BULL RUN and RICHARD HEART?

November 30, 2023

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The Collision of AI and Crypto Attracts Scammers – What’s Going On?

Within the evolving landscape of the crypto industry, Kathleen Breitman, the co-founder of Tezos blockchain, has alerted about a burgeoning wave of scams interweaving artificial intelligence (AI) with crypto. Her commentary in Fortune on Sunday cautioned against opportunistic endeavors aiming to merge these apparently disparate domains to exploit unsuspecting investors, outlining three distinct forms of AI-related crypto scams.

The initial approach involves using crypto tokens to access AI models or services, exploiting the shared terminology of "tokens" in both AI and crypto spheres. Breitman cautioned that while some AI services accept crypto payments, the connection is often surface-level, potentially misleading investors.

The second scheme revisits the concept of “data is the new oil,” which originated during the 2017 ICO boom and has since become an internet meme. Scammers may market tokens claiming to reward contributors for providing personal data to AI training models through purported “data marketplaces.” Breitman dismissed this notion, asserting that personal data lacks sensible monetization.

Breitman also anticipated the emergence of tokens overtly branded with “AI” or “GPT” (referencing the popular chat bot ChatGPT), capitalizing on the buzz surrounding these technologies.

Concluding her insights, Breitman stressed the lack of coherence between AI and crypto in these amalgamated attempts. She cautioned against falling for these “shoehorned” tokens, highlighting the crypto industry's inclination to create dubious models to entice unwitting investors. Emphasizing the primary value of crypto as a censorship-resistant store of value fostering global unity, she urged readers to remain vigilant against manipulative practices within the industry.

Crypto miner Hive expands data center operations in Sweden

Hive Digital Technologies recently expanded its global operations by acquiring land and a data center in Boden, Sweden, aiming to bolster its cryptocurrency mining endeavors and accommodate the next wave of ASIC servers, further amplifying Bitcoin production.

The company announced a property transfer agreement with Turis AB, acquiring a data center previously established as part of the European Union’s Horizon 2020 project. Positioned near its existing Swedish data center, this new property will house advanced ASIC servers, augmenting the company's Bitcoin mining output.

Johanna Thornblad, Hive’s Sweden country president, emphasized the significance of this expansion, highlighting the company's dedication to environmental responsibility and energy efficiency through the utilization of "green" energy in their data centers.

With operational facilities in Canada, Sweden, and Iceland, Hive prioritizes green energy adoption for mining digital assets like Bitcoin, underscoring its commitment to sustainable practices.

Earlier in 2023, Hive strategically dropped "blockchain" from its name to align with an expanded focus on AI, cloud computing, and GPUs. Despite this pivot, CEO Aydin Kilic and Chairman Frank Holmes affirmed their continued engagement in Bitcoin and crypto mining, emphasizing the coexistence of blockchain, AI, and their pivotal roles within Web3.

Moreover, Hive participated in the launch of the Digital Power Network (DPN) in collaboration with mining companies affiliated with the Chamber of Digital Commerce. The network advocates for the importance of proof-of-work (PoW) mining in the crypto space.

JAPANESE MARKET EMBRACES USDC AS CIRCLE AND SBI SET THE STAGE FOR WEB3

Circle, renowned for its USD Coin (USDC), has teamed up with Tokyo-based financial giant SBI Holdings in a strategic alliance to propel USDC adoption and Web3 services in Japan. This collaboration aligns with recent regulatory changes in Japan's Payment Services Act, now paving the way for stablecoin regulation.

The memorandum of understanding (MOU) signed on November 27th between Circle and SBI Holdings marks a vital step in fortifying USDC's presence in Japan. Their goal is to invigorate stablecoin issuance and circulation while catalyzing Japan's shift toward a Web3 economy. SBI Holdings seeks regulatory approval to operate as an electronic payment instruments service, a crucial element in this partnership's execution.

Yoshitaka Kitao, CEO and President of SBI Holdings, views this collaboration optimistically, seeing it as a crucial moment for stablecoin adoption in Japan. He envisions this as groundwork for the comprehensive integration of stablecoins, expressing contentment in forging an alliance with Circle.

Circle's CEO, Jeremey Allaire, resonated Kitao's outlook, highlighting the unified vision shared by both entities for Japan and Asia's digital currency landscape. This partnership is a cornerstone of Circle's strategic expansion in the region.

Beyond bolstering USDC adoption, the collaboration aims to promote Circle's Web3 Services suite, facilitating the creation and operation of Web3 applications across various blockchains. Allaire expressed eagerness for the collaboration, anticipating new benchmarks in Japan's financial sector.

SBI Shinsei Bank, a subsidiary of SBI Holdings, will extend banking services to Circle, enhancing USDC access and liquidity within Japan, further propelling stablecoin adoption.

Circle's observations indicate that 70% of USDC adoption occurs outside the United States, with Asia taking the lead. This demand for reliable digital dollars extends to regions like Latin America and Africa.

As of recent data, USD Coin (USDC) ranks as the second-largest stablecoin globally, boasting a market capitalization of around $24.6 billion, solidifying its position in the rapidly evolving digital currency landscape.

SEC struggles to serve Richard Heart in an international case

The United States Securities and Exchange Commission (SEC) faces obstacles in serving a lawsuit against Richard Heart, HEX's founder, accused of a $1 billion securities fraud involving unregistered securities. Heart's residence in Finland complicates the lawsuit's delivery due to logistical challenges.

Attempting service in Finland, the SEC encounters difficulties adhering to legal conventions. Despite efforts, confirmation of successful service remains elusive. If traditional methods fail, the SEC plans alternative service under Rule 4(f) of the Federal Rules of Civil Procedure, showcasing their determination to proceed despite jurisdictional hurdles.

This case highlights the SEC's perseverance and the trend toward innovative legal service in the digital age. While not yet specified for Heart's case, using blockchain for legal notices was approved in the UK, signaling a potential avenue for the SEC if traditional methods falter. This reflects the evolving intersection of technology and law, especially in cases involving digital assets and blockchain.

Richard Heart's lawsuit underlines cryptocurrency regulatory scrutiny, emphasizing compliance with securities laws. The outcome could significantly impact digital asset regulations, emphasizing the legal obligations facing cryptocurrency creators. The SEC's pursuit of Heart showcases legal complexities in the digital age and potential innovative solutions, with the case's resolution poised to shape future actions in this evolving sector.

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