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Google launches Digital Futures Project with $20M in grants to support ‘responsible AI’

The launch comes ahead of a series of AI forums to be hosted by U.S. Senate Majority Leader Chuck Schumer.

Google and its charitable arm, Google.org, launched the Digital Futures Project, an initiative to study responsible artificial intelligence (AI) technologies, on Sept. 11. 

The Mountain View company will invest a total of $20 million in grants to leading think tanks and academic institutions around the world with the expressed aim “to facilitate dialogue and inquiry” into AI technologies.

According to a blog post, Google wishes to address issues of fairness, bias, misinformation, security and the future of work through deep collaboration with outside organizations and a commitment to facilitating responsible discussion:

“Through this project, we’ll support researchers, organize convenings and foster debate on public policy solutions to encourage the responsible development of AI.”

Awardees who’ve already received grants under the fund include the Aspen Institute, the Brookings Institution, the Carnegie Endowment for International Peace, the Center for a New American Security, the Center for Strategic and International Studies, the Institute for Security and Technology, Leadership Conference Education Fund, MIT Work of the Future, R Street Institute and SeedAI.

The timing of the project’s launch comes as the CEOs of some of the largest technology corporations in the world are set to convene in Washington, D.C. on Sept. 13 for an “AI Forum” hosted by U.S. Senate Majority Leader Chuck Schumer.

Related: Senators unveil bipartisan blueprint for comprehensive AI regulation

Alphabet and Google CEO Sundar Pichai and former Google CEO and chairman Eric Schmidt are slated to attend alongside Meta CEO Mark Zuckerberg, Tesla CEO Elon Musk, Microsoft CEO Satya Nadella and co-founder Bill Gates, Nvidia CEO Jensen Huang, OpenAI CEO Sam Altman and representatives from civil rights organizations.

Not only will the event bring together the CEOs of U.S. companies worth a combined total market value of well over $6 trillion, but it also seemingly marks the first time Zuckerberg and Musk will be in the same room together since their much-hyped mixed martial arts match fell apart.

According to Senator Schumer’s office, the event’s purpose is to discuss artificial intelligence policy. It will be the first of nine such meetings scheduled throughout the fall — though it remains unclear whether proceeding events will feature the same guest list.

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

DC doesn’t realize how powerful crypto voting is — Brian Armstrong

According to Brian Armstrong, the gap between current crypto policies and Americans needs will make cryptocurrencies a hot topic in the upcoming elections.

Coinbase CEO Brian Armstrong has shared his predictions for the role crypto will play in next years' elections in the United States, claiming that representatives in Washington, D.C. do not fully understand the crypto community's voting power in the upcoming race.

"I don’t think everybody in DC actually fully realizes how powerful the crypto voting community block is. And I think 2024 is an election where the voters of America are really going to hold candidates' feet to the fire and say, what is your position on crypto?,” Armstrong said during a recent interview with Yahoo Finance.

According to Armstrong, roughly 56 million people in the U.S. have already used cryptocurrencies. “It’s 5x as many as have electric vehicles, just as an example. And we’re voters,” he noted. He believes the gap between current crypto policies and American needs will make cryptocurrencies a hot topic in 2024.

Coinbase's Brian Armstrong expects crypto to be a hot topic in next year's elections. Source: Yahoo Finance.

Indeed, presidential candidates are actively speaking out about cryptocurrency. Florida's Governor Ron DeSantis has vowed to ban central bank digital currencies (CBDCs) if elected president. Robert F. Kennedy Jr. is also opposed to exploring the concept of a digital dollar. Both Kennedy Jr. and DeSantis cited privacy concerns as reasons for their positions. The candidates, however, have adopted a crypto-friendly campaign strategy.

The White House is likely to be home to a CBDC supporter, according to a recent report from crypto asset manager Grayscale. Ahead in the 2024 presidential polls among their respective parties, Joe Biden and Donald Trump are “favorable toward exploring CBDC,” says the analysis.

