Tech Brew Ride Home - Tue. 12/13 – SBF Arrested And Charged

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, December 13th, 2022. I'm Brian McCullough today. SBF is under arrest. The feds have charged him. The SEC has charged him. The CFTC has charged him. CZ continues to try to reassure Binance users over withdrawals. I think it's time I update you on the health I'm seeing on the Twitter platform.

Starting point is 00:00:54 And what is open source intelligence and why is the U.S. behind in this modern type of spycraft? Here's what you miss today in the world of tech. Sam Bankman-Fried has been arrested in the Bahamas. He is under indictment and could be extradited soon. Sources say that federal prosecutors from the Southern District of New York have charged SBF with wire fraud, wire fraud conspiracy, security fraud, security's fraud, conspiracy, and money laundering. Supposedly, this indictment will be unsealed today, probably as I'm speaking these words. Separately, the U.S. Securities and Exchange Commission has charged SBF with defrauding investors. and concealing the diversion of FTX customer funds to Alameda, while raising more than $1.8 billion since at least May 2019 from investors. And now, the Commodity Futures Trading Commission has also

Starting point is 00:01:48 sued SBF, FTX, and Alameda research for violations of commodities laws. This all comes as yesterday, FTC's current CEO, John Ray, the guy who was brought in to try and clean things up, testified to the House of Representatives that FTCX and Alameda did, in fact, commingle customer assets. Insiders were paid more than $1 billion. FtXUS was not run separately, a lot more. The show notes, of course, have links to stories outlining all of this, but what I want to do, actually, is quote from a tweet thread from Jim Edwards from Insider. He read the entire SEC complaint this morning, and I'm just going to pull out these nuggets. These are all Edwards' tweets summarizing what is in the SEC complaint, quote. From the start, Bankman-Fried, improperly diverted

Starting point is 00:02:34 customer assets to his privately held crypto hedge fund Alameda and undisclosed venture investments, lavish real estate purchases, and large political donations. FDX ran into trouble in May when crypto prices collapsed and it couldn't repay its loans without taking customers' assets. It was pretty much over by the summer of 2022, and yet with disaster looming, SBF and other FTX executives began taking hundreds of millions in loans for themselves, the SEC claims. Sam Bankman Fried took $1.4 billion for himself. the SEC says. Two other FDX executives took $544.4 million and $224.7 million, respectively. The personal loans made FTCs even more shaky at a time. Sam Bankman-Fried already knew it was shaky, the SEC says.

Starting point is 00:03:19 SBF raised $1.8 billion and invested it in 90 entities, mostly in the U.S. He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments among other uses. FDX customer funds were used and commingled with Alameda indiscriminately, the SEC says. Disaster came when they tried to separate $8 billion that Alameda ended up owing FTX. Binance's sale of its entire FTT stake was the final straw. The fall came fast as customers withdrew $5 billion in funds in a single day. Within 48 hours, it was all over. Notably, SBF is the only defendant in this SEC action. That doesn't mean further defendants won't be charged, but it's interesting that the SEC is doing this one

Starting point is 00:04:04 by one. Also, it's a civil action, not a criminal charge, so the SEC is seeking disgorgement of his gains and restitution, etc. Criminal charges are presumably coming from the Southern District of New York later today, end quote. I am not alleging anything about how this might rhyme with that, but Changpeng Xiao is seeking to reassure Binance users once again concerning this time. USDC outflows from the Binance platform, saying that users can, quote, withdraw any other stable coin for the time being. Nansen research shows that $1.6 billion in ETH has flown out from the Binance platform in the last 24 hours, quoting the block. After acknowledging that Binance has seen an increase in USD coin withdrawals,

Starting point is 00:04:56 Zhao explained that, quote, to swap from Pax BUSD to USDC requires going through a bank in New York in USD, and that, quote, the banks are not open for another few hours, end quote, at which point Binance expects the situation to be, quote, restored. Some $1.6 billion on Ethereum has been withdrawn from the exchange over the past 24 hours, according to Nansen researcher Sandra Leo. With USDC liquidity proving to be an issue on Binance Tron, founder Justin Sun, deposited 100 million USDC to the exchange. Seemingly dismissing concerns that customers may have any problems removing funds from the exchange,

