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Congress

Wyoming’s Pro-Bitcoin Senator Joins Senate Banking Committee

February 4, 2021 by Blockchain Consultants

Pro-bitcoin senator Cynthia Lummis has been appointed to the Senate Banking Committee. Yesterday, Wyoming TV news confirmed the appointment, stating in a release that the Republican Senator from the Cowboy State would join the committee. She’s also billed to join the Commerce, Science, and Transportation Committee and the Public Works Committees.

Lummis Wasting No Time

Kumis has vowed to take her committee assignments seriously, particularly with her new role as part of a major financial overseer. The freshman Senator added that she would be working to improve financial innovation, drawing inspiration from efforts in her home state.

The Senator also explained that she is focusing on advancing the discussion around digital asset regulation – a project which she hopes to bring to the limelight in her time on the Congressional committee.

As part of her efforts, Lummis announced this week that she would launch a Financial Innovation Caucus to help educate some of her colleagues on cryptocurrencies. Speaking with the crypto hedge fund manager and analyst Anthony Pompliano, Lummis explained that the caucus would focus on blockchain and crypto education.

Amongst other things, the objective is to ensure that all crypto-related policies and legislation from Capitol Hill come from a place of nuanced knowledge and not just irrational fears and hearsay.

As the Senator told Pompliano, many Congress members have been fed lies about cryptocurrencies and their use in criminal activities. The caucus will focus on combating many of these lies, pointing out that crypto-enabled crime pales compared to those done with fiat currencies and other conventional settlement methods.

Hail the Biden Administration

Lummis also revealed that she had been engaging with Janet Yellen, the current Treasury Secretary, over progressive Bitcoin regulations. While Yellen has given mixed signals about her crypto stance, the Senator believes the policymaker is keeping an open mind about digital assets.

“It’s going to take a lot of work to get to where we can have an open dialogue that is free from the clutter of seeing this knee-jerk reaction to the concern that all crypto is subject to criminal activity. Crypto regulations need to leave room for innovation,” Lummis said.

While this appointment doesn’t necessarily mean that cryptocurrency regulations will come this year, it is as good a sign as anyone could hope. Many have touted the Biden administration as the perfect one to bring about crypto regulations, succeeding in several areas that the Trump administration seemingly failed.

The Commander-in-Chief might be focusing more on pressing issues like the coronavirus and economic recovery, but the signs are so far looking good.

Wyoming’s Pro-Bitcoin Senator Joins Senate Banking Committee

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Filed Under: blockchain Tagged With: analyst, Apple, Banking, Bitcoin, blockchain, clutter, Congress, coronavirus, crime, crypto, Cryptocurrencies, cryptocurrency, Currencies, Cynthia Lummis, Digital, Education, fiat, Fund Manager, hedge fund, Legislation, news, other, Regulation, science, senate, Senate Banking Committe, transportation, trump, wyoming, yellen

Columbian Congressman Highlights Challenges Of Crypto Legislation

October 3, 2020 by Blockchain Consultants

Mauricio Toro stands as a congressman of Columbia, as well as a member of the Alianza Verde party. Toro has recently authored a draft bill, with the intent to regulate the crypto industry within Columbia. In a recent interview done with Confidencial Colombia, a local news outlet, he highlighted the challenges the proposed legislation could face

Fears Of Lagging Behind

Toro is convinced that Columbia is lagging behind other nations when it comes to the regulation of cryptocurrencies. He explained that one of the key challenges of regulating the crypto industry, is to ensure that it complies with AML procedures as an industry. With AML measures in place, Toro hopes that the negative perception of cryptocurrency could be bypassed within the country. Crypto is frequently associated with crime, due to its nature being very favorable for criminal use.

Trying To Ease Association Of Crypto Crime

Alongside this, the congressman highlighted how any scenario within Columbia could be used to launder money. Thus, crypto isn’t special in its own right, though it should be noted that it’s relatively easier with cryptocurrency. Toro explained that this bill tries to ensure that cryptocurrencies are not used for money laundering, at least not within Columbia.

Crypto Crime Losses Increase By 160% to $4.5 Billion In 2019

Crypto Crime Losses Increase By 160% to $4.5 Billion In 2019

This can be done by way of special requirements needed for groups wanting to establish an exchange, mandating to report the number of transactions per month. Alongside this, these parties must also disclose who their clients are, who their owners are, and must also pay tax for the commissions themselves.