Coinbase has been lobbying in Washington, D.C. for a clear regulatory framework in the crypto space. Congress is now actively discussing bipartisan bills that may finally set rules for crypto firms and users across the country. But legislation isn't the only option for crypto firms, said Armstrong, pointing to the possibility of a new chair at the Securities and Exchange Commission (SEC) in 2024.

"I also think there’s a possibility we’ll just get a different chair in 2024 or beyond,” he suggested in reference to a possible replacement for Gary Gensler. Coinbase was sued by the SEC in June for allegedly breaking security laws, claiming a number of tokens traded on the exchange were securities.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

Congressman Tom Emmer seeks amendment to limit SEC’s crypto oversight

Emmer intends to introduce an appropriations amendment that will limit the SEC's utilization of funds for digital asset enforcement until comprehensive rules and regulations are put in place.

Tom Emmer, the Majority Whip of the U.S. House of Representatives, who has previously expressed concerns about the Securities Exchange Commission's (SEC) actions in the cryptocurrency industry, on Friday, Sep. 8, introduced a significant amendment that once more drew attention to the SEC's actions.

In his statement, Tom Emmer criticizes Gary Gensler, alleging that the SEC chair has overstepped his authority, which is negatively affecting the American people. Emmer urges Congress to utilize their available methods and proper procedures to thwart any potential misuse of taxpayer funds by Gary Gensler and the SEC.

In the past, Rep. Tom Emmer has jointly sponsored several bills aiming to enhance regulatory transparency in the United States. Emmer recently used Twitter to unveil his latest endeavor to limit Gary Gensler and the SEC's financial resources.

Emmer intends to introduce an appropriations amendment that will limit the SEC's utilization of funds for digital asset enforcement until comprehensive rules and regulations are put in place. The absence of cryptocurrency regulations has raised concerns about the SEC's substantial expenditures in legal disputes with numerous crypto entities, potentially squandering taxpayers' funds.

Back in March 2023, Majority Whip Emmer introduced the Blockchain Regulatory Certainty Act, a bill that clarifies that blockchain developers and service providers are not considered money transmitters, as they do not hold consumer funds in custody.

Related: SEC urges court to grant Ripple Labs appeal citing ‘knotty legal problems’

The bill distinguishes between custody providers and non-custody providers, relieving the latter from unnecessary compliance burdens that might hinder innovation in the United States. This clarification ensures that validators, miners, and other non-custodial service providers are not categorized in the same way as custody providers.

Key figures in the blockchain sector, including Blockchain Association CEO Kristin Smith and Crypto Council CEO Sheila Warren, expressed their backing for the proposed legislation. Tom Emmer has also thrown his support behind Rep. Warren Davidson's SEC Stabilization Act, which seeks to remove Gary Gensler from his position as SEC Chair.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

Crypto Biz: Coinbase’s lending bet, a new ads policy at Google and Marathon’s mining performance

This week’s Crypto Biz explores Coinbase's lending platform, Marathon Digital’s latest Bitcoin mining report, Hana Bank’s move to offer crypto custody and Google’s new crypto ads policy.

Crypto giant Coinbase seems to be strategically steering its ship amid constant crypto industry turbulence in 2023. The company recently unveiled its lending platform for institutional investors, aiming to fill the void left behind by major players during 2022’s crypto winter, when firms such as Celsius Network, BlockFi and Genesis went bankrupt. 

The move comes after the company shut down its Borrow service for retail customers in May amid regulatory scrutiny. The service allowed certain customers to use crypto as collateral to receive a cash loan. The new lending solution, however, focuses on institutional investors — companies or organizations investing on behalf of their clients, such as mutual funds and pension plans.

Coinbase’s new venture amassed millions in capital within a few days of launching, documents filed with the United States Securities and Exchange Commission (SEC) show. Despite headwinds and uncertainty, the service debut indicates that crypto lending among high-profile investors is still in demand in the United States.

