News: El Salvador phone tapping, Bitcoin in Tonga, Associated Press NFTs, books

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Don’t tap my phone in Bitcoin City

We had first reports in November that journalists at El Faro in El Salvador had been hacked with the Pegasus spyware, as favoured by unnamed state actors. Now Citizenlab has a full report: “Project Torogoz: Extensive Hacking of Media & Civil Society in El Salvador with Pegasus Spyware.” [CitizenLab; Reuters summary]

CitizenLab started investigating in September 2021. [El Faro, in English; El Faro, in Spanish]

President Bukele’s office denies everything, and doubtless won’t rest until they find the real hacker:

In a statement to Reuters, Bukele’s communications office said the government of El Salvador was not a client of NSO Group Technologies, the company that developed Pegasus. It said the administration is investigating the alleged hacking and had information that some top administration officials also might have had their phones infiltrated.

Salvadoran journalists had previously been attacked from 2017 (pre-Bukele) to 2020 with bulk surveillance technology Circles — which only sells its product to nation-states. Circles doesn’t hack individuals’ phones, but vacuums up data from the phone network around the targets. [CitizenLab, 2020]

Having struck out (ahaha) in El Salvador, Jack Mallers’ Strike is launching in Argentina, as part of a planned expansion into Latin America. When Mallers talks about dollars here, he means tethers. [Twitter; CoinDesk]

South sea bubble

Tonga is planning to adopt Bitcoin as legal tender. The legislation is modeled on the breathtakingly nonspecific Bitcoin Law put into place in El Salvador last year. The main Bitcoin proponent in Tonga is former Member of Parliament Lord Fusitu’a, who believes Bitcoin will make remittances cheaper. [AFR, 2021; CoinTelegraph, 2021; Twitter thread]

I expect Bitcoin will be on the back burner for a bit, while Tonga deals with being flooded by the biggest volcanic eruption of the twenty-first century — which cut off the country’s Internet cable. Magical Internet money requires Internet.

Baby’s on fire

Bitfinex Securities, who will be offering El Salvador’s Volcano Bonds later this year, are now offering the Blockstream Mining Note — securitised cloud mining. There are 25 places, which will cost 350,000 EUR each — of actual money..

“By securitizing hashrate on the Liquid Network, investors can adjust their exposure to Bitcoin mining based on market conditions by trading the BMN tokens on the secondary market.” The graph of expected returns on the Blockstream page seems to assume a steady BTC hash rate, not one that rises as it has for the past decade. [Bitfinex; Blockstream]

Norton Antivirus added a crypto miner last year. Yes, a crypto miner in the antivirus software itself. NortonLifeLock has since bought Avira antivirus — and they’ve put a crypto miner into Avira too. Norton’s also bought Avast, so I’m sure we can look forward to that going crypto in due course. Frankly, the built-in Windows Defender antivirus is about as good as any of them. [Krebs on Security; The Register]

Hydroelectric power is super-cheap in Villarrica, Paraguay — so the crypto miners have swarmed in like locusts. [Rest Of World]

Kosovo bans Bitcoin mining, and the miners scramble to dump their mining hardware. [The Guardian, archive]

Laos is looking to make money from crypto mining — with quotes from me. It didn’t make it into the article, but Laos is planning to put more hydroelectric dams on the Mekong — which may annoy Vietnam. [Lowy Institute]

Digiconomist starts tracking Dogecoin’s energy consumption — and yes, this accounts for the merge mining with Litecoin. [Digiconomist]

Corporate monkey laundering

The Associated Press is doing NFTs of famous AP photographs, on NFT marketplace Xooa. [AP press release]

Dwayne Desaulniers, the nontechnical executive in charge of the project, has tweeted a list of claims about NFTs: [Twitter, archive]

We believe registering our photos on a blockchain greatly preserves their value, reduces the economic impact of digital theft, helps protect photographers income and helps us fight deep fakes and misinformation.

These claims are so manifestly and transparently false that selling a product on the basis of them would constitute fraud. The only possible personal defence might be that Desaulniers literally does not understand the words he’s been told to say.

Intellectual property lawyer Mike Dunford does a Twitter thread on the planned NFT marketplace, which is dubious even by NFT standards. [Twitter]

Dunford has a chat with Desaulniers — who may not know anything about technology, but also doesn’t seem to know anything about copyright, nor about how not to offer unregistered securities to US retail buyers. [Twitter thread, archive]

Regulatory clarity

In Singapore, crypto companies can no longer advertise to the general public — only on their own websites and in their own apps. [Bloomberg]

The State Bank of Pakistan and the federal government of Pakistan have recommended a complete ban on the use of cryptocurrencies in the country. The Federal Investigation Agency launched an investigation into crypto exchange Binance in December. [SAMAA]

Spain is requiring all crypto advertising to warn investors they may lose all their money, and that crypto assets are unregulated and may be inappropriate for retail investors. Campaigns reaching over 100,000 people must be registered with the regulator, CMNV. The rules also apply to social media influencers. [Bloomberg]