Toro had once again highlighted the irony of Colombia’s crypto transaction volumes. Despite having no clear mandate in regards to crypto legislation, the country has one of the largest crypto transaction volumes within Latin America.

Things Are yet To Be Debated

As a result of bureaucratic issues, the debate around Toro’s bill had been forced to be delayed. As it stands now, the debate is currently waiting for the Columbian Financial Superintendence to make a clear stance regarding crypto, whether for or against it.

In recent weeks, the country has been making headlines within the crypto space. On the 22nd of September, 2020, the Columbian government had approved a pilot program. This program called for companies to test various crypto transactions within the regulatory sandbox the government provided.

As it stands now, time will tell whether or not this draft bill will be approved. In the interview, Toro stated that there was no way of telling how the Congress would handle it, as it would open the door to further talks of alternative markets, innovation, and other elements unknown at this point.

Columbian Congressman Highlights Challenges Of Crypto Legislation

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Filed Under: blockchain, cryptocurrency Tagged With: america, Colombia, Companies, Congress, crime, crypto, Cryptocurrencies, cryptocurrency, exchange, government, Headlines, interview, latin america, Legislation, Market, Markets, money, Money Laundering, news, other, Regulation, tax, Trading

SEC v. Telegram: Part 3 — The extraterritorial reach of US securities laws

September 23, 2020 by Blockchain Consultants

As mentioned in the first and second parts of this story, on March 24, 2020, in a widely reported and closely followed decision, Judge Peter Castel imposed a sweeping preliminary injunction preventing Telegram from issuing its planned crypto asset, Grams. Shortly thereafter, the judge clarified his initial ruling by explicitly holding that the injunction applied to all sales worldwide regardless of where the original purchasers might be located. Efforts by Telegram to see that the Grams would not easily be resold into the United States were unavailing. This part of the story looks at the decision to apply U.S. requirements extraterritorially (outside our geographic borders, to a company headquartered elsewhere, selling to persons located elsewhere).

There is a clear presumption against applying U.S. law to foreign transactions. On the other hand, if the transaction has a sufficient connection to U.S. citizens or markets, U.S. law may be applied. The difficulty is in knowing how much of a connection is required.

In 2010, the U.S. Supreme Court held in Morrison v. National Australia Bank Ltd. that in order to apply the anti-fraud provisions of the U.S. securities laws, the securities in question either had to be listed on a domestic exchange or the transaction had to be domestic in character. Shortly after that decision was released, U.S. Congress enacted Dodd–Frank, which gave federal district courts jurisdiction over fraud claims involving significant steps in furtherance of a violation or having a foreseeable substantial effect in the United States.

The meaning of Dodd–Frank is subject to debate, with some commentators saying the language does not change the law and merely grants jurisdiction over claims. Others say the decision was designed to expand the reach of U.S. law. Given this uncertainty, in particular, it is not unreasonable for Judge Castel to have decided that if Telegram had issued the Grams, they would eventually have found their way into the hands of at least some U.S. purchasers. This could be seen as a substantial effect here. However, the fact that the judge’s ruling is defensible under U.S. law does not mean that the decision is supportable from a policy perspective.

By their very nature, crypto assets are inherently transnational. They cannot be confined to a single nation, and it is impossible to ascertain where they are definitively “located,” since in reality, a crypto asset is nothing more than computer-generated alpha-numeric sequences stored electronically on the World Wide Web. This means that when the U.S. insists on applying its law to crypto assets because they might be resold into the U.S., there is almost inevitably the risk of over-regulation.

In most cases, the issuer is likely to be complying with the law of the nation(s) where the primary effects are felt. Adding U.S. law on top of those is likely to create overlapping, redundant and potentially inconsistent requirements.

In addition, the possibility that U.S. law will be applied to transactions that are essentially occurring elsewhere creates uncertainty, making it more likely that entrepreneurs will work very hard to stay out of U.S. markets. Not only does this diminish the availability of capital for legitimate businesses but it also prevents U.S. investors from having the option of participating in those endeavors.

Not surprisingly, this reality is likely to increase international resentment. Just as the U.S. has its own objectives and interests to protect, so too do other nations. Their approach to regulation of securities transactions and markets reflects their own unique priorities and needs, while blanket application of U.S. law ignores their legitimate policy considerations. Foreign governments have repeatedly disapproved of U.S. efforts to enforce anti-fraud mandates in their markets; they are no more likely to welcome our regulations in their crypto markets.