This week’s Crypto Biz also explores Marathon Digital’s latest Bitcoin mining report, Hana Bank’s move to offer crypto custody and Google’s new crypto ads policy.

Coinbase launches crypto lending platform for U.S. institutions

Crypto exchange Coinbase has rolled out a crypto lending service for institutional investors in the U.S., which reportedly seeks to capitalize on massive failures in the crypto lending market. According to a filing with the SEC, Coinbase customers have already invested over $57 million in the lending program since the first sale occurred on Aug. 28. In another headline, Coinbase’s recently released Base network reached over 700,000 nonfungible tokens (NFTs) minted in August. The tokens minted were part of the launch’s strategy to spur adoption. Base’s launch, however, has not been flawless. The network suffered an outage on Sept. 5 when its sequencer stopped producing blocks. Several scams have also been promoted on the network, including a $6.5 million rug-pull by Magnate Finance.

Data from a SEC filing by Coinbase Credit. Source: Coinbase SEC Filings

Marathon’s Bitcoin mining rate fell 9% in August

Crypto mining operator Marathon Digital Holdings produced 1,072 Bitcoin in August — 9% less than in July. According to the company, the smaller production resulted from increased curtailment activity in Texas due to record-high temperatures. The term curtailment refers to the reduction of electricity generated to maintain a balance between demand and supply. The temporary shutdowns more than offset the progress made by the company to increase its operational hash rate and optimize operations, according to its CEO, Fred Thiel. Marathon increased its U.S. operational hash rate by 2% month-over-month to 19.1 exahashes in August. The performance increase is attributed to the upgrade of Bitmain Antminer S19j Pro miners to the more efficient S19 XP models.

Google will allow ads for NFT games starting Sept. 15

Google has updated its cryptocurrency advertising policy to allow for blockchain-based NFT gaming advertisements as long as they don’t promote gambling or gambling services. The new policy will continue to ban advertisements for games that allow players to wager or stake NFTs against other players or for rewards. NFT casino games offering players to wager or play for prizes — such as NFTs, cash or cryptocurrency — will also continue to be banned. Google previously banned all cryptocurrency-related advertising across its platforms in March 2018. 

South Korean Hana Bank enters crypto custody business with BitGo

One of the largest South Korean banks, KEB Hana Bank, is moving to offer digital asset custody services through a new partnership with cryptocurrency custody firm BitGo Trust Company. According to local media reports, KEB Hana Bank signed a strategic business agreement with BitGo to jointly establish digital asset custody in South Korea. The commercial bank has a network of 111 branches with local banking assets of nearly $10 billion and equity of $490 million. Together, Hana Bank and BitGo plan to launch their joint cryptocurrency custody venture in the second half of 2024.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

Ripple acquires Fortress Trust, expands license portfolio in the US

Fortress holds a Nevada Trust license for asset custody. Ripple holds more than 30 licenses across the United States.

Financial technology firm Ripple is expanding its portfolio of regulatory licenses in the United States with the acquisition of Fortress Trust, according to an announcement on Sept. 8. 

Fortress Trust provides regulatory and technology infrastructure for blockchain organizations. The company holds a Nevada Trust license that allows it to custody financial assets. The acquisition is in addition to the more than 30 licenses Ripple holds across the country as a money transmitter, along with a BitLicense in New York, required digital currency businesses operating in the state.

“Licenses are a powerful enabler to build and deliver best-in-class customer experiences for enterprises,” said Monica Long, president at Ripple. According to Ripple’s announcement, the technology and licensing held by Fortress Trust complements its business and product roadmap

Ripple first invested in the company in 2022 via a seed round. The recent transaction amounts and other financial terms were not revealed.

“As an early investor in Fortress Blockchain Technologies, we’ve had a chance to get to know the team, its vision and technology. Since their launch in 2021, they’ve built an impressive business with recurring revenue and a strong roster of both crypto-native and new-to-crypto customers,” said Brad Garlinghouse, CEO of Ripple. 

