will no longer be able to add money to their accounts, Novi said, advising users to withdraw their balance as soon as possible. Users won't be able to access their transaction history or other data after the pilot ends. The company does plan

Starting point is 00:08:21 to use Novi's technology in future products, such as its Metaverse project. A company spokesperson said in an email, quote, we are already leveraging the years spent on building capabilities for meta overall on blockchain and introducing new products, such as digital collectibles. Meta said in the statement, you can expect to see more from us in the Web3 space because we are very optimistic about the value these technologies can bring to people and businesses in the metaverse, end quote. Meta launched Novi's pilot back in October of last year, amid scaled-back ambitions to dominate the crypto remittances space instead of a new DM token. Meta once backed, Novi ended up using Paxos Trust's U.S.

Starting point is 00:09:00 SDP stablecoin to allow wallet users from parts of the U.S. and Guatemala to conduct transactions. Coinbase Global was safeguarding the funds, end quote. Now this is a haircut. Sources say that Clarna is nearing a deal to raise $650 million, mostly from existing investors led by Sequoia Capital, but at around a $6.5 billion valuation, which is down from the $45.6 billion valuation back in June of last year, quoting the Wall Street Journal. The company's services boomed during the pandemic as consumers flocked to online shopping, so did its valuation, which soared through several funding rounds from $5.5 billion to $31 billion

Starting point is 00:09:47 and eventually $45.6 billion. The valuation surge made Klarna one of the world's most valuable fintech companies and turned its CEO and co-founder Sebastian Simikowski into a paper billionaire. Klarna is licensed as a bank in Sweden, and the fundraising was also necessary to keep up with the more stringent Swedish bank capital requirements. The Wall Street Journal reported last month, citing people familiar with the company. Clarenas fundraising is being closely watched in Silicon Valley as a signal of the amount of pain investors will have to take in the broader tech swoon. Venture capital firms often base the value of their investments on a company's most recent funding

Starting point is 00:10:23 round, end quote. However, I want to point out that this is a classic example of how this sort of markdown is often based on comparable valuation, especially in the public markets. The 85% drop in Klarna's valuation, if this goes through, is in line with what we've seen from their competitors. A firm and PayPal are down around 75% from their highs. They're both publicly traded and theoretically are more mature, however. And then, of course, you have the example of fast going completely to zero. So frankly, an 85% haircut actually maths out. Quoting Gavin Daley on Twitter. The funny thing is, I'd be delighted if I founded slash owned slash ran a company worth $6.5 billion, but they're probably not feeling like that

Starting point is 00:11:11 right now, end quote. An unidentified hacker on a forum is selling more than 23 terabytes of allegedly stolen data on up to one billion Chinese residents for around 10 BTC after breaching a Shanghai police database. allegedly. Quoting Bloomberg. The scale of the alleged leak has sent shockwaves through the Chinese security community, triggering speculation about the credibility of the claim and how it could have taken place. Zhao Shangpeng, founder and chief executive officer of cryptocurrency exchange Binance, tweeted on Monday the company had detected the breach of a billion resident records from, quote, one Asian country without specifying which, and had since increased verification procedures for

Starting point is 00:11:59 potentially affected users. Shanghai authorities have not publicly responded to the purported hack. Representatives for the city's police and cyberspace administration of China, the country's internet overseer, did not immediately respond to fax requests for comment. The U.S. and other nations have repeatedly identified China as one of the world's biggest sources of cybercriminals, which they say infiltrate systems on behalf of domestic agencies in search of valuable data or intellectual property. Domestic breaches are, however, rarely disclosed because of a lack of transparent reporting mechanisms. In 2016, personal information on dozens of Communist Party officials and industry figures from Jack Ma to

Starting point is 00:12:33 Wang Zhang Lin was said to have been exposed on Twitter in one of the country's biggest online leaks of sensitive information at the time. In 2020, the Twitter-like service Weibo said hackers claimed to have stolen account information for more than 538 million of its users, though sensitive data such as passwords was not leaked. And this year, tens of thousands of seemingly hacked files from China's remote Xinjiang region provided fresh evidence of the abuse of mostly Muslim ethnic Uyghurs, according to a rights group. The latest, alleged incident again underscored the challenges facing Beijing as it collects data on hundreds of millions of people while tightening policing of sensitive online content. Under Chinese law,

