Tech Brew Ride Home - Tue. 08/02 – What Is It With Bridges?

Episode Date: August 2, 2022

Seriously, what is it with crypto bridges? Why are they seemingly so easy to hack? New York cracks down on Robinhood. A bunch of Silicon Valley boldfaced names are going to be swept up into the Twitter/Elon trial. And if Chromebooks and gaming are suffering post-Covid hangovers, is Uber a post-covid Phoenix? Sponsors: Babbel.com/ride for 60% off go.factor75.com/techmeme130 and code techmeme130 to get $130 off Links: Nomad token bridge drained of $190M in funds in security exploit (CoinTelegraph) Robinhood’s Crypto Unit Fined $30 Million by New York’s Top Financial Regulator (WSJ) Twitter is probing Elon Musk’s social circle in broad legal requests (Washington Post) As worldwide tablet shipments grow, Chromebooks face a different reality (ZDNet) Activision Blizzard Sales Fall on Weak Call of Duty Release (Bloomberg) The Morning After: Did Microsoft just neg Activision Blizzard? (Engadget) Uber reports another big loss but beats on revenue, shares pop 14% (CNBC) Learn more about your ad choices. Visit megaphone.fm/adchoices

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, August 2, 2022. I'm Brian McCullough today. Seriously, what is it with crypto bridges? Why are they so seemingly easy to hack? New York cracks down on Robin Hood. A bunch of Silicon Valley boldface names are going to be swept up into the Twitter Elon trial. And if Chromebooks and gaming are suffering post-COVID hangovers is Uber a post-COVID Phoenix. Here's what you miss today in the world of tech. To sing the old soccer song, It happened again, it happened again. Tottenham Hotspur, it happened again. Hackers have drained nearly the entire $190.90.7 million in crypto that was in the Nomad Token Bridge. Nomad raised an April

2022 seed from Coinbase, OpenC, and five other companies. So like, I guess, bridges just aren't structurally sound, quoting Coin Telegraph. The Nomad Token Bridge, appears to have experienced a security exploit that has allowed hackers to systematically drain a significant portion of the bridge's funds over a long series of transactions. Nearly the entire $190.90.7 million in crypto has been removed from the bridge with only $651 and $54 left remaining in the wallet, according to decentralized finance tracking platform defy llama. However, Nomad later suggested to coin Telegraph that some of the funds were withdrawn by White Hat friends who took the funds out with the intention of safeguarding them. So far, at least one individual

has come out and offered to act as a white hat hacker who intends to return the funds they took from the bridge. The individual going by NotifyBot on Twitter reached out to Nomad in a tweet stating, this is a white hack. I plan to return the funds, end quote. The incident has seen wrapped ether, USD coin, frax, covalent query token, hummingbird governance token, Igon, I-A-G-O-N, Dai, Jeru Wallet, Card Starter, Saddle, Dow, and Charlie three tokens taken from the bridge. Exploitors removed tokens in an unusual fashion, as each token was removed in nearly equivalent denominations. For example, transactions with exactly 202,44.725413 U.S.D.C were executed over 200 times. Nomad is a token bridge that allows transfers of tokens between Avalanche, Ethereum, EVMOS,

Milko meta C1 and Moombeme. Unlike other exploits that have become somewhat commonplace in 2022, this event so far has hundreds of addresses receiving tokens directly from the bridge, end quote. Quoting Zero X Misaka on Twitter, Nomad is definitely one of the best teams in crypto. This hack simply shows how hard it is to create a secure bridge infrastructure, and quote. And quoting DZAC 23 on Twitter, front running all of your bad nomad, Mad takes. One, this is why trustless bridges are better. The trust model wasn't compromised here. Two, this is why multi-chain equals bad. There was nothing bridge specific about the exploit. And three, nomad team equals bad? Smart good people make mistakes, end quote. Yeah, but what is it

about the nature of bridges that lets it keep happening to bridges? New York's Department of Financial Services has fined Robin Hood's crypto unit $30 million for allegedly violating anti-money laundering and crypto security regulations, quoting the Wall Street Journal. The New York State financial regulator said Tuesday that Robin Hood crypto-LLC failed to maintain and certify compliant anti-money laundering and cybersecurity programs. As part of the consent order, Robin Hood also will be required to retain an independent consultant to evaluate its compliance with NYDFS's regulations and its remediation efforts. NYDFS said it found significant failures through a supervisory exam,

and through a subsequent enforcement investigation of Robin Hood. The failures, the regulator said, resulted from shortcomings in the company's management and oversight of its compliance programs. These include failures to foster and maintain a culture of compliance and to allocate adequate resources to the programs, particularly as the company grew quickly, which exacerbated the issues. NYDFS said Robin Hood's Bank Secrecy Act and Anti-Money Laundering Compliance Program was insufficiently staffed and failed to transition in a timely manner from a manual transaction monitor, system that was appropriate for the company's size, transaction volumes, and customer profiles. Robin Hood's cybersecurity program also failed to address the company's operational risks,

and its policies weren't in compliance with the regulators' cybersecurity and virtual currency regulations, NYDFS said. Robin Hood also failed to comply with certain consumer protection requirements by not having a dedicated phone number on its website to receive consumer complaints, NYDFS said. The settlement with Robin Hood was the first cryptocurrency sector enforcement action by NYDFS, which, given New York's role as a financial center, plays an outsized role in financial regulation and enforcement. It also comes as its new superintendent, Adrian A. Harris, looks to provide more guidance for the crypto industry and to expand the regulator's team on virtual currency, end quote. By the way, we miss talking about this, but that Elon Musk Twitter trial is going to happen in October, October 17th through 21st, in fact.