Ripple has been accelerating deals amid the bear market. In May, the company announced the acquisition of Metaco, a Swiss digital asset custodian and tokenization provider, for $250 million. A Ripple executive forecast in January that 2023 would see a wave of acquisitions within the crypto space, helping companies fill gaps in capabilities

Ripple plans to invest in Fortress’ parent company, Fortress Blockchain Technologies, and its affiliated firm FortressPay services, the announcement reveals. Ripple claims to be present in over 55 countries, offering payout services through blockchain technology.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

CFTC fines Mirror Trading $1.7B for Bitcoin-related forex fraud

The CFTC has brought or resolved ten fraud cases involving digital assets or forex since June 2023, Commissioner Kristin Johnson said.

The United States regulators have finally taken steps to resolve an enforcement case against the collapsed Mirror Trading International (MTI).

The United States District Court for the Western District of Texas has ordered MTI to pay $1.7 billion in restitution to victims for operating a fraudulent scheme involving digital assets and forex, the Commodity Futures Trading Commission (CFTC) announced on Sept. 7.

The CFTC noted that MTI and its CEO, Cornelius Steynberg, were engaged in an “international multi-level marketing scheme” which accepted nearly 30,000 Bitcoin (BTC) from at least 23,000 people in the United States. According to the announcement, MTI and Steynberg promised to provide access to an unregistered commodity pool in exchange for BTC contributions, which had never taken place.

“MTI misappropriated virtually all of the money instead,” the CFTC wrote, adding that the latest court order and restitution effectively conclude a case that the authority filed in June 2022.

As previously reported by Cointelegraph, MTI went into provisional liquidation in late 2020 after one of its directors allegedly escaped the country, grabbing all Bitcoin that investors had entrusted to MTI.

In January 2021, MTI claimed to have over 260,000 members in 170 countries, with investors losing roughly $1 billion at the time of the liquidation. The MIT fraud is believed to be one of the biggest Ponzi schemes involving digital assets in history.

Related: Crypto collapses generate hundreds of millions of dollars for lawyers

“I strongly encourage all members of the public to stay informed about the potential scams and abuses in digital assets markets by visiting our investor advisory page,” CFTC Commissioner Kristin Johnson wrote in the announcement. She added that the CFTC has brought or resolved ten fraud cases involving digital assets or forex since June 2023, adding:

“I commend the Division of Enforcement for continuing to stay vigilant, and sending a strong message to the market that the Commission will do what is necessary to protect its markets from fraud.”

The news comes as CFTC Commissioner Caroline Pham is advocating for a limited pilot program to address cryptocurrency regulation in the United States. The commissioner on Sept. 7 said that she planned to propose a pilot program for digital asset markets, claiming the U.S. may soon need to “play catch-up” to crypto-friendly jurisdictions.

On the same day, another CFTC Commissioner, Summer Mersinger, also voiced concerns over enforcement actions related to decentralized finance protocols. The commissioner argued that the CFTC should engage with the public and stakeholders instead of relying primarily on enforcement actions.

Magazine: Should we ban ransomware payments? It’s an attractive but dangerous idea

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

AI usage on social media has potential to impact voter sentiment

The U.S. presidential election is nearing and with it comes the employment of technologies like AI on social media platforms to manipulate voter sentiment.

Artificial intelligence (AI) usage in social media has been targeted as a potential threat to impact or sway voter sentiment in the upcoming 2024 presidential elections in the United States. 

Major tech companies and U.S. governmental entities have been actively monitoring the situation surrounding disinformation. On Sept. 7 the Microsoft research unit called “Microsoft Threat Analysis Center” (MTAC) published research that observed “China-affiliated actors” leveraging the technology.

The report said these actors utilized AI-generated visual media in what it called a “broad campaign” that had a heavy emphasis on “politically divisive topics, such as gun violence, and denigrating U.S. political figures and symbols.”

It said it anticipates that China “will continue to hone this technology over time,” and remains to be seen how it will be deployed at scale for such purposes.