Starting point is 00:05:31 Zhao encouraged users to, quote, feel free to withdraw any other stable coin, end quote. adding a folded hands emoji. Zhao also noted that no margin or leverage is involved in the stable coin conversions, end quote. We discussed this last Friday, but confirmation from Censor Tower, Lenza, has topped the U.S. App Store charts with 3.6 million installs in December alone. The app has seen 2.6 million installs globally in December so far, up 600% from the end of November, quoting TechCrunch.

Starting point is 00:06:08 The popular photo and video editing app recently went viral over. its new Magic Avatar's feature powered by the open source stable diffusion model, allowing users to turn their selfies into styled portraits of themselves as sci-fi, anime, or fantasy characters, among other artistic renderings. Consumer demand for the app and for AI edits more broadly has now pushed numerous other AI apps into the U.S. App Store's top charts. As of Monday, the top three spots in the U.S. App Store are all held by AI photo editors and even more AI art apps are newly ranking in the top 100.

Starting point is 00:06:40 In fact, eight out of the top 100 apps by downloads on the U.S. App Store were AI Art apps during the December 1 through December 11th timeframe the firm's analysis found. Lenza is top, but following Lenza, the generic sounding app AI Art AI Image Generator has keyword stuffed its app's name to rank in second place, promising AI avatars and AI art from text. Don AI avatars is in the number three position, offering AI avatars that can be changed with a text prompt. As of the time of writing on December 12th, the two apps appear to have swapped places. AI art has seen around 1.7 million global installs during December 1 through 11, up 229% from the 71,000 it saw during November 20th through 30th. Meanwhile, Dawn also saw around 1.7 million installs, sensor tower set up from 28,000 it saw in the late November time frame. These are closely followed by Wonder AI Art Generator at number 10, which also offers AI avatars and AI art from text prompts.

Starting point is 00:07:39 While it's common for app makers to congregate around a trend by updating their app's name and description or by bidding on keywords and Apple's app store search ads, it's remarkable just how many AI apps have now made it into the top charts in the wake of Lenza's success. This signals something more than a flash-in-the-pan trend, as the general conversation these days is around how much AI has been improving. It's clear the tech has a long way to go to be ethical and responsible, but those concerns for the time being aren't dampening consumer interests in this growing category, end quote. Quick review of the AMD radion RX-7900 XTX and XT, Ars Technica says the XTX beats the Nvidia RTX 4080 for $200 less in terms of cost, only paling in comparison when it comes to power efficiency and ray tracing, although they claim the XT does come close. Quote, at $899 and $999,000, the RX-7900 XT and RX7900 XTX,

Starting point is 00:08:42 are still objectively expensive, but because they're not a further escalation over the starting price of the RX-6900 XT, both cards are wet-passed for a bargain in today's GPU market. If you're looking for cards that can consistently handle 4K gaming at 60 frames per second and higher, these GPUs do it for less than NVIDIA's latest, and they're good enough and fast enough that they'll hopefully start driving NVIDIA's prices down a bit too. Nvidia still retains some key advantages that complicate an easy David and Goliath narrative. These GPUs don't quite feel like a rise in moment for AMD's graphics division, a turning point where a scrappy AMD manages to make a big dent in the market share of an

Starting point is 00:09:22 entrenched, complacent competitor. But if you can actually find them for their starting prices, they're the first sign we've had in a while that some relief is coming for high-end but price-conscious PC gamers. The big question is how much you care about ray tracing? If the answer is a lot, AMD still can't beat NVIDIA even at the 4080 tier. The radiance are solid 1440P cards for ray tracing heavy games, but the experience at 4K is good in some games and poor and others. If the answer is not much, then the 7,900 series gives you as good or better performance than the 4080 in games without ray tracing, with none of the logistical problems like the connector or the gigantic case-busting heat sink and fan assembly. And at 899 and 990,