In the UK, the House of Lords Economics Affairs Committee has issued its report on central bank digital currencies. The title is “Central bank digital currencies: a solution in search of a problem?” — and notes “We have yet to hear a convincing case for why the UK needs a retail CBDC.” The report says that Parliament must decide on whether to introduce a British CBDC — the Bank of England can’t just decide this by itself. [FT, paywalled; Parliament; Parliament, PDF]

The soap opera writer would follow him around and use his jewels for TV prime time

Patrick McGinty reviews The Cryptopians by Laura Shin, saving me the trouble of ever cracking it open. It comes across as a grinding book about horrible people — mostly the early Ethereum crowd — which will be no surprise to anyone who’s encountered crypto true believers.

I’ve spent five years now attempting to deobfuscate this firehose of nonsense, and I find myself repeatedly just saying that 2+2 makes 4, not 5 or 666 or whatever today’s crypto pumper needs it to make. I see my error in Libra Shrugged: I tried to explain how the stuff that collapsed in the 2008 financial crisis worked in comprehensible terms — I should have said it was all verrr’ complicated and referred readers to my white paper. (I prefer my way.)

McGinty ends up concluding that David Golumbia was just right about everything. It’s a good review, you should read it. [The Baffler]

Update: I did end up buying a copy of The Cryptopians, as a reference on the early Ethereum guys. It’s decently-written, but McGinty is right about the characters.

The Globe & Mail has run a very dull interview with Jennifer Robertson of QuadrigaCX that says nothing. It says “exclusive,” so let’s hope it really is the last. [Globe & Mail, archive There’s an excerpt from Robertson’s new book. [Globe & Mail, archive]

The journalists talk about Quadriga and Robertson in a Globe & Mail podcast, with a few clips of her voice — but just fragments. [Globe & Mail]

Things happen

Crypto ads on London public transport are at plague (ahaha) levels. Sadiq Khan, the mayor of London, has been urged to implement a previously-promised ban on gambling ads on all Transport for London services — and to extend the ban to crypto companies. The ads are frequently for some of the most blatantly scammy fly-by-night doge-themed altcoins. [The Guardian, archive]

USDF is a new stablecoin being issued by a consortium of proper FDIC-insured banks: NYCB, NBH, FirstBank, Sterling and Synovus. No, I’ve never heard of them either. USDF will run on the blockchain, which hopes to host frenetic DeFi nonsense. [press release]

Moxie Marlinspike is stepping down from Signal — with no notice and no replacement, after the minor altcoin MobileCoin hit the fan a couple of weeks ago. [Signal]

It has been [0] days since the last crypto Galt’s Gulch scam: “People Building ‘Blockchain City’ in Wyoming Scammed by Hackers.” [Vice]

How an undercover journalist bluffed his way to a six-figure job offer from Binance’s regulatory team — part one of three. [Disruption Banking]

New York Times: “Crypto Enthusiasts Meet Their Match: Angry Gamers.” [NYT]

ZDNet: “I bought Bitcoin from PayPal. Here’s what happened.” Give them a buttload of Know-Your-Customer information, then the service fails. There are no fees! Except for all the considerable list of fees. [ZDNet]

Hot takes

Tara Iyer of the International Monetary Fund has written the bank’s first Global Financial Stability note of 2022 — “Cryptic Connections: Spillovers between Crypto and Equity Markets.” Crypto markets go up and down with equity (stock) markets — and Iyer worries that that the linkage might work the other way. Iyer particularly notes the March 2020 cross-markets crash, where Bitcoin suddenly became super-correlated with other assets at the precise moment those wanting an “uncorrelated” asset needed it not to be. [IMF, PDF]

Andreesen Horowitz blatantly uses Coinbase as a channel to dump venture capital coins on retail. Fais Khan details the connections — and that these coins are usually terrible investments. (As well as unregistered securities.) [Substack]

Matt Ranger sets out the anatomy of Bitcoin price manipulation, using the 26 July 2021 short squeeze, and the fake news around that time of Amazon adopting crypto, as a worked example of a Bart with cascading liquidation. [Single Lunch]

Martin Walker explains Web 3.0 in a twenty-minute interview. [YouTube]

Molly White: “The more you think about it, the more ‘it’s early days!’ begins to sound like the desperate protestations of people with too much money sunk into a pyramid scheme, hoping they can bag a few more suckers and get out with their cash before the whole thing comes crashing down.” [blog post]

Paul Krugman: “The answer, I’d argue, is that Bitcoin was supposed to create a monetary system that functions without trust — and the modern right is all about fostering distrust. Covid is a hoax; the election was stolen; California’s forest fires had nothing to do with climate change, and they were started by Rothschild-controlled space lasers.” [NYT]

I thought The Onion was supposed to be parody. Anyway, here’s their guide to Web3. [The Onion]







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