Encryption

Feds Bust Alaska Man With 10,000+ CSAM Images Despite His Many Encrypted Apps (arstechnica.com) 209

A recent indictment (PDF) of an Alaska man stands out due to the sophisticated use of multiple encrypted communication tools, privacy-focused apps, and dark web technology. "I've never seen anyone who, when arrested, had three Samsung Galaxy phones filled with 'tens of thousands of videos and images' depicting CSAM, all of it hidden behind a secrecy-focused, password-protected app called 'Calculator Photo Vault,'" writes Ars Technica's Nate Anderson. "Nor have I seen anyone arrested for CSAM having used all of the following: [Potato Chat, Enigma, nandbox, Telegram, TOR, Mega NZ, and web-based generative AI tools/chatbots]." An anonymous reader shares the report: According to the government, Seth Herrera not only used all of these tools to store and download CSAM, but he also created his own -- and in two disturbing varieties. First, he allegedly recorded nude minor children himself and later "zoomed in on and enhanced those images using AI-powered technology." Secondly, he took this imagery he had created and then "turned to AI chatbots to ensure these minor victims would be depicted as if they had engaged in the type of sexual contact he wanted to see." In other words, he created fake AI CSAM -- but using imagery of real kids.

The material was allegedly stored behind password protection on his phone(s) but also on Mega and on Telegram, where Herrera is said to have "created his own public Telegram group to store his CSAM." He also joined "multiple CSAM-related Enigma groups" and frequented dark websites with taglines like "The Only Child Porn Site you need!" Despite all the precautions, Herrera's home was searched and his phones were seized by Homeland Security Investigations; he was eventually arrested on August 23. In a court filing that day, a government attorney noted that Herrera "was arrested this morning with another smartphone -- the same make and model as one of his previously seized devices."

The government is cagey about how, exactly, this criminal activity was unearthed, noting only that Herrera "tried to access a link containing apparent CSAM." Presumably, this "apparent" CSAM was a government honeypot file or web-based redirect that logged the IP address and any other relevant information of anyone who clicked on it. In the end, given that fatal click, none of the "I'll hide it behind an encrypted app that looks like a calculator!" technical sophistication accomplished much. Forensic reviews of Herrera's three phones now form the primary basis for the charges against him, and Herrera himself allegedly "admitted to seeing CSAM online for the past year and a half" in an interview with the feds.

Government

California Passes Bill Requiring Easier Data Sharing Opt Outs (therecord.media) 22

Most of the attention today has been focused on California's controversial "kill switch" AI safety bill, which passed the California State Assembly by a 45-11 vote. However, California legislators passed another tech bill this week which requires internet browsers and mobile operating systems to offer a simple tool for consumers to easily opt out of data sharing and selling for targeted advertising. Slashdot reader awwshit shares a report from The Record: The state's Senate passed the landmark legislation after the General Assembly approved it late Wednesday. The Senate then added amendments to the bill which now goes back to the Assembly for final sign off before it is sent to the governor's desk, a process Matt Schwartz, a policy analyst at Consumer Reports, called a "formality." California, long a bellwether for privacy regulation, now sets an example for other states which could offer the same protections and in doing so dramatically disrupt the online advertising ecosystem, according to Schwartz.

"If folks use it, [the new tool] could severely impact businesses that make their revenue from monetizing consumers' data," Schwartz said in an interview with Recorded Future News. "You could go from relatively small numbers of individuals taking advantage of this right now to potentially millions and that's going to have a big impact." As it stands, many Californians don't know they have the right to opt out because the option is invisible on their browsers, a fact which Schwartz said has "artificially suppressed" the existing regulation's intended effects. "It shouldn't be that hard to send the universal opt out signal," Schwartz added. "This will require [browsers and mobile operating systems] to make that setting easy to use and find."

AI

California Legislature Passes Controversial 'Kill Switch' AI Safety Bill (arstechnica.com) 56

An anonymous reader quotes a report from Ars Technica: A controversial bill aimed at enforcing safety standards for large artificial intelligence models has now passed the California State Assembly by a 45-11 vote. Following a 32-1 state Senate vote in May, SB-1047 now faces just one more procedural state senate vote before heading to Governor Gavin Newsom's desk. As we've previously explored in depth, SB-1047 asks AI model creators to implement a "kill switch" that can be activated if that model starts introducing "novel threats to public safety and security," especially if it's acting "with limited human oversight, intervention, or supervision." Some have criticized the bill for focusing on outlandish risks from an imagined future AI rather than real, present-day harms of AI use cases like deep fakes or misinformation. [...]