Starting point is 00:10:06 $99, they handily eviscerate the handful of new price-inflated 3080s and 3080s that some retailers are still offering at and well above those prices, end quote. Elon Musk has reiterated that Twitter blue subscribers will see half the number of ads as a part of their subscription and that Twitter plans to offer a higher tier with zero ads sometime in 2023, but also quoting TechCrunch. Twitter will remove all legacy blue checkmarks in a few months, according to a tweet from CEO Elon Musk. The way in which they were given out was corrupt and nonsensical tweeted Musk. Before Musk bought Twitter checkmarks were used to verify individuals and entities as active, authentic, and notable accounts of interest. On Monday, the social media platform

Starting point is 00:10:54 relaunched its Twitter blue subscription plan after a dicey first attempt. The subscription gives anyone willing to shell out $8 per month or $11 per month on iOS because, screw you, Apple Store, a blue checkmark next to their name, fewer ads on their timeline, boosted posts, and other features. week. Many blue checkmark holders have been seeing a pop-up when they click on their blue checkmark that reads, this is a legacy verified account. It may or may not be notable, end quote. So there's that, but remember when I promised I would keep track of the health of the accounts that I follow for this show, as a proxy for how alive or dead Twitter is, at least for the purposes of doing the show, not in terms of glitches or downtime, but just the quality of the chatter, as we

Starting point is 00:11:36 call it, the quality of the discourse that I draw from to do this show. Well, I'd say things have taken a turn in the last week. I'd say we're down to Twitter being 75% alive to keep with that sort of ranking. This week has seen some high-profile accounts in tech that we quote from every day publicly swear off Twitter. Casey Newton and Eli Patel are among them, but there are about a dozen other prominent tech folks who have said they will no longer tweet just in the last 48 hours. to a person. They've all been mentioning Elon's personal tweeting this past weekend as the straw that broke their proverbial backs. Of course, it remains to be seen if anybody sticks to this, but I should note a few fairly prominent Wall Street and finance accounts I follow have jumped ship

Starting point is 00:12:22 as well. I actually follow Wall Street folks pretty closely for the show, and they're a different breed than the tech or founder or VC accounts I follow. And even though I'm not in that world, it's been really interesting to me to see how negative Wall Street folks have been about Elon specifically all of the sudden. I've said before that I feel like the biggest part of my job with this show is to tell you what Silicon Valley types are really thinking about the headlines, behind the headlines that I read to you every day. But in this case, I actually think it's important to maybe point out the sort of conventional wisdom I'm seeing outside of the valley, specifically Wall Street. Like, aside from the political people, the only people I still see defending Elon at this point are Silicon Valley types. The Wall Street types, they are absolutely over him. And it's not even for political reasons or even business reasons. They just kind of don't like him. They think he's a child. They think he's a dick. This is not me agreeing or disagreeing with that opinion, but this is me saying to Silicon Valley types, if you go out into the world, talk to normal folks, folks outside the valley, and spell out. the Elon worship that is still sort of conventional wisdom inside the tech bubble, there are a lot of people, normal people, that will find you suspect by doing that at this point. Outside of the bubble,

Starting point is 00:13:42 it's not that people find Elon toxic or controversial, it's that they find him ridiculous now. Like if I went on the Compound and Friends podcast, the biggest Wall Street podcast around, and I tried to say, oh, Elon's great, he knows what he's doing, he's playing 11th dimensional chess that you can't see. Like Josh and Michael would probably laugh me out of the room. Just saying. Finally today, interesting thing that I was unaware of. There are reasons why governments like the U.S. are worried about TikTok potentially surveilling their citizens, and this is one of the biggest ones. It's because a major trend in international spycraft these last few years is something called open source intelligence, basically spying by hoovering up publicly available data.

