Tech Brew Ride Home - Wed. 09/25 – Caroline Ellison Sentenced

Episode Date: September 25, 2024

Caroline Ellison benefits from being cooperative. Has your company unknowingly hired remote workers from North Korea? What is going on with this WordPress back and forth? Why OpenAI has to let people look at their training data. And why is everyone upset at Marquess Brownlee? Sponsors: Hims.com/ride Links: Caroline Ellison sentenced to two years in prison for her role in FTX scandal (Axios) Dozens of Fortune 100 companies have unwittingly hired North Korean IT workers, according to report (The Record) The DOJ sues Visa for locking out rival payment platforms (The Verge) Automattic sends WP Engine its own cease-and-desist over WordPress trademark infringement (TechCrunch) OpenAI Training Data to Be Inspected in Authors’ Copyright Cases (The Hollywood Reporter) Marques Brownlee says ‘I hear you’ after fans criticize his new wallpaper app (The Verge) 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 Wednesday, September 25th, 2024. I'm Brian McCullough today. Caroline Ellison benefits from being cooperative. Has your company unknowingly hired remote workers from North Korea? What is going on with this WordPress back and forth? Why OpenAI has to let people look at their training data for the first time?

And why is everyone upset at Marquez Brownlee? Here's what you miss today in the world of tech. Caroline Ellison, the star witness in prosecuting FTCS founder and ex-boyfriend Sam Bankman-Fried, has been sentenced to two years in prison for her role in the scandal, quoting Axios. Ellison arguably was the most important witness in the prosecution of FTCS founder Sam Bankman-Fried, and her relatively lenient sentence reflected her cooperation. I've seen a lot of core operators in 30 years. I've never seen one quite like Ms. Ellison, Judge Lewis Kaplan said. Ellison was SBF's one-time girlfriend and also CEO of the first company he founded, Hedge Fund Alameda Research.

She talked to the government prior to Bankman-Fried's arrest and one month after FDX's collapse, according to a court filing. SBF was sentenced to 25 years in prison and has filed an appeal. Not a day goes by that I don't think about all the people I hurt, Ellison told the court. I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us. I'm sorry I wasn't brave, she added. Her attorneys said that Ellison has agreed to divest all profits she made from the scheme and continues to support prosecutors and recovery efforts. The judge, prosecutors, and defense attorneys all emphasized the value of lenient sentencing for cooperating witnesses, end quote. Google's mandiant says dozens of Fortune 100 companies have unwittingly hired North Korean IT workers in a scheme orchestrated by group UNC-5267 starting back in 2018.

Quoting the record. Google said it has been contacted by several major U.S. companies recently who discovered that they unknowingly hired North Koreans using fake identities for remote IT roles. In a report published Monday by the company's Mandient Unit, researchers describe a common scheme orchestrated by the group. It tracks as UNC 5267, which has been active since 2018. In most cases, the IT workers, quote, consist of individuals sent by the North Korean government to live primarily in China and Russia with smaller numbers in Africa and Southeast Asia. The goal is for workers to earn salaries at multiple companies generating revenue for the North Korean government and to gain pivotal access to

U.S. tech firms that can be used for further cyber tax or intrusions. The remote workers, quote, often gain elevated access to modify code and administer network systems, Mandiant found, warning of the downstream effects of allowing malicious actors into a company's intersankdom. Charles Carmacall, CTO of Mandant, said in a statement that he has spoken to, quote, dozens of Fortune 100 organizations that have accidentally hired North Korean IT workers. North Korean IT workers often have multiple jobs with different organizations concurrently, and they often have elevated access to production systems or the ability to make changes to application source code. Karma Call said, there is a concern that they may use this access

to insert back doors in systems or software in the future. Every Fortune 100 organization should be thinking about this problem, end quote. Using stolen identities or fictitious ones, the actors are generally hired as remote contractors. Mandient has seen the workers hired in a variety of complex roles across several sectors. Some workers are employed at multiple companies bringing in several salaries each month. The tactic is facilitated by someone based in the U.S. who runs a laptop farm where workers' laptops are sent. Remote technology is installed on the laptops, allowing the North Koreans to log in and conduct their work from China or Russia. The Justice Department in recent months has arrested and charged several U.S. citizens for running these laptop farms,

and in one instance found an American that used 60 stolen identities to facilitate North Korean employment at more than 300 U.S. companies. The workers earned at least $6.8 million from October 2020 to October 2020 to 23. Workers typically asked for their work laptops to be sent to different addresses than those listed on their resumes, raising the suspicions of companies. Mandiant said it found evidence that the laptops at these farms are connected to a keyboard video mouse device or multiple remote management tools, including Log Me In, Go to Meeting, Chrome Remote Desktop, Any Desk, Team Viewer, and others, end quote. The U.S. Department of Justice has sued Visa, alleging it has an illegal monopoly over debit network

markets and has tried to unlawfully crush competitors, including PayPal and Square. Quoting the Verge, we allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market, U.S. Attorney General Merrick Garland said in a statement, merchants and banks pass along those costs to consumers either by raising prices or reducing quality or service. As a result, Visa's unlawful conduct affects not just the price of one thing but the price of nearly everything, end quote. Visa makes more than $7 billion a year in payment processing fees alone, and more than 60% of debit transactions in the United States run on Visa's network the complaint claims. The government alleges that Visa's market dominance is partly due to the web of exclusionary agreements. It imposes on businesses and banks.