If the Senate confirms the Assembly version as expected, Newsom will have until September 30 to decide whether to sign the bill into law. If he vetoes it, the legislature could override with a two-thirds vote in each chamber (a strong possibility given the overwhelming votes in favor of the bill). At a UC Berkeley Symposium in May, Newsom said he worried that "if we over-regulate, if we overindulge, if we chase a shiny object, we could put ourselves in a perilous position." At the same time, Newsom said those over-regulation worries were balanced against concerns he was hearing from leaders in the AI industry. "When you have the inventors of this technology, the godmothers and fathers, saying, 'Help, you need to regulate us,' that's a very different environment," he said at the symposium. "When they're rushing to educate people, and they're basically saying, 'We don't know, really, what we've done, but you've got to do something about it,' that's an interesting environment."
Supporters of the AI safety bill include state senator Scott Weiner and AI experts including Geoffrey Hinton and Yoshua Bengio. Bengio supports the bill as a necessary step for consumer protection and insists that AI should not be self-regulated by corporations, akin to other industries like pharmaceuticals and aerospace.

Stanford professor Fei-Fei Li opposes the bill, arguing that it could have harmful effects on the AI ecosystem by discouraging open-source collaboration and limiting academic research due to the liability placed on developers of modified models. A group of business leaders also sent an open letter Wednesday urging Newsom to veto the bill, calling it "fundamentally flawed."
The Courts

Appeals Court Questions TikTok's Section 230 Shield for Algorithm (reuters.com) 92

A U.S. appeals court has revived a lawsuit against TikTok over a child's death, potentially limiting tech companies' legal shield under Section 230. The 3rd U.S. Circuit Court of Appeals ruled that the law does not protect TikTok from claims that its algorithm recommended a deadly "blackout challenge" to a 10-year-old girl.

Judge Patty Shwartz wrote that Section 230 only immunizes third-party content, not recommendations made by TikTok's own algorithm. The decision marks a departure from previous rulings, citing a recent Supreme Court opinion that platform algorithms reflect "editorial judgments." This interpretation could significantly impact how courts apply Section 230 to social media companies' content curation practices.
Piracy

Top Movie Piracy Ring Taken Down, Major Studios' Enforcement Group Claims 42

An anti-piracy coalition comprised of major studios in the U.S. and across the globe is claiming victory against Fmovies, a significant streaming operation based in Vietnam. From a report: On Thursday the Alliance for Creativity and Entertainment revealed that it had worked with Hanoi police to shutter Fmovies and affiliated sites, which together made up "the largest pirate streaming operation in the world," according to the organization. With sites including bflixz, flixtorz, movies7, myflixer, and aniwave in addition to Fmovies, the operation attracted more than 6.7 billion visits between January 2023 and June 2024, ACE says.

The effort also shut down video hosting provider Vidsrc.to and its affiliated sites, which were "operated by the same suspects," per ACE. Two Vietnamese men were arrested by Hanoi police in connection with Fmovies and have yet to be charged. Charles Rivkin, the chairman and CEO of Hollywood trade group the Motion Picture Association and the chairman of ACE, called the action "a stunning victory for casts, crews, writers, directors, studios, and the creative community across the globe" in a statement. His colleague Larissa Knapp, evp and chief content protection officer for the MPA, said the takedown sent a "powerful deterrent message."
The Courts

Yelp Sues Google For Antitrust Violations (theverge.com) 23

Yelp has filed an antitrust lawsuit against Google, accusing the search giant of maintaining its local search monopoly by preferencing its own services over competitors, harming competition and reducing quality. "Yelp claims that the way Google directs users toward its own local search vertical from its general search engine results page should be considered illegal tying of separate products to keep rivals from reaching scale," adds The Verge. From the report: Yelp wants the court to order Google to stop the allegedly anticompetitive conduct and to pay it damages. It demanded a jury trial and filed the suit in the Northern District of California, where a different jury found that Google had an illegal monopoly through its app store in its fight against Epic Games.

The company was emboldened to bring its own lawsuit against Google after the DOJ's win in its antitrust case about the company's allegedly exclusionary practices around the distribution of search services. Yelp CEO Jeremy Stoppelman told The New York Times that following that decision, "the winds on antitrust have shifted dramatically." Previously, he told the Times, he'd hesitated to bring a suit because