Starting point is 00:14:34 And this piece in the Wall Street Journal says that China is ahead of everyone else in this new form of spycraft. Quote, supercharged by the Ukraine War, the rise of open source intelligence or Auxent, which compromises everything from commercial satellite imagery to social media posts and purchasable databases, poses revolutionary challenges for the Central Intelligence Agency and its sister spy agencies, according to former senior officials, who spent decades working in those agencies classified spaces. China has the largest, most focused effort, while U.S. spy agencies with deeply ingrained habits of operating in the shadows have been slow to adapt to a world in which much of what is important isn't secret, according to dozens of officials and many studies. By some estimates, more than 80% of

Starting point is 00:15:16 what a U.S. President or military commander needs to know comes from Auxent, and not from foreign agents, spy satellites, or expensive eavesdropping platforms. That means officials said that the CIA and other agencies need to give priority to vetting and sifting through troves of Auxent. That ranges from YouTube videos to publicly posted genetic databases or else risk missing the next threat or looming global crisis, and they need to do so faster than U.S. rivals, principally China. U.S. intelligence agencies could miss signals of the next global pandemic that are hiding in plain sight. China could leap ahead on technologies such as quantum computing and artificial intelligence while using public data to identify U.S. intelligence officers. And the $90 billion U.S.

Starting point is 00:15:58 intelligence community could see its role diminished as private companies generate more intelligence insights that a U.S. president and his top advisors would want to know, end quote. The piece actually begins by outlining how an eight-person intelligence team of analysts at multinational chemical company Dow successfully called the Russian invasion of Ukraine two weeks before it happened, not because they had spies on the ground, but because they were watching satellites and signals that are just out there in the open. And there have been numerous examples of social media posts on both sides of the Ukraine war informing decisions made by both armies. So you can see how having access to the firehose of data from a social network could give everything from locations of

Starting point is 00:16:38 people to the sentiments of entire populations. And that might be valuable for this sort of surveillance by a nation state. Quoting again, China puts a premium on Auxent and has an estimated 100,000 analysts tasked with scouring scientific and technical developments globally, mostly in the U.S., according to research by William Hannes of Georgetown University. The system for gathering such intelligence is centrally directed but, quote, functions at all levels in separate but interlocking organizations. Mr. Hannes and Hui Mi Chang wrote in a 2021 paper. We don't have a comparable effort, said Jason Matheny, former head of the U.S. Intelligence Advanced Research Projects Activity and the president of Iran Corporation, also a federally funded research organization.

Starting point is 00:17:21 It really is an immense enterprise in China, he said, and quote. Hey everybody, but especially those of you who live in the San Francisco area, I am going to be out there at the end of January. Specifically, I'm going to be doing a show at San Francisco Sketchfest, a comedy show. I'm going to be on the panel of the show where Moshe Casher's Hound Tall podcast is being recorded. Hound Tall is where they bring on an expert in a subject and then talk about that subject as a bunch of comedians. crack wise about the topic. The subject this time will be the history of the internet. The comedians will be Moshe Kassher, Baron Vaughn,

Starting point is 00:18:09 Janine Garofalo, and John Ross Bowie, and the expert, in quotes, will be me. The show will be Saturday, January 28th at 9.30 p.m. at the Swedish American Hall on Market Street. Final link in the show notes is to purchase tickets to this show. Please come out, purchase tickets. Hopefully Chris and I will be able to do a separate meetup before the show. if any listeners are interested, hopefully somewhere near the venue.

Starting point is 00:18:34 But also, I would just love it if the mutant podcast army showed up in force at the show. When I get introduced and they mention this podcast, wouldn't it be great to have, like, half the audience be us and we make our presence known with a big cheer. The comedians would be like, who are all these nerds? I'll have more details about all of this in coming weeks, especially with regards to the meetup. But for now, order tickets. Come see me as I get as close to professional comedy as I'll ever get.

Starting point is 00:19:00 It's sort of a bucket list item of mine since I'm a huge comedy nerd. So come support. Talk to you tomorrow.

Tech Brew Ride Home - Tue. 12/13 – SBF Arrested And Charged

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