And this morning, word that things could get juicy. According to legal docs, Twitter subpoenaed information about Chimath Pallihabitia, David Sacks, Steve Jervitson, Mark Andresen, and others in its Elon Musk lawsuit, quoting the Washington Post. In a subpoena Twitter issued on Monday, its legal team asked for information about a who's who of Silicon Valley elite, including investors Chimath Pallihabitia, David Sacks, Steve Jervitson, Mark Andreson, Jason Callicanus, and Keith Rebois, among others. Some of the figures have not been previously named as having any involvement in the deal, suggesting the breadth of Twitter's search for independent information to support its legal attempt to force Musk to go through with his deal to buy the company. After Musk said he was exiting the deal last month, accusing Twitter of not being forthright about the amount of spam and bots on its service, Twitter sued Musk in a Delaware business court known as a Chancery Court. Musk in turn countersued

Twitter on Friday. Twitter also issued subpoenas over the weekend to a group of banks involved in the deal, including Credit Suisse and Morgan Stanley. The subpoena obtained by the Post includes extensive requests for communications, including, quote, checklists, timelines, presentations, decks, organizational calls, meetings, notes, recordings, and other related to the deal's financing. Calacanus and Andresan were previously known to be involved in financing aspects of the deal. The Monday subpoena obtained by the Post also specifically asked for any communications about spam and bots, as well as for information about the All-In Summit 2020. a Miami event held in May by Palihappatia, Calacanus, Sacks, and David Friedberg.

The men host a popular podcast together, and the summit was a live event associated with the podcast. Musk spoke at the event via video conference. Calacanus and Sacks are known to be friends with Musk. Sacks worked with Musk when they ran PayPal, along with billionaire Peter Thiel, who is a friend of both. Rabeau was also a PayPal executive and is a friend of Teal. Jervitsyn is a longtime friend of Musk who is on the board of Musk's SpaceX, and served on the board of electric car company Tesla, which Musk helms as CEO. A subpoena also went out to investor Joe Lonsdale, an associate of Musk and Teal, who also spoke at the All-In event. He said on

Twitter on Monday, Lonsdale declined to comment beyond his tweet. There are a couple of things that Twitter is probably looking for here. The first would be anything nice Musk said about Twitter to encourage people to participate in the equity financing, said Adam Badawi, a law professor at the University of California at Berkeley, who is not involved in the case in a text. The second would be anything he said that contradicts his public statements about bots, end quote. The investors targeted by the subpoenas could be compelled to testify by the court, he added, quote, most venture capitalists have portfolios of companies incorporated in Delaware, so they probably don't want to run a foul of the courts.

Badawi said, if there are documents or conversations relevant to dispute, these subpoenas will probably bring them to light, end quote. Michael Jackson eating popcorn gif. Interesting tale of post-COVID times here. IEDC reports that global Chromebook shipments fell 51.4% year-over-year to 6 million units in Q2 of this year. Still above pre-pandemic levels, though, while tablet shipments rose 0.15% year-over-year to 40.5 million units. But again, 0.15%. That's not really growth. but this makes sense, right?

We all bought a bunch of devices for work from home and especially school from home. I know we bought Penny a Chromebook so she could attend class remotely. But, you know, those things don't really need to be upgraded very often. Quote, when the world went online because of the pandemic, tablet and Chromebook makers saw a boost in demand due to virtual schooling and work. Now that the pandemic is in the rearview mirror for many, the demand for tablets and Chromebooks is affected by the aftermath. tablet shipments experienced 0.15% growth reaching 4.5 million units shipped during the second quarter of 2022,

according to an international data corporation report. Tablets experience better than expected shipments in the quarter due to smoother deployments into education projects and several promotional sales, says IDC. Chromebook sales, however, continued to decline with year-over-year shipment growth down 51.4% and only 6 million units shipped during Q2-2020. The decline was expected, due to inventory buildup and changes in education sector demand, says IDC. Despite seeing a sharp decline in shipments, Chromebook shipment volumes are still above pre-pandemic levels. Jitesh Urbani, research manager for IDC's mobility and consumer device trackers, said that the pandemic

still brought positive change to the Chromebook market. The need for remote learning accelerated schools plans to reach a one-to-one ratio for PCs to students, and this ratio will likely continue to hold in the future. And even if PC shipments decline in other categories, Chrome will continue at these elevated levels, Urbani said in a statement, end quote. Also, did you know that the gaming industry has been suffering a post-COVID lockdown times hangover? Activision Blizzard reported Q2 revenues of $1.64 billion this quarter down from $2.3 billion year over year and $280 million in net income down from $876 million in income year over year.