Visa has also attempted to, quote, smother competitors, including smaller debit networks and newer fintech companies, the complaint alleges. Visa executives allegedly feel particularly threatened by Apple, which the company has described as an existential threat, the DOJ claims. According to the complaint, Visa entered into paid agreements with potential competitors as part of an effort to fend off competition from newer entrants into the payment processing industry, these practices have allowed Visa to build an enormous moat around its business. the complaint alleges. Regulators have had their eyes on Visa for a while. In 2020, the DOJ

filed a civil antitrust lawsuit to stop Visa's $5.3 billion acquisition of Plaid, a fintech company, arguing that Visa was attempting to snuff out a, quote, payments platform that would challenge Visa's monopoly. Acquiring Plaid, the DOJ complaint claimed was Visa's insurance policy to protect against a threat to our important U.S. debit business. Visa and Plaid scrapped their plans for a merger in 2021 as a result of the DOJ's lawsuit. Payment processors are a ubiquitous part of Americans' lives and their increasingly powerful internet gatekeepers. In 2020, Visa and MasterCard stopped processing payments on Porn Hub after reports of illegal content on the site. The following year, OnlyFans announced before ultimately abandoning a plan on explicit sexual content citing payment

processors' reticence to work with the website because of its reputation as a porn platform. but the DOJ argues that Visa didn't come by this dominance fairly, and it's taking steps to stop it, end quote. Okay, so let me break down the timeline of this. Last week, Matt Mullenweg, the CEO of Automatic and co-creator of WordPress, criticized WP Engine for profiteering off the open source WordPress project, calling it a, quote, cancer to WordPress and accusing the company of contributing very little to the open source community. Then WP Engine sent a cease and assist letter to Automatic, asking Mullenweg to stop trashing the company, and now Automatic has sent its own cease and assist letter back to WP Engine, alleging unauthorized use of the WordPress trademark. Quoting TechCrunch. In its letter dated Monday, Automatic alleged that WP Engine has built a business of over $400 million in revenue

based on unauthorized use of its WordPress trademark, which Automatic claims it has the exclusive commercial rights for from the WordPress Foundation. Automatic also said WP. Engine has misled consumers into believing that there is a direct affiliation between the two companies. Automatic is also demanding compensation for the profits made by WP. Engine by using its trademarks and said that if WP. Engine doesn't amicably resolve the matter, the company has the right to file a civil injunction case. For context, here's a good summary of the WordPress community by my colleague Paul Sowers. WordPress powers more than 40% of the web,

and while any individual or company is free to take the open source project and run a website themselves, a number of businesses have sprung up to sell hosting services and technical expertise off the back of it. These include Automatic, which Malinwake set up in 2005, to monetize the project he'd created two years earlier, and WP Engine, a managed WordPress hosting provider that has raised nearly $300 million in funding over its 14-year history,

the bulk of which came via a $250 million investment from private equity firm Silver Lake in 2018, end quote. In the cease and desist letter WP Engine sent to Automatic on Monday, the company defended its right to use the WordPress trademark under fair use laws. The company added that Automatic has, quote, a profound misunderstanding of both trademark law and WordPress Foundation's trademark policy. It also said Mullenweg demanded WP Engine pay automatic, quote, a significant percentage of its gross revenues, tens of millions of dollars, in fact, on an ongoing basis for a license to use the trademarks like WordPress, end quote. Maybe this whole brouhaha is summed up best by Dar Obisancho, quote, WordPress hit the same problem other open source cloud software like Redis, MongoDB, and Elasticsearch have.

You do a bunch of R&D only for another company to host your software and provide the same or better service with your free labor. Usually, companies change licenses in response to this form of asymmetric competition. It's unusual to first demand a portion of revenue and then sue for trademark violations instead, end quote. For the first time ever, Open AI is turning over its training data for inspection. This is all in aid of discovering if copyrighted material is a part of that training data, which you figure it kind of has to be right, quoting the Hollywood reporter. In a Tuesday filing, authors suing the Sam Altman-led firm and OpenAI indicated that they came to terms on protocols for inspection of the information. They'll seek details related to the incorporation of their works in training datasets, which could be a battleground in the case that may help establish guardrails for the creation of automated chatbots.

