SEC - Page 269

Worldcoin, the Proof of Humanity protocol that gained attention in 2021 for its promise of free tokens to users verifying their humanity through iris scans, has recently faced increased criticism regarding its data collection practices.

In response to mounting concerns, Worldcoin released its audit reports on July 28, conducted by security consulting firms Nethermind and Least Authority.

The audit by Nethermind unveiled 26 security issues within the protocol, with 24 of them being addressed and resolved during the verification phase.

One issue was mitigated, and another was acknowledged, demonstrating Worldcoin’s commitment to enhancing its security measures.

Least Authority, on the other hand, discovered three issues and made six suggestions. Worldcoin promptly resolved all the identified issues or planned resolutions for them, as outlined in their official announcement.

Worldcoin’s public launch took place on July 25, following nearly two years of development and beta testing. However, the project faced immediate criticism.

The UK’s Information Commissioner’s Office (ICO) was considering an investigation into potential violations of data protection laws, while the French data protection agency, the National Commission on Informatics and Liberty, also raised concerns about the project’s legality.

The concept behind Worldcoin, co-founded by Sam Altman, aimed to combat the rise of AI bots on the internet by offering a means of verifying users’ humanity without compromising their privacy.

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The process involved iris scans through a device called the “Orb,” which generated a hash of the user’s iris scan without storing the actual scan data.

The crypto community had mixed reactions to Worldcoin’s launch. Some saw it as a step toward protecting humans from malicious AI, while others feared it could lead to a dystopian future with diminished privacy.

The audit reports focused on various security aspects, including protection against distributed denial of service attacks, specific implementation errors, proper encryption and key management, data leak prevention, and information integrity.

Some issues arose due to dependencies on Semaphore and Ethereum, involving elliptic curve precompile support and Poseidon hash function configuration.

Worldcoin made commendable progress in addressing the security concerns raised during the audits. Almost all identified issues were either fixed, mitigated, or had planned solutions.

The remaining security issue’s severity was labeled “undetermined,” but it was acknowledged and being monitored.

As Worldcoin continues to evolve, addressing security challenges and data privacy concerns will be crucial in gaining public trust and support.

The project’s innovative approach to proving humanity may pave the way for future developments in the blockchain and AI space, but ensuring responsible data handling remains paramount.

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Former Twitter Product Director Exposes Peculiarities of Working Under Elon Musk

Formerly a product director at Twitter, now identified only as X, has revealed new insights into the inner workings of the social media giant under entrepreneur Elon Musk’s leadership.

In a lengthy 2,400-word tweet and accompanying video, X described the pre-Musk era at Twitter as a mixture of “amazing and terrible,” plagued by bureaucracy.

However, under Musk’s leadership, the post-Musk Twitter has been a rollercoaster of challenges and drama.

X was among the few original members of the Twitter team who decided to stick around when Musk took over, hoping that his influence would steer the company in the right direction.

Unfortunately, she was one of the 200 employees who got laid off during Musk’s round of layoffs in February.

X initially viewed Musk as a bold and inspiring entrepreneur, responsible for creating successful companies like Tesla and SpaceX. She believed that Musk’s ownership could breathe new life into Twitter.

Despite Musk’s charm, X soon discovered that his leadership style had its downsides.

He often lacked empathy to a painful extent, and his unpredictability made employees afraid to share bad news or contradictory opinions with him.

This fear led to the formation of a fanatical inner circle that unquestionably supported everything Musk said.

Musk’s aversion to criticism led him to seek advice from unconventional sources, like polling Twitter, consulting friends, or even turning to his biographer for product advice.

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He seemed to trust random feedback more than the dedicated employees in the room who were experts in solving the company’s problems. This approach puzzled X and others.

Since Musk took over Twitter in October 2022, he introduced various crypto and finance-related features to the app.

Under the rebranded name “X,” Musk envisions turning the social media platform into an “everything app” with features like electric payments, voice calls, and a potential integration with the meme token Dogecoin (DOGE).

Cointelegraph reached out to Twitter for comments, but they did not receive an immediate response.

In conclusion, X’s revelations shed light on the challenges and peculiarities of working under Elon Musk’s leadership at Twitter.

While his bold and inspiring personality brought some optimism, his unpredictable and unresponsive nature created an environment of fear and an inner circle of unquestioning support.

Despite these hurdles, Musk continues to drive the company forward with ambitious plans for its future as “X.”

