The Breakdown - Elon Bans Journalists, Kills Spaces and Asks if He Should Quit

Starting point is 00:00:00 I do think to many of the crypto community's point that he is showing just how problematic it is to have these fundamentally important institutions ultimately ruled by a single person. There is a lot of reimagining that needs to happen. And it's not just a private corporate discussion, I don't think. I don't think you can apply the old models of how we think about corporate governance and its relationship to civic responsibility to these platforms that accrue such huge amounts of power. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.

Starting point is 00:00:39 The breakdown is sponsored by nexo.io, Circle, and Cracken, and produced and distributed by CoinDesk. What's going on, guys? It is Tuesday, December 20th, and today we are talking about Elon, Musk, and Twitter. Before we dive into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or If you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Also, today I am thrilled to welcome CryptoWatch as an additional sponsor. CryptoWatch is the last crypto app you will ever need. Track prices up to two times faster than other apps.

Starting point is 00:01:17 Catch market movements as they happen with powerful charting tools and custom alerts, sink your portfolio and trade across multiple exchanges. And of course, stay in the community conversation with leading influencers on CryptoWatch social. Get everything you need to gain a competitive edge with the CryptoWatch app. Visit Google player, the Apple App Store to download Crypto Watch today. All right, so before we get into the main show, a quick follow-up from yesterday. We discussed the apparent shit show that was Sam's hearing from the Bahamas. And there are just so many layers of weird in this. Ben Armstrong, aka Bitboy, had a whole crew down there in the Bahamas who were trolling Sam at the hearing and talking about some woman

Starting point is 00:01:53 who filed criminal charges over the weekend. Anyway, where we ended off was the judge sending Sam back to jail calling it a wasted day, but apparently it wasn't entirely wasted, because before he left, Sam was allowed to place a phone call to his U.S. legal team. One of the issues raised in Monday's hearing was that Sam wanted to view the indictment before he agreed to extradition. Following the hearing, both the New York Times and Washington Post reported that Sam's Bahamas-based defense attorney said that Sam had now agreed to extradition, stating that we as counsel will prepare the necessary documents to trigger the court.

Starting point is 00:02:24 However, the strangest twist in the story came on Monday evening, when Fox News reported. reported that Sam had cut a deal with U.S. prosecutors in exchange for waiving his right to contest extradition. Eleanor Turrett, a reporter at Fox, tweeted, quote, Sam Bankman-Fried has agreed to be extradited to the U.S. and will be arriving either tonight or tomorrow. Two sources have informed Fox News he's expected to be released on bail per preconditions, his lawyer made with the SDNY prosecutors in exchange for agreeing to extradition. Bagman-Fried will be arraigned at a federal court in Manhattan where he'll have a new bail hearing. While multiple sources say he's expected to be released on bail, it will ultimately be up to the judge to decide.

Starting point is 00:03:01 Now, this fact that whatever the SDNY has indicated to Sam's lawyers, it will still be up to a judge to decide about bail, has not stopped tons of people, including politicians from speculating about a potential deal. For example, Bill Huizenga, a congressman from Michigan, said, A, U.S. government must seize his passport to make sure he's not a flight risk again. B, bail needs to be significant and commensurate with the crime. C, while not practical or possible for him, think a dog must bark. he ought to be limited in his social media and internet usage. Now, frankly, if you're the judge and you're hearing this case, there isn't just the issue of whether Sam's a flight risk or not. There's also the issue of how Sam on bail could potentially access crypto networks to move around any secreted funds. And frankly, I think that's just as big

Starting point is 00:03:42 of an issue in this case. Anyway, that's the update on that situation, and I'll keep you posted as it evolves. Now, yesterday I mentioned the weekend dust up about Elon, but I didn't have the time to cover it, so today that's what we're going to do. As I always say, this show is about big picture power shifts. So how does that apply to Elon and Twitter? Well, one way to look at everything that has been going on with Twitter is as a cartoony sideshow of a media-obsessed billionaire, and I wouldn't fault you for that take. However, regardless of what you think of the personalities involved, or personality at the top, really, there is sort of no denying how essential Twitter is as an information source. For all of the years of all of the bluster of people being ready to leave Twitter

Starting point is 00:04:21 for some reason or another, it has remained an essential, vital digital town square. However, for the first time, the threats to leave are feeling a little more real, and they might be driven by real decisions being made by the current leadership. I think that a seismic shift in the global communication landscape is in the category of big-picture power shifts, so let's try to catch up. The latest round of chaos at Twitter started on Thursday when Elon Musk modified Twitter's moderation policy following a security incident. The previous night, Elon's child had been in a car that was followed by a stalker. Over the next day, Elon blamed the incident on an account, called Elon Jet, which tracks Elon's private jet in real-time, publishing its location to a Twitter