Even their monthly active users were down. 361 million mouths down from 408 million mouths year over year. This maybe explains why Activision Blizzard was happy to be acquired by Microsoft. Or, remember, gaming is a hits-based business. Quoting Bloomberg, Last fall's Call of Duty Vanguard, which Activision said hasn't performed as well as anticipated, has had a ripple effect on the company's fiscal year. The game received negative reviews and faced stiff competition from new entries in the popular Halo and Battlefield series.

During the second quarter, Activision Blizzard's division released Diablo Immortal, a new mobile entry in the action series. Activision's Chinese partner Nettys delayed Diablo Immortals launch in the world's biggest mobile app market by about a month, saying it needed additional time. It was finally released on July 25th. Activision didn't give revenue figures for the new Diablo game on Monday. The video game industry has faced a sluggish year as it deals with hardware supply chain issues affecting consoles, inflation, and a lack of big hits. interest in gaming has also cooled off as pandemic stay-at-home orders lifted and people resumed outside interest and activities. Spending in the video game industry is expected to drop 8.7% this year, according to a report from the analytics firm NPD Group.

Call of Duty Modern Warfare 2, a new entry in the series will be released on October 28th, but the series will then skip 2023, Bloomberg has reported. Activision will instead release add-ons for modern warfare and other Call of Duty related content. The next mainline game in the series from the Triarch Studio is planned for 2024. Call of Duty is Activision's biggest video game series and the title's regularly top yearly sales charts. They have sold more than 400 million units since the series began in 2003, end quote. So that sounds like the Call of Duty franchise is pretty key to Activision's financial success, doesn't it? Well, not to hear Microsoft tell it, quoting in Gadget.

In a recent filing, Microsoft told news, Zealans Commerce Commission that Activision Blizzard produces no, quote, must-have games. Weird thing to say when the company plans to spend $68.7 billion to buy the gaming giant behind Call of Duty, Overwatch, Diablo, World of Warcraft, and plenty more. In the document, Microsoft said, quote, there is nothing unique about the video games developed by and published by Activision Blizzard that is a must-have for rival PC and console game distributors that give rise to a foreclosure concern, end quote. Attempting to downplay the importance of call of duty is just one of the ways Microsoft has tried to placate regulators. In February, the company pledged it would continue to make the franchise

available on PlayStation consoles beyond any existing agreements between Sony and Activision, end quote. You know, Microsoft, a white lie is still technically a lie. Finally today, though, a quick tale of COVID-Times recovery. Uber reported Q2 revenue rose 105% year-over-year to $8.1 billion. Mobility, gross bookings, rose 57% year-over-year to $13.4 billion. The stock jumped more than 10% after hours, despite Uber still reporting a $2.6 billion net loss, quoting CNBC. The company reported a net loss of $2.6 billion for the second quarter, $1.7 billion of which was attributed to investments and a re-evaluation of stakes in Aurora, and Zamado. But CEO Darikos Roshahi said in a prepared statement that Uber continues to benefit from

an increase in on-demand transportation and a shift in spending from retail to services. Uber relied heavily on growth in its Eats delivery business during the pandemic, but its mobility segment surpassed Eats revenue in the first quarter as writers began to make more trips. That trend continued during the second quarter. Its mobility segment reported $3.55 billion in revenue compared with deliveries $2.69 billion. Uber's freight segment delivered $1.83 billion in revenue for the quarter. Revenue doesn't include the additional taxes, tolls, and fees from gross bookings. Despite the increase in fuel prices during the quarter, Uber said it has more drivers and couriers earning money than before the pandemic, and it saw an acceleration in active and new driver growth. Quote, quote, driver engagement reached another post-pandemic high in Q2, and we saw an acceleration in both active and new driver growth in the quarter. Korsh Shah, he said in prepared remarks, against the backdrop of elevated gas. prices globally, this is a resounding endorsement of the value drivers continue to see in Uber. Consequently, in July, surge and wait times were near their lowest levels in a year in several

markets, including the U.S. And our mobility category position is at or near a multi-year high in the U.S., Canada, Brazil, and Australia, end quote. Uber recently announced new changes that may help it continue to attract and keep drivers. They'll be able to choose the trips they want, for example, and will be able to see how much they'll earn before they accept a trip. reported 1.87 billion trips on the platform during the quarter up 9% from last quarter and up 24% year over year. Monthly active platform consumers reached 122 million up 21% year over year. Drivers and couriers earned an aggregate $10.8 billion during the quarter, up 37% year

year over year, end quote. I learned on my run this morning that industry season two is already out on HBO Max. The first episode is already there. How come nobody told me? I'm going to be watching that tonight for sure. We're coming into some serious TV watching weeks in the coming months. That new Game of Thrones show is coming soon. That Lord of the Rings show is coming soon on Amazon video. And I saw the trailer for that Andor Star Wars show and it looked good. Like maybe it has a plot that doesn't revolve around saving slash mentoring slash chauffeuring around a child. Something that I might actually want to watch, in other words. Count me in. Busy TV fall. Talk to you tomorrow.