On the other hand, AI is also being employed to help detect such disinformation. On Aug. 29 Accrete AI deployed AI software to be used for real-time disinformation threat prediction from social media as contracted by the U.S. Special Operations Command (USSOCOM).

Prashant Bhuyan, the founder and CEO of Accrete said that these deep fakes and other “social media-based applications of AI” pose a serious threat.

“Social media is widely recognized as an unregulated environment where adversaries routinely exploit reasoning vulnerabilities and manipulate behavior through the intentional spread of disinformation.”

In the previous U.S. election in 2020, troll farms were reported to have reached 140 million Americans each month, according to an MIT report

Troll farms are an “institutionalized group” of internet trolls with the intent to interfere with political opinions and decision-making.

Related: Meta’s assault on privacy should serve as a warning against AI

Already, regulators in the U.S. have been looking at ways to regulate deep fakes ahead of the election. 

On Aug. 10 the U.S. Federal Election Commission concluded with a unanimous vote to advance a petition which would regulate political ads using AI. One of the members of the commission behind the petition called deep fakes a “significant threat to democracy.”

Google announced on Sept. 7 that it will be updating its political content policy in mid-November 2023 which will now make AI disclosure mandatory for political campaign ads.

It said the disclosures will be required where there is “synthetic content that inauthentically depicts real or realistic-looking people or events.”

Magazine: Should we ban ransomware payments? It’s an attractive but dangerous idea

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

CFTC commissioner calls for crypto regulatory pilot program

Commissioner Caroline Pham called for the pilot program to kick off with a stakeholder roundtable and for the CFTC to propose and adopt rules on the risks retail investors face.

Caroline Pham, a commissioner with the United States Commodity Futures Trading Commission (CFTC), has suggested a limited pilot program in an effort to address crypto regulation.

In a pre-recorded message for a Cato Institute event on Sept. 7, Pham said that following public roundtable discussions she planned to propose a pilot program for digital asset markets, claiming the U.S. may soon need to “play catch-up” to crypto-friendly jurisdictions. She suggested that the program would be similar to regulatory sandboxes previously introduced at the state level.

“A pilot program can create a framework for emerging technologies and market structures under our existing laws and regulations,” said Pham. “It is my hope that a pilot to test, gather data, and develop a pragmatic approach to tokenization can ensure we continue to uphold our mandate to fostering open, transparent, competitive and financially sound markets.”

Pham called for a stakeholder roundtable and for the CFTC to propose and adopt rules on the risks of crypto based on previous pilot programs. At the conclusion of the program, the commission would determine whether to implement the changes permanently.

Related: CFTC issues $54M default judgment against trader in crypto fraud scheme

Serving at the CFTC since April 2022, Pham is one of five commissioners who has called for greater clarity on crypto regulation. In addition to sponsoring the commission’s Global Markets Advisory Committee, she has suggested initiatives aimed at protecting crypto retail investors.

The proposed pilot program came following U.S. lawmakers’ attempts to clarify the roles of the CFTC and Securities and Exchange Commission on crypto regulation. In July, the House Financial Services Committee approved the Financial Innovation and Technology for the 21st Century Act, setting the bill up for a full House vote possibly before 2024.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

JPMorgan moves into deposit tokens for settlements: Report

JPMorgan is reportedly developing the infrastructure to run a new deposit token, allowing settlements between banks for corporate clients.

Financial giant JPMorgan is making another move into the crypto space with a new blockchain-based solution for cross-border transactions, reveals a report by Bloomberg. The system, however, won't be available until the bank receives the green light from regulators in the United States. 

JPMorgan has reportedly developed most of the infrastructure to run the new deposit token, which will be first launched for corporate clients to speed up payments and settlements. Deposit tokens are issued on a blockchain by a depository institution to represent a deposit position. The solution contrasts with stablecoins, which are usually issued by a non-bank private entity.