Starting point is 00:05:00 account. Although the account is published using only publicly available information, Elon considered this to be, quote, real-time doxing and banned the account as well as suspending numerous journalists who are covering the story. Now, holding aside anything you think about moderation policies or this specific, as just a human being, I totally understand Elon's response. If my kid was in a car that had been followed by a stalker who eventually drove it to the side of the road and then climbed on the car, I'd burn down the world. So again, on a human level, I understand, but of course, we're not just talking about one specific incident, we're talking about the moderation policy of a network of tens of millions. Now, Elon later posted

Starting point is 00:05:40 a Twitter poll, asking his followers to vote on how long the suspension should be before reactivating accounts by the end of the weekend. On December 18th, he tweeted, any account doxing real-time location info of anyone will be suspended, as it is a physical safety violation. This includes posting links to sites with real-time location info. Posting locations someone traveled to on a slightly delayed basis isn't a safety problem, so it's okay. But last night, car carrying Little X in L.A. was followed by Crazy Stalker, thinking it was me, who later blocked car from moving and climbed onto Hood. Legal action is being taken against Sweeney and organizations who supported harm to my family. Now, the big issue here wasn't so much the outwore about the Elon Jet account itself.

Starting point is 00:06:19 I think other folks had a similar reaction that I did to the specifics of this case, and were sympathetic to the idea that this might be a physical safety violation. It was more the fact that journalists were banned for asking questions. What happened was that when those journalists were suspended, several of the most anti-Elon journalists discovered that despite being suspended from normal Twitter, they could continue taking part in Spaces, which is the live voice streaming feature. During a live discussion of the new moderation policy around doxing that was happening on Spaces, Twitter shut it down. And it wasn't just that particular Twitter Spaces room, but Twitter Spaces was entirely removed from the platform. Basically, it appeared that Twitter

Starting point is 00:06:57 could not amend the code to ensure that suspended accounts were unable to access Twitter spaces fast enough, so instead pulled the plug on the whole feature. Anyways, it was this banning of journalists that elicited the biggest response. Coffeezilla, who's recently been all over the Sam Bankman-Fried case, tweeted on December 18th, banning journalists is cowardly and a dangerous precedent. Elon should live by his principles instead of becoming the same boot on a different foot. crazy how many of the same people who disagree with me now were celebrating my view earlier this year that Andrew Tate should not be banned. Kind of wild to be arguing with the free speech folks about free speech. Now this was just the first incident of a weird weekend. Adding further confusion,

Starting point is 00:07:36 late on Saturday night, Twitter updated its terms of service to ban links to several rival social media platforms. Called the promotion of alternative social media platforms policy, under these new terms, users could be banned for simply posting a link to their Instagram or Macedon accounts. The terms even ban the use of link tree, a popular aggregator site, which allows users to have a single place to show all social media profile links. The move appeared to be an attempt to stop people leaving Twitter for alternative platforms, but the application of the moderation rules appeared to be being done in an extremely heavy-handed manner, from the policy themselves, as it was announced. What is a violation of this policy? At both the tweet level and

Starting point is 00:08:14 the account level, we will remove any free promotion of prohibited third-party social media platforms, such as linking out, i.e. using URLs, to any of the below platforms on Twitter or providing your handle without a URL. Prohibited platforms. Facebook, Instagram, Macedon, TruthSocial, Tribal, Post, and Noster. Third-party social media link aggregators such as link tree, link bio. Examples. Follow me at username on Instagram. Username at mastodon.com.com. Check out my profile on Facebook, Facebook.com slash username. So again, this is not just putting those links in your profile. This is also in a single tweet. Now, a lot of people flew off the handle about this, and I think rightly so. One of them was Ycombinator co-founder Paul Graham, who said, this is the last draw. I give up.