In the past, international reaction has suggested that the extraterritorial application of U.S. law is intrusive and arrogant. This, in turn, increases the impetus for pushback where other nations seek to impose their laws and vision on U.S. businesses.

The reality is that a system of international regulation where individual nations vie to have their particular viewpoint applied globally is antithetical to the goal of harmonization. Extraterritorial application of U.S. domestic law diminishes the role of traditional international law, resulting not only in confusion, over-regulation and legal uncertainty but also reducing the possibility of developing an international consensus where a harmonized, cooperative approach to regulation of crypto is created.

SEC v. Telegram is a single decision, from a single judge, in a single court, on a motion for a preliminary injunction. There are many opportunities for the decision’s impact to be limited. It can be factually distinguished because Telegram did not raise many of its arguments until after the preliminary injunction issued. Other courts can disagree with the rationale or result. The SEC could change its approach in future enforcement proceedings. Congress could step in to mandate a different approach.

This comment suggests that any of those alternatives are likely to be preferable to insisting U.S. law must apply to all crypto transactions no matter where they are based on the grounds that the crypto assets are likely to land in the hands of U.S. purchasers eventually.

This is Part 3 of a three-part series on the legal case between the U.S. SEC and Telegram’s claims to be securities. Read Part 1 on introduction to the context here, and Part 2 on why this decision should not be followed in other cases here.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Carol Goforth is a university professor and the Clayton N. Little Professor of Law at the University of Arkansas (Fayetteville) School of Law.

The opinions expressed are the author’s alone and do not necessarily reflect the views of the University or its affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

SEC v. Telegram: Part 3 — The extraterritorial reach of US securities laws

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Filed Under: blockchain technology Tagged With: arkansas, article, australia, Bank, Congress, crypto, Cryptocurrencies, entrepreneurs, exchange, fraud, information, Law, Markets, opinions, other, Regulation, SEC, Securities and Exchange Commission, supreme court, Telegram, u.s., United States, us, world, world wide web

Lowlights from Zuckerbergs Libra testimony in Congress

October 25, 2019 by Blockchain Consultants

“I don’t control Libra” was the central theme of Facebook CEO Mark Zuckerberg’s testimony today in Congress. The House of Representatives unleashed critiques of his approach to cryptocurrency, privacy, encryption and running a giant corporation during six hours of hearings. Zuckerberg tried to assuage their fears while stoking concerns that if Facebook doesn’t build Libra, the world will end up using China’s version. Yet Facebook won’t stop shaking up society, with Zuckerberg saying its News tab feature will be announced this week.

During the hearing before the House Financial Services Committee that you can watch here, Zuckerberg recommitted to only releasing Libra with full U.S. regulatory approval. But given the tone of the questioning and Zuckerberg’s lack of fresh answers since Facebook’s David Marcus testified about Libra in July, Libra now looks even less likely to launch in 2020.

The hearing started tensely, with Rep. Maxine Waters (D-CA) declaring that “Perhaps you believe that you’re above the law, and it appears that you are aggressively increasing the size of your company, and are willing to step over anyone, including your competitors, women, people of color, you own users, and even our democracy to get what you want . . . In fact, you have opened up a serious discussion about whether Facebook should be broken up.“

However, some members of Congress used their time to advocate for American dominance instead of heavy regulation. Rep. Patrick McHenry (R-NC) said “the question is, are we going to spend our time trying to devise ways for government planners to centralize and control as to who, when and how innovators can innovate.” Many Republicans complimented Zuckerberg on his business acumen, though none showed outright support for Libra.

Zuckerberg

With few highlights or positive moments coming from the hearing, here are the major takeaways followed by a chronicle of the top exchanges between Zuckerberg and Congress:

  • Zuckerberg claims China will soon have its own version, so regulators shouldn’t block Libra
  • He’s open to regulators requiring Libra to be majority-backed by the U.S. dollar
  • Zuckerberg would leave inheritance to his children in Libra since it’s backed one-to-one with real currency
  • He wouldn’t commit to blocking anonymous wallets but he’s open to baking more anti-money laundering into Libra’s network
  • Zuckerberg plans to expand verifying users via government ID to battle abuse of Facebook
  • He said Libra partners left because “it’s a risky project and there’s been a lot of scrutiny”
  • Zuckerberg confirmed the Libra Association has abandoned or modified its plan to deal themselves dividends on interest from the Libra reserve
  • Facebook will pull out of Libra if it does something Facebook can’t allow or that it’s prohibited from by regulators
  • Zuckerberg didn’t discuss Facebook’s policy allowing misinformation in political ads with President Trump during their meeting
  • He says Facebook is developing anti-deepfakes technology and a policy about takedowns
  • He repeated his call for more government regulation instead of Facebook making its own rules
  • Facebook will comply with subpoenas for info on discrimination in housing ads
  • Zuckerberg wouldn’t commit to trying out the role of Facebook content moderator
  • Facebook plans to announce its upcoming News tab this week
  • Congress’ questions were smarter than a year ago, but still pried little new information on Libra out of Zuckerberg
  • Zuckerberg repeatedly relied on the Libra Association’s independence from Facebook to avoid substantial answers

On Libra versus China

Zuckerberg tried to leverage nationalist sentiment to deflect scrutiny. “As soon as we put forward the white paper around the Libra project, China immediately announced a public private partnership, working with companies . . . to extend the work that they’ve already done with AliPay into a digital Renminbi as part of the Belt and Road Initiative that they have, and they’re planning on launching that in the next few months.” He later said that for Libra, “Chinese companies would be the primary competitors.”

Facebook’s executives have repeatedly leaned on this “let us, or China will” argument we chronicle here.

Facebook’s regulation dodge: Let us, or China will

What if the Libra Association chooses to add the Chinese currency to the basket used to back Libra and reduces the U.S. dollar’s fraction of the basket? “I think it would be completely reasonable for our regulators to try to [implement] a restriction that says that it has to be primarily U.S. dollars,” Zuckerberg responded in one of his most substantial answers of the day. Zuckerberg was receptive to feedback that the Libra Association should keep its white paper updated.

As for why Libra isn’t just backed 100% with the U.S. dollar, Zuckerberg explained that “I think from a U.S. regulatory perspective, it would probably be significantly simpler. But because we’re trying to build something that can also be a global payment system that works in other places, it may be less welcome in other places if it’s only 100% based on the dollar.” Still, Zuckerberg said he would leave his children their inheritance in Libra because it’s backed one-to-one by the Libra reserve.

On Libra and regulation

Zuckerberg wouldn’t commit to blocking anonymous Libra wallets that could facilitate money laundering, only saying Facebook’s own Calibra wallet would have strong identity checks. He did say Libra was exploring whether it could encode “know your customer” protections at the network level instead of relying on developers to build this into their wallets.

On whether Facebook will increasingly seek to verify users’ identities through government ID, Zuckerberg was enthusiastic. “This is an area where I think we are going to do a lot more in the years to come. We started with political ads . . .  over the coming years for anything that people are doing that is sensitive, we’re likely going to increasingly require verification either by government ID or other things so we can have a clear sense of people’s authentic identity.”

Rep. Dean Phillips (D-MN) mentioned this could be a competitive advantage, implying Facebook’s size and resources might allow it to embark on a verification initiative other companies couldn’t.

Calibra

Facebook has assured regulators that Calibra’s data would be kept separate from the social network. But Facebook said the same when it acquired WhatsApp, then reneged and integrated its data. This time around, Congresswoman Nydia Velázquez declared that “we’re going to need to make sure that . . . you learned that you should not lie.”

When pushed on why Libra Association members like Visa, Stripe and eBay left the organization, Zuckerberg admitted, “I think because it’s a risky project and there’s been a lot of scrutiny.” Zuckerberg struck back at finance incumbents, saying “I think that the U.S. financial industry . . . is just frankly behind where it needs to be to innovate and continue American financial leadership going forward.”

In an awkward moment, Zuckerberg could not answer which Libra members were run by women, minorities or LGBTQ+ people. “Is it true that the overwhelming majority of persons associated with this endeavor are white men?,” Rep. Al Green (D-TX) asked. “Congressman, I don’t know off the top of my head,” Zuckerberg responded.

Facebook announces Libra cryptocurrency: All you need to know

Zuckerberg was criticized for trying to profit and potentially helping money laundering while claiming Libra is designed to help the unbanked. Zuckerberg said the Libra Association “hadn’t nailed down policies” about whether anonymous payments are allowed.