Starting point is 00:13:13 the exposure of personal information can result in jail terms. It's unclear how the alleged cyber attackers in this month's breach gained access to Shanghai police servers. One popular theory circulated online among cybersecurity experts was that the breach involved a third-party cloud infrastructure provider. Alibaba, Tencent, and Huawei are among the country's biggest external cloud services, end quote. China is apparently rapidly censoring news of the alleged Shanghai Police Data Breach online. Data leak and other terms are currently banned on Weibo. FIFA is going to introduce semi-automated off-side technology at the 2022 World Cup coming later this year, using 12 cameras and a custom soccer ball to track players and make off-sides calls.

Starting point is 00:14:02 Quoting the Guardian, semi-automated off-side technology, or S-A-O-T, will see a complete overhaul of the system used to judge positional offside decisions in the lead-up to a goal. While a referee and their assistant will still make on-field calls and the referee will have a final say on SAT-D decisions, the controversial practice of rewining TV footage will be a thing of the past. During the World Cup offside reviews will be conducted by creating a 3D map of the goal-scoring action using a combination of 12 cameras and a high-tech ball. The Adidas-Al-Rila ball will be fitted with a sensor that sends out location, data 500 times per second, which will be matched against player positions on camera, with synchronized

Starting point is 00:14:42 devices tracking 29 points on players' bodies, and relaying information 50 times per second. The data will be processed using AI technology devised in collaboration with a number of universities, including the Massachusetts Institute of Technology. After being sent to an S-A-O-T operator, it'll be double-checked by a VAR video after review. DeVar will then relay the verdict to the referee, who will make the final call, but will, in theory, merely approved the decision. FIFA says that in trials, the time taken to make a decision compared with the previous VAR system had fallen to 25 seconds from an average of 70 seconds. Once a decision is made, a 3D rendering of the offside incident will be shown on television

Starting point is 00:15:23 and on screens in the World Cup stadiums. FIFA says that the image would be easier to interpret for the viewer than previous TV pictures with lines drawn across them, but that the images would take an extra 25 seconds to generate, end quote. all the recent security updates I've been telling you about, maybe this is the one that would affect most of you listening, or the largest number of you, I suppose. Google has released a Chrome update for Windows to address a high severity zero-day vulnerability that has been exploited in the wild. It's the fourth Chrome zero-day patch so far this year, quoting bleeping computer. The zero-day bug fixed today is a high-severity heap-based buffer overflow

Starting point is 00:16:08 weakness in the WebRTC component, reported by Jan Voisek of the Vosk of the Vast Threat Intelligence Team on Friday, July 1st. The impact of successful heap overflow exploitation can range from program crashes and arbitrary code execution to bypassing security solutions if code execution is achieved during the attack. Although Google says this zero-day vulnerability was exploited in the wild, the company is yet to share technical details or any info regarding these incidents. A Chrome update was available immediately when bleeping computer checked for new updates by going to Chrome menu, Help About Google Chrome, end quote. Finally today, President Biden is going to award a posthumous Medal of Freedom to Steve Jobs for changing the way the world communicates and transforming

Starting point is 00:17:00 the computer music and film industries, quoting 9 to 5 Mac. For full context, the presidential Medal of Freedom is the highest civilian honor in the United States. It is presented to those who have, quote, exemplary contributions to the prosperity, values, or security of the United States, world peace, or other significant societal, public, or private endeavors, end quote. Jobs passed away on October 5th, 2011, after a battle with pancreatic cancer. Posterous Medals of Freedom are rare, but not unheard of. This year, other posthumous recipients include John McCain and Richard Trumpka. The awards will be presented at the White House on July 7th. The announcement does not make mention of who will be

Starting point is 00:17:40 in attendance in representation of Steve Jobs. We would assume that it would be Lorraine Powell Jobs, the widow of Steve Jobs, end quote. Nothing for you today. Obviously coming to you from Northern Michigan, as the audio quality probably sounds different to you. Talk to you tomorrow.

Tech Brew Ride Home - Tue. 07/05 – What Did I Miss?

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.