Starting point is 00:08:58 You can find a link to my new Macedon profile on my site. To that, he was quickly suspended. And the outcry was pretty immense. M.J. A.K. Morgan is a wizard said banning Linktree right now across the board is a huge mistake. It's wrong to assume people primarily use it to promote their profiles on other platforms. This is going to have devastating consequences for small business, event sales, website traffic, fundraisers, etc. Until you can promote more than one link at a time in your bio, this is just really bad. Ella Dawson wrote, imagine thinking the true threat to your business is Linktree. In an ecosystem where innovation is the norm, it's the basics that are in the spotlight. Nexo is a company that has never put the safety of clients' funds in question. With over 50,

Starting point is 00:09:42 50 global licenses, $775 million in insurance, and a real-time audit of custodial assets. Nexo sets an example for security standards in the industry. Apart from keeping their 5 million clients safe, Nexo has kept building. They've just announced their non-custodial smart wallet. Visit nexo.io. That's nexo.io and sign up today. This episode is brought to you by Circle, the sole issuer of USDC, and a leader in crypto that's held to a higher standard. USDC is a fast, safe, and efficient way to send money around the globe.

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Starting point is 00:11:12 Download the Cracken app on Google Play or the Apple App Store or visit crackin.com slash breakdown to join. Belaji Shrinivasa wrote, this is a bad policy and should be reversed. The right way to compete is to build a better product, not to restrict the use of your product. Rapper Chico wrote Elon Musk banned Linktree, which is literally faking with people's money. Building a following on one platform can help you build up another. The free speech absolutus is trying to ruin competitors when he's really just shitting on the users of this app. Now, by Sunday night, Twitter reversed this decision and reinstated users amid widespread complaints. Instead, directing the bans only towards accounts whose, quote, primary purpose is the promotion of

Starting point is 00:11:55 competitors. The tweets announcing the policy were deleted, along with records of the policy on the Twitter website. The policy reversal was accompanied by a tweet from Elon saying, quote, going forward, there will be a vote for major policy changes. My apologies won't happen again. But of course, the damage was done. To many, Elon's antics at Twitter have moved from being mildly annoying but largely ignorable or even comedic to being actively hostile to many users. Now, alongside the policy change, Elon posted a poll asking followers, should I step down as head of Twitter? I will abide by the results of this poll. The poll ran for 12 hours and during that time, several contenders for CEOs stepped up, including Snoop Dogg and podcaster Lex Friedman.

Starting point is 00:12:36 In response to Lex Friedman's suggestion that he be allowed to, quote, run Twitter for a bit, Elon responded, you must like pain a lot. One catch. You have to invest your life savings in Twitter, and it has been in the fast lane to bankruptcy since May. Still want the job? Now, when all was said and done, the users of Twitter did indeed say that Elon should step down as the head. 57.5% of the 17,502-391 votes said that he should step down. Of course, that hasn't happened, and subsequently Elon has said that these major decision polls will be only Twitter blue users, and he's indicated that he thought that maybe bots were voting on this as well. But still, I think for our purposes, the more interesting thing than that specific poll is the idea that

Starting point is 00:13:14 all of this is creating motivation for people to join a decentralized alternative. Remember, the prohibited platforms that were called out in that initial policy were Facebook, Instagram, sure the biggies, Massadon, a federated network, truth social, Trump's network, tribal post, and Noster. Now, notable among these seven was Noster, which is a decentralized Twitter alternative that uses combinations of private key cryptography and peer-to-peer networking principles to achieve a censorship-resistant social media platform. While it's still pretty early days for Noster, the platform gained some notoriety last week when Jack Dorsey announced that he would be funding it with a 14 Bitcoin grant to aid development. mentioning such a small upstart platform

Starting point is 00:13:53 alongside already established competitors like Mastodon was an interesting insight into how Twitter leadership views its competitors. One of the interesting quirks of Noster is that it is just an open source protocol that anyone can use, rather than a platform owned and controlled by a company. developer Fiatjaf told CoinDesk this week that part of his motivation was to return to some of the original internet principles of free and open communication. Quote, the old internet where freedom was winning is being killed and new supposedly free platforms won't work in the long run. Jack Dorsey's interest was also a boom for the platform. The developer said money isn't really the most impactful thing, but the fact that Jack used it

Starting point is 00:14:26 and talked about it is more important. Now what about Macedon? While some have seen it as the main rival to Twitter, its federated model doesn't really offer the promise of permissionless social media. Instead, it replaces the central moderation of Twitter with a multitude of connected servers that each function effectively as a fiefdom with its own petty chieftain, presiding over individual moderation decisions and armed with pretty significant surveillance tools. Still, what's really notable is how much people in the crypto and Web3 space are taking interest in this growing battle for the Digital Town Square. In late November, Vitalik Buterin, the creator of Ethereum, posted his list of social platforms

Starting point is 00:15:02 he was trying out, including Mastodon, Farcaster, and Lens. Of the competition for users, he said, let the best socials win. Asterisk, there will be multiple winners. There has been a lot of chatter about this from the crypto crowd. Jake Chervinsky, the head of policy at the Blockchain Association, wrote free speech for me, but not for thee, the seemingly inevitable end state for any forum under the control of a single authority. This is why we decentralize.