Rep. Brad Sherman (D-CA) said “for the richest man in the world to come here and hide behind the poorest people in the world, and say that’s who you’re really trying to help. You’re trying to help those for whom the dollar is not a good currency — drug dealers, terrorists.” Some members of Congress like Sherman chose to use their entire time monologuing instead of actually asking questions. 

Zuckerberg got a chance to clear up a major snafu from Marcus’ testimony, where he said the Libra Association was in contact with the Swiss data regulator, which CNBC reported hadn’t heard from Libra. Zuckerberg explained today that the Libra Association had been in contact with the primary Swiss Financial Market Supervisory Authority instead. He says Facebook plans to earn money from Libra on ads from small businesses if cheap transactions lead to more e-commerce.

In one revealing exchange, Rep. Lance Gooden (R-TX) asked if the Libra Association still planned to offer profit incentives by offering dividends based on interest earned on currency in the Libra reserve after expenses are paid. Zuckerberg said the idea had either been “modified or abandoned.”

Screen

The highlighted section detailing how Libra Association members earn dividends on Libra reserve interest has been removed from the Libra whitepaper

Claiming Facebook isn’t Libra

Throughout the testimony, Zuckerberg tried to distance himself and Facebook from the Libra Association’s decision making process. “We might be required to pull out if the Association independently decides to move forward on something that we’re not comfortable with,” Zuckerberg said. That means if Facebook can’t launch Libra, it could still theoretically launch without the social network, though it does most of the engineering heavy-lifting.

The strategy was crystallized by Zuckerberg’s response to whether he could commit to moving Libra’s headquarters from Switzerland to the U.S. “At this point, we do not control the independent Libra Association so I don’t think we can make that decision.” Rep. Ayanna Pressley (D-MA) refuted this position, stating, “Mr. Zuckerberg, Libra is Facebook, and Facebook is you.”

Mark

The Facebook CEO, Mark Zuckerberg, testified before the House Financial Services Committee on Wednesday October 23, 2019 Washington, D.C. (Photo by Aurora Samperio/NurPhoto via Getty Images)

The “we don’t control Libra” argument provides Facebook and Libra an escape hatch from criticism, because any member and even the newly appointed chairperson and board can’t unilaterally control or make promises about its actions.

On misinformation and encryption

Many Congress members remain fixated on Facebook’s recently solidified policy of refusing to submit political ads for fact-checking. Rep Sean Casten (D-IL) asked if in Zuckerberg’s recent meeting with President Trump, “Did anyone discuss the policy change along the exemption of political figures and parties from misinformation prohibition on Facebook?” Zuckerberg responded, “Congressman, that did not come up,” quieting theories that Trump pushed for the policy that would exempt false claims in his ads.

Facebook should ban campaign ads. End the lies.

Zuckerberg defended the policy to Rep. Alexandria Ocasio-Cortez (D-NY), saying “I think lying is bad, and I think if you were to run an ad that had a lie, that would be bad,” but that outside of calls for violence or voter suppression, Facebook thinks it’s best to leave lies in ads from politicians so they can be scrutinized by the press and public. Yet that too heavily leans on the media to scrutinize thousands of ad variants being run as part of multi-hundred-million-dollar political ad campaigns.

Rep. Ann Wagner (R-MO) chided Zuckerberg, saying “you’re not working hard enough” to stop the spread of child exploitation imagery online despite Facebook submitting millions of reports. She brought up worries that Facebook moving entirely to encrypted messaging could hide child abusers, and Zuckerberg merely said “I think we work harder than any other company.” He failed to explain how Facebook would continue improving detection through encryption.

Oddly, Zuckerberg was directly confronted about his views on vaccines since Facebook works to hide vaccine hoaxes and avoid recommending groups spreading unverified information about them. “I don’t think it would be possible for anyone to be 100% confident, but my understanding of the scientific consensus is that it is important that people get their vaccines,” Zuckerberg said, defending Facebook’s decision to hide some of this content.

In another strange moment, Rep. Madeleine Dean (D-PA) demanded if Facebook had bought blocks of hotel rooms at Trump properties but never used them just to curry favor with the president. Zuckerberg said he’d never heard of that and would be surprised if it was true.

On deepfakes, Zuckerberg confirmed that “I think deepfakes are clearly one of the emerging threats that we need to get in front of and develop policy around to address. We’re currently working on what the policy should be to differentiate between media that has manipulated and been manipulated by AI tools like deepfakes, with the intent to mislead people.” Zuckerberg later said the doctored Nancy Pelosi video should have been flagged sooner, and highlighted Facebook needs a separate deepfakes policy. Yet Facebook’s policy allows politicians’ ads to mislead people, weakening faith that it will properly address this new problem.