The agreement stems from a trio of lawsuits initiated by top authors, including Sarah Silverman, Paul Tremblay, and Tanahisi Coates, accusing OpenAI of harvesting mass quantities of books across the web, which were then allegedly used to produce infringing answers by ChatGBT.B.T. It comes after the court in July dismissed a claim, alleging that the company engaged in unfair business practices by utilizing their works without consent or compensation. Previously, U.S. District Judge Ariselli Martinez-O.Gwen also tossed other claims for negligence, unjust enrichment, and vicarious copyright infringement, though the writer's claim for direct copyright infringement remains untouched. In other cases, AI companies have denied wholesale copying of works. Rather, they've argued that training their models involves development of parameters based on those works to define what things look like and how they should be constructed. OpenAI may advance that defense at a later stage of the author's case, as well as arguments that the practice of using published works to train

its systems constitutes fair use, which provides protection for the use of copyrighted material to make a secondary work as long as it's, quote, transformative. OpenAI has said that it trains its model on large publicly available datasets that include copyrighted works. Last year, it pivoted to no longer disclosing those materials in an attempt to maintain an advantage over competitors and sidestep legal liability. While it remains unknown, which works were used, the authors pointed to chat GPT generating summaries and in-depth analyses of the themes in their novels. They claim that the company downloaded hundreds of thousands of books from shadow library sites to train its AI system. Under the agreement, the training datasets will be made available at OpenAI's San Francisco office on a secured computer without internet or network access.

Any person who will review the information will be required to sign a nondisclosure agreement, sign a visitor's log, and provide identification. Use of any kind of technology will be severely restricted. No recording devices, including computers, cell phones, or camera will be allowed into the inspection room, per the joint stipulation. OpenAI may provide limited use of a computer to take notes with lawyers for the authors copying those notes on to a another device under the supervision of representatives for the company at the end of each day. No copies of any portion of the training data will be allowed. The inspecting parties' counsel and or experts may take handwritten notes or electronic notes on the provided note-taking computer in scratch files, but may not copy any training data itself into any notes, the filing states. Lawyers at the Joseph Savari Law firm are spearheading the litigation. They also represent authors

in identical copyright lawsuits against meta. In those cases, fact-discovery discovery. is slated to end on September 30th, though a request for an extension has been filed. U.S. District Judge Vince Chabria at a hearing on Friday questioned whether the attorneys can adequately represent the writers. Quote, it's very clear to me from the papers, from the docket, and from talking to the magistrate judge, that you have brought this case and you have not done your job to advance it, Chabra said, according to Politico, you and your team have barely been litigating the case. That's obvious. This is not your typical proposed class action. This is an important case. This is an important case. It's an important societal issue. It's important for your clients, end quote. The concern stemmed in

part from the lawyer's failure to conduct any depositions in the case, end quote. Which, that's odd. Finally today, this whole weird MKBHD controversy, you might have seen it. Marcus Brownlee has had to come out and say, I hear you, after criticism of his new freemium wallpaper app panels over privacy concerns, paying $50 per year for full access, and more. Quoting the Verge. Brownlee revealed the new app as part of his iPhone 16 review on Monday, a video that's usually among the biggest of the year. But a flood of criticism about the panels app quickly overshadowed comments about the new iPhone. Part of building in public is getting mass feedback immediately, which is pretty dope, almost exactly like publishing a YouTube video, Brownley said.

Panels is meant to offer access to a curated selection of, quote, stunning full resolution wallpapers from digital artists, but fans aren't happy about the subscription that comes along with it. It costs $49.99 per year or $1199 per month for a panels plus subscription, which lets you download all the wallpapers in the app in high resolution. You can still access a more limited selection of wallpapers for free, but you can only download them in standard definition and have to watch two ads first. As far as pricing, I hear you, it's our own personal challenge to work to deliver that kind of value for the premium version, Brownlee said on X. I'll also be dialing back ad frequency for the free experience. Users on the iOS version of panels also pointed out some

privacy concerns as the app asks to track your activity across other websites and apps and also appears to use location data. Brownley says these data disclosures are, quote, likely too broad and that we'd never actually, actually ask for your location, internet history, et cetera, end quote. He says the panel's team is working to fix the issue. The version of the version. The version of reached out to Brownlee with a request for comment but didn't immediately hear back. Brownlee has increasingly been dabbling in building his own products after a decade plus as a reviewer. He joined the accessories maker Ridge as chief creative partner and worked on a sneaker collaboration with Adams. Brownley says this new wallpaper app is built from scratch and will

split profits with the digital artist featured in the app 50-50. The app is, quote, starting off as a wallpaper app now, Brownley says, but he promises it will be pretty consistently improving over time, end quote. Yes, I will do that Metacconnect event tomorrow. Talk to you then.