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The European Commission’s proposal for the Artificial Intelligence Act (AI Act) has undergone extensive negotiations between the Council of the European Union and the European Parliament.

However, the two legislative bodies face challenges due to differences on specific issues, including biometric surveillance.

In Germany, political groups and digital experts are raising concerns about the proposed changes to the AI Act.

Die Linke, a left-wing party in Germany, is calling for stricter regulation and transparency in European AI legislation.

They emphasize the need for consumer protection and want high-risk AI systems to be thoroughly checked by a supervisory authority before being launched on the market.

Die Linke also advocates for an explicit ban on biometric identification systems in public spaces and AI-driven election interference, among other measures.

On the other hand, the center-right coalition, known as “the Union,” prioritizes fostering innovation and openness in AI.

They believe that excessive regulation should be avoided and emphasize the importance of aligning with existing data protection and digital market regulations.

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The German AI Association (KI Bundesverband), representing innovative SMEs and startups, also advocates for openness to innovation but disagrees with the EU’s approach.

The association suggests a focus on mitigating real AI application threats and risks and protecting fundamental rights and European values.

Germany’s government supports the AI Act but aims to strike a balance between regulation and openness to innovation. They are implementing measures to promote German AI companies and continue advocating for an ambitious approach to AI testbeds during negotiations on the AI Act.

Despite these efforts, concerns arise that Europe might fall behind in AI compared to the dominance of U.S. and Chinese tech companies.

A feasibility study commissioned by the German Ministry for Economic Affairs and Climate Action explores the potential of large AI models for Germany, including the establishment of an AI supercomputing infrastructure to foster development.

Experts argue that Europe’s reliance on non-European software and services threatens its AI sovereignty.

They propose the creation of a globally recognized “CERN for AI” to facilitate cutting-edge research and attract talent, contributing to the success of “AI made in Europe.”

In conclusion, the negotiations on the AI Act continue to be complex due to differing perspectives. While Die Linke advocates for stricter regulation, the Union seeks to prioritize innovation.

Germany’s government is working to strike a balance between regulation and innovation, and the German AI Association calls for practical solutions to address AI risks.

To avoid falling behind, Europe must focus on fostering its AI landscape and investing in foundational technologies.

A shift in AI strategy and targeted public investments are essential for the success of “AI made in Europe.”

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Crypto exchange Binance and its CEO Changpeng “CZ” Zhao have taken steps to contest a lawsuit filed by the United States Commodity Futures Trading Commission (CFTC).

In a recent court filing on July 27, legal representatives for Binance and CZ made a formal request for the dismissal of the CFTC’s claims, citing concerns of regulatory overreach and the exceeding of the commission’s regulatory authority.

The filing strongly argued that the CFTC was attempting to regulate foreign entities and individuals operating outside the borders of the United States, which, according to Binance and CZ, falls beyond the scope of the commission’s statutory jurisdiction.

This approach, they asserted, interferes with the established principles of comity with foreign sovereigns, raising significant legal questions.

According to the defense, the initial six charges presented by the CFTC did not directly relate to the foreign conduct at the core of the case.

Furthermore, certain charges were argued to not meet the required legal standards. As for the seventh charge, which accused Binance of evading the Commodity Exchange Act (CEA), Binance’s legal team maintained that the CFTC failed to meet the necessary requirements to sustain such an accusation.

One of the primary contentions of the motion to dismiss was the CFTC’s alleged lack of regulatory authority over spot trading both domestically and internationally.

The defense questioned whether Binance․com should be subjected to specific registration and regulatory compliance provisions in the CEA and CFTC regulations, considering factors such as the introduction of additional products after 2019 and previous limitations on U.S. users.

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The legal clash between Binance and the CFTC began in March when the commission initiated a lawsuit against the exchange.

The CFTC’s allegations included the offering of unregistered derivatives products in the United States, encompassing cryptocurrency trading services, futures, and options products.

Additionally, the CFTC accused Binance of inadequate supervision, lack of a reliable Know Your Customer (KYC) or Anti-Money Laundering (AML) program, and failure to register as a futures commissions merchant, designated contract market, or swap execution facility.

In addition to the CFTC lawsuit, Binance has been facing further legal challenges in the United States due to a separate lawsuit filed by the Securities and Exchange Commission (SEC) in June.

The outcome of the motion to dismiss will undoubtedly be critical for Binance, CZ, and the regulatory landscape surrounding cryptocurrency exchanges in the United States.

As the legal battle continues, industry observers and stakeholders await further developments in this high-profile case.

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