Questions about Facebook’s fair practices led Zuckerberg to reiterate his call for regulation, saying “I think we need federal privacy legislation. I think we need data portability legislation. I think clear rules on elections-related content would be helpful too because it’s not clear to me that we want private companies making so many decisions on these important areas by themselves.”

On diversity, discrimination and moderation

Regarding housing discrimination via Facebook ads, Zuckerberg committed to working with regulators to provide information under subpoena, noted Facebook has banned discriminatory housing ads, and said “Nobody wants to redline and I’m sure that was accidental.”

Zuckerberg received his heaviest criticism of the day from Rep. Joyce Beatty (D-OH), who grilled him about not knowing if diverse bankers manage Facebook’s cash or if diverse law firms handle its court cases.She chastised Facebook for a lack of diverse leadership, saying “this is appalling and disgusting to me.” Of COO Sheryl Sandberg, who leads Facebook’s civil rights task force, Beatty said “we know she’s not really civil rights.”

Facebook

WASHINGTON, DC – OCTOBER 23: Facebook co-founder and CEO Mark Zuckerberg arrives to testify before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill October 23, 2019 in Washington, DC. Zuckerberg testified about Facebook’s proposed cryptocurrency Libra, how his company will handle false and misleading inform

Read more: https://techcrunch.com/2019/10/23/zuckerberg-testimony/

Filed Under: cryptocurrency Tagged With: Congress, facebook, facebook news, Libra, Libra Association, Mark Zuckerberg

The Great Hack: Netflix doc unpacks Cambridge Analytica, Trump, Brexit and democracys death

July 26, 2019 by Blockchain Consultants

It’s perhaps not for nothing that The Great Hack — the new Netflix documentary about the connections between Cambridge Analytica, the U.S. election and Brexit, out on July 23 — opens with a scene from Burning Man. There, Brittany Kaiser, a former employee of Cambridge Analytica, scrawls the name of the company onto a strut of “the temple” that will eventually get burned in that fiery annual ritual. It’s an apt opening.

There are probably many of us who’d wish quite a lot of the last couple of years could be thrown into that temple fire, but this documentary is the first I’ve seen to expertly peer into the flames of what has become the real-world dumpster fire that is social media, dark advertising and global politics which have all become inextricably, and, often fatally, combined.

The documentary is also the first that you could plausibly recommend to those of your relatives and friends who don’t work in tech, as it explains how social media — specifically Facebook — is now manipulating our lives and society, whether we like it or not.

As New York Professor David Carroll puts it at the beginning, Facebook gives “any buyer direct access to my emotional pulse” — and that included political campaigns during the Brexit referendum and the Trump election. Privacy campaigner Carroll is pivotal to the film’s story of how our data is being manipulated and essentially kept from us by Facebook.

The U.K.’s referendum decision to leave the European Union, in fact, became “the Petri dish” for a Cambridge Analytica (CA) experiment, says Guardian journalist Carole Cadwalladr. She broke the story of how the political consultancy, led by Eton-educated CEO Alexander Nix, applied to the democratic operations of the U.S. and U.K., and many other countries, over a chilling 20+ year history techniques normally used by “psyops” operatives in Afghanistan. Watching this film, you literally start to wonder if history has been warped toward a sickening dystopia.

carole

The Petri-dish of Brexit worked. Millions of adverts, explains the documentary, targeted individuals, exploiting fear and anger, to switch them from “persuadables,” as CA called them, into passionate advocates for, first Brexit in the U.K., and then Trump later on.

Switching to the U.S., the filmmakers show how CA worked directly with Trump’s “Project Alamo” campaign, spending a million dollars a day on Facebook ads ahead of the 2016 election.

The film expertly explains the timeline of how CA first worked off Ted Cruz’s campaign, and nearly propelled that lack-luster candidate into first place in the Republican nominations. It was then that the Trump campaign picked up on CA’s military-like operation.

After loading up the psychographic survey information CA obtained from Aleksandr Kogan, the Cambridge University academic who orchestrated the harvesting of Facebook data, the world had become their oyster. Or, perhaps more accurately, their oyster farm.