The product is also different from its JPM Coin, which already allows corporate clients to transfer dollars and euros across the financial institution. The new deposit token, meanwhile, will allow transactions to other banks and is suitable for different forms of settlements on a blockchain, including trades of tokenized securities.

The deposit token, however, shares similarities with the JPM Coin in terms of compliance, since its transactions would go through know-your-customer and anti-fraud processes. Last year, the new token was piloted in a single transaction as part of the Project Guardian, a collaborative cross-industry effort pioneered by the Monetary Authority of Singapore (MAS) of Singapore.

Related: PayPal’s PYUSD struggles with early adoption — Nansen

“Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used,” a JPMorgan spokesperson told Bloomberg in a statement, adding that “should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly.” As per the report, JPMorgan moves $10 trillion in transactions overall on a daily basis.

The bank has voiced its support for deposit tokens before. In February, JPMorgan noted that deposit tokens may offer more stability and reliability compared to similar solutions, such as stablecoins and central bank digital currencies (CBDCs).

JPMorgan's deposit token initiative not only expands its blockchain-based solutions, but also adds more competition for stablecoin issuers. Another big player who recently joined the race for faster settlements powered by crypto tokens was PayPal. The fintech firm launched its stablecoin (PYUSD) in early August, prompting traditional competitors in the U.S. market, such as Circle, to expand the reach of its stablecoin USD Coin (USDC) to six new blockchains in an effort to boost adoption.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Altseason delayed due to lack of fresh retail capital — Ki Young Ju

Former FTX exec will give up real estate, car and $11M following guilty plea: Report

Ryan Salame will reportedly remain free on a $1 million bond until his sentencing hearing expected in March 2024.

Ryan Salame, the former co-CEO of FTX Digital Markets, has pleaded guilty to charges related to defrauding the United States Federal Election Commission (FEC) and conspiracy to operate an unlicensed money-transmitting business.

According to a Sept. 7 announcement from the U.S. Justice Department, Salame pleaded guilty before a judge in the U.S. District Court for the Southern District of New York, making him the fourth major player connected to defunct crypto exchange FTX facing criminal charges to do so. The former co-CEO could face years in prison for the campaign finance charge as well as additional time related to operating an unlicensed money-transmitting business.

The campaign finance charges were reportedly related to contributions for the 2022 congressional campaign of Salame's girlfriend, Michelle Bond. FEC records showed the former FTX exec made 2 donations of $2,900 each to support Bond's campaign in Massachusetts for the primary, as well as 2 donations of $2,900 each for the general election. Reports suggested he also made campaign contributions on behalf of a corporation, violating U.S. law.

“I made $10 million in political contributions and called them loans, which I never intended to repay,” said Salame, according to a Sept. 7 thread on X (formerly Twitter) from Inner City Press. “This was supported by Sam Bankman-Fried. I knew it was prohibited. [...] As Alameda’s head of settlements I used banks, one used in California. I was unaware licensure was required. But now I know.”

Related: FTX Bahamas co-CEO Ryan Salame blew the whistle on FTX and Sam Bankman-Fried

The former FTX executive pleaded guilty to the criminal charges, but Assistant U.S. Attorney Samuel Raymond reportedly said he would make a submission to probation following the criminal trial of former FTX CEO Sam Bankman-Fried (SBF), scheduled to begin on Oct. 3. Salame will reportedly pay roughly $6 million in penalties to the U.S. government, pay more than $5 million to FTX debtors and surrender two properties in Massachusetts as well as a Porsche in his name.

At the time of publication, Salame remained free on a $1 million bond, with sentencing potentially looking to be held on March 6, 2024 — a few days before Bankman-Fried's second criminal trial is set to begin. Former Alameda Research CEO Caroline Ellison, FTX co-founder Gary Wang and FTX’s former engineering director Nishad Singh have already pleaded guilty to federal fraud charges, while SBF has pleaded not guilty.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

Altseason delayed due to lack of fresh retail capital — Ki Young Ju