Starting point is 00:15:25 Nairaj Agrawal, who runs Coms for Coin Center, says Elon is secretly being based for playing the part and revealing why having a failable human in charge of a public commons is unsustainable. I see your game, Mr. Musk's 60 chess indeed. Software engineer Avi Aryan writes, Elon buying Twitter was a net positive anyway. If Elon did a good job, free speech has a place. If Elon f***es up, everyone moves to a decentralized town square and never looks back. Win-win. Now, whatever the decentralization set thinks, they're not the only ones who are being galvanized by Elon's seeming capriciousness. For example, Senator Elizabeth Warren is turning up the heat on Elon as well. She recently wrote to the Tesla Board of Directors reminding them of their

Starting point is 00:16:03 duty to ensure that Elon does not treat the publicly listed electric vehicle company as a, quote, private plaything. Her letter put the board on notice saying, quote, your legal responsibility is to serve as a prudent fiduciary for shareholders and to oversee the management of Tesla's business. That responsibility includes ensuring that Mr. Musk is an effective CEO and that he fulfills his legal obligations to act in the best interest of Tesla and all of its shareholders, not just himself. The fact that Mr. Musk was until recently the world's richest man does not absolve him of those legal responsibilities or provide assurances that he will meet them. It remains unclear whether the Tesla board is adequately governing the company or if it has established clear rules and policies

Starting point is 00:16:39 to address the risks to Tesla posed by Mr. Musk's dual roles. Warren was particularly concerned with reports that Musk brought in a team of 50 Tesla engineers to work on issues at Twitter, which could be seen as a misappropriation of Tesla's resources and a violation of SEC regulations on corporate governance. Warren asked for comprehensive information on the steps taken by the Tesla board to monitor these conflicts of interest. And to be clear, it's not just Warren who's concerned about this. Shareholders seem concerned as well. Musk has sold 40 billion in Tesla stock this year, even as its stock has plummeted by 23% so far in December and is off more than 60% overall. Major Tesla investors are now publicly calling out Elon for his lack of care and attention as CEO.

Starting point is 00:17:21 Ross Gerber, the CEO of Gerber-Kawoski wealth and investment management, who is a big Tesla Bull, earlier this week tweeted, Elon has now erased 600 billion of Tesla wealth and still nothing from the Tesla board of directors. It's wholly unacceptable. Later in the week, he said he would run for a seat on the Tesla board, telling Reuters, I work with maybe a thousand investors. Seeing the pain everyone is going through the disappointment with Elon on happiness, it was just the time for somebody to stand up and say what needs to be said. Leo Co-Gwan, a major individual Tesla shareholder tweeted last week, Elon abandoned Tesla and Tesla has no working CEO. Tesla needs and deserves to have working for.

Starting point is 00:17:55 full-time CEO? What Tesla board of directors should do? Do nothing? Matthew Tuttle, the CEO of Tuttle Capital Management said, the whole situation is just weird and weird as being kind. If I was a long-term investor, I would stay away. You never know what Elon is going to do. I think that pretty well sums up the situation. For my part, I am certainly not rooting for Elon to fail. I do not think there is yet a good model of how these Web 2 social networks that have accrued so much power relative to other human institutions should actually be governed. We are still in the theorize and experiment phase and all we have basically are examples of what not to do. I also have no personal bones against Elon so I don't have any sort of shot in for a desire to see him not succeed.

Starting point is 00:18:42 But I do think to many of the crypto community's point that he is showing just how problematic it is to have these fundamentally important institutions ultimately ruled by a single person. There is a lot of reimagining that needs to happen. And it's not just a private corporate discussion, I don't think. I don't think you can apply the old models of how we think about corporate governance and its relationship to civic responsibility to these platforms that accrue such huge amounts of power. But whatever the case, the experiment is live, it's on, and it's going to stay interesting. I'm likely not going to follow it beat by beat as I do for many stories in the crypto and Bitcoin ecosystem. But to the extent that there are these sort of big, major pivotal moments that

Starting point is 00:19:24 involve issues of free speech, I will do my best to keep you updated. For now, I want to say thanks again to my sponsors, nexus.io, circle, crackin, and crypto watch. And thanks to you guys for listening. Until tomorrow, be safe and take care of each other. Peace.

The Breakdown - Elon Bans Journalists, Kills Spaces and Asks if He Should Quit

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