Back in London, Cadwalladr notices triumphant Brexit campaigners fraternizing with Trump and starts digging. There is a thread connecting them to Breitbart owner Steve Bannon. There is a thread connecting them to Cambridge Analytica. She tugs on those threads and, like that iconic scene in The Hurt Locker, where all the threads pull up unexploded mines, she starts to realize that Cambridge Analytica links them all. She needs a source though. That came in the form of former employee Chris Wylie, a brave young man who was able to unravel many of the CA threads.

But the film’s attention is often drawn back to Kaiser, who had worked first on U.S. political campaigns and then on Brexit for CA. She had been drawn to the company by smooth-talking CEO Nix, who begged: “Let me get you drunk and steal all of your secrets.”

But was she a real whistleblower? Or was she trying to cover her tracks? How could someone who’d worked on the Obama campaign switch to Trump? Was she a victim of Cambridge Analytica, or one of its villains?

British political analyst Paul Hilder manages to get her to come to the U.K. to testify before a parliamentary inquiry. There is high drama as her part in the story unfolds.

Kaiser appears in various guises, which vary from idealistically naive to stupid, from knowing to manipulative. It’s almost impossible to know which. But hearing about her revelation as to why she made the choices she did… well, it’s an eye-opener.

brit

Both she and Wylie have complex stories in this tale, where not everything seems to be as it is, reflecting our new world, where truth is increasingly hard to determine.

Other characters come and go in this story. Zuckerburg makes an appearance in Congress and we learn of the casual relationship Facebook had to its complicity in these political earthquakes. Although, if you’re reading TechCrunch, then you probably know at least part of this story.

Created for Netflix by Jehane Noujaim and Karim Amer, these Egyptian-Americans made “The Square,” about the Egyptian revolution of 2011. To them, the way Cambridge Analytica applied its methods to online campaigning was just as much a revolution as Egyptians toppling a dictator from Cario’s iconic Tahrir Square.

For them, the huge irony is that “psyops,” or psychological operations, used on Muslim populations in Iraq and Afghanistan after the 9/11 terrorist attacks ended up being used to influence Western elections.

Cadwalladr stands head and shoulders above all as a bastion of dogged journalism, even as she is attacked from all quarters, and still is to this day.

What you won’t find out from this film is what happens next. For many, questions remain on the table: What will happen now that Facebook is entering cryptocurrency? Will that mean it could be used for dark election campaigning? Will people be paid for their votes next time, not just in Likes? Kaiser has a bitcoin logo on the back of her phone. Is that connected? The film doesn’t comment.

But it certainly unfolds like a slow-motion car crash, where democracy is the car and you’re inside it.

Read more: https://techcrunch.com/2019/07/23/the-great-hack-netflix-doc-unpacks-cambridge-analytica-trump-brexit-and-democracys-death/

Filed Under: cryptocurrency Tagged With: afghanistan, Alexander Nix, Barack Obama, Brexit, Brittany Kaiser, California, Cambridge Analytica, cambridge university, Chris Wylie, Congress, David Carroll, european union, facebook, iraq, London, Netflix, Social Media, Ted Cruz, United Kingdom, United States

Facebooks testimony to Congress: Libra will be regulated by Swiss

July 17, 2019 by Blockchain Consultants

The head of Facebook’s blockchain subsidiary Calibra David Marcus has released his prepared testimony before Congress for tomorrow and Wednesday, explaining that the Libra Association will be regulated by the Swiss government because that’s where it’s headquartered. Meanwhile, he says the Libra Association and Facebook’s Calibra wallet intend to comply will all U.S. tax, anti-money laundering and anti-fraud laws.

“The Libra Association expects that it will be licensed, regulated, and subject to supervisory oversight. Because the Association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority (FINMA),” Marcus writes. “We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association. The Association also intends to register with FinCEN [The U.S. Treasury Department’s Financial Crimes Enforcement Network] as a money services business.”

Facebook announces Libra cryptocurrency: All you need to know

Marcus will be defending Libra before the Senate Banking Committee on July 16th and the House Financial Services Committees on July 17th. The House subcomittee’s Rep. Maxine Waters has already issued a letter to Facebook and the Libra Association requesting that it halt development and plans to launch Libra in early 2020 “until regulators and Congress have an opportunity to examine these issues and take action.”

The big question is whether Congress is savvy enough to understand Libra to the extent that it can coherently regulate it. Facebook CEO Mark Zuckerberg’s testimonies before Congress last year were rife with lawmakers dispensing clueless or off-topic questions.

Sen. Orin Hatch infamously demanded to know “how do you sustain a business model in which users don’t pay for your service?,” to which Zuckerberg smirked, “Senator, we run ads.” If that concept trips up Congress, it’s hard to imagine it grasping a semi-decentralized stablecoin cryptocurrency that took us 4,000 words to properly explain, and a six-minute video just to summarize.

Attempting to assuage a core concern that Libra is trying to replace the dollar or meddle in financial policy, Marcus writes that “The Libra Association, which will manage the Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena. It will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy is properly the province of central banks.”

Marcus’ testimony comes days after President Donald Trump tweeted Friday to condemn Libra, claiming that “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International.”

TechCrunch asked Facebook for a response Friday, which it declined to provide. However, a Facebook spokesperson noted that the Libra Association won’t interact with consumers or operate as a bank, and that Libra is meant to be a complement to the existing financial system.

Facebook answers how Libra taxes & anti-fraud will work

Regarding how Libra will comply with U.S. anti-money laundering (AML) and know-your-customer (KYC) laws, Marcus explains that “The Libra Association is similarly committed to supporting efforts by regulators, central banks, and lawmakers to ensure that Libra contributes to the fight against money laundering, terrorism financing, and more,” Marcus explains. “The Libra Association will also maintain policies and procedures with respect to AML and the Bank Secrecy Act, combating the financing of terrorism, and other national security-related laws, with which its members will be required to comply if they choose to provide financial services on the Libra network.”

He argues that “Libra should improve detection and enforcement, not set them back,” because cash transactions are frequently used by criminals to avoid law enforcement. “A network that helps move more paper cash transactions—where many illicit activities happen—to a digital network that features regulated on- and off-ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will present an opportunity to increase the efficacy of financial crimes monitoring and enforcement.”

As for Facebook itself, Marcus writes that “The Calibra wallet will comply with FinCEN’s rules for its AML/CFT program and the rules set by the Office of Foreign Assets Control (OFAC) . . . Similarly, Calibra will comply with the Bank Secrecy Act and will incorporate KYC and AML/CFT methodologies used around the world.”

These answers might help to calm finance legal eagles, but I expect much of the questioning from Congress will deal with the far more subjective matter of whether Facebook can be trusted after a decade of broken privacy promises, data leaks and fake news scandals like Cambridge Analytica.

That’s why I don’t expect the following statement from Marcus about how Facebook has transformed the state of communication will play well with lawmakers that are angry about how those changes impacted society. “We have done a lot to democratize free, unlimited communications for billions of people. We want to help do the same for digital currency and financial services, but with one key difference: We will relinquish control over the network and currency we have helped create.” Congress may interpret “democratize” as “screw up,” and not want to see the same happen to money.

Facebook and Calibra may have positive intentions to assist the unbanked who are indeed swindled by banks and money transfer services that levy huge fees against poorer families. But Facebook isn’t acting out of pure altruism here, as it stands to earn money from Libra in three big ways that aren’t mentioned in Marcus’ testimony:

  1. It will earn a share of interest earned on the Libra Reserve of traditional currencies it holds as collateral for Libra that could mount into the billions if Libra becomes popular.
  2. It will see Facebook ad sales grow if merchants seek to do more commerce over the internet because they can easily and cheaply accept online payments through Libra and therefore put marketing spend into those efficiently converting channels like Facebook and Google.
  3. It will try to sell additional financial services through Calibra, potentially including loans and credit where it could ask users to let it integrate their Facebook data to get a better rate, potentially decreasing defaults and earning Facebook larger margins than other players.

The real-world stakes are much higher here than in photo sharing, and warrant properly regulatory scrutiny. No matter how much Facebook tries to distance itself from ownership of Libra, it started, incubated and continues to lead the project. If Congress is already convinced “big is bad,” and Libra could make Facebook bigger, that may make it difficult to separate their perceptions of Facebook and Libra in order to assess the currency on its merits and risks.

Below you can read Marcus’ full testimony:

David Marcus' Libra testimony 7-16-19 – TechCrunch from Josh Constine

For full details on how Libra works, read our feature story on everything you need to know:

Facebook announces Libra cryptocurrency: All you need to know

Read more: https://techcrunch.com/2019/07/15/libra-testimony/

Filed Under: digital currency Tagged With: Calibra, Congress, David Marcus, facebook, house of representatives, Libra, Libra Association, U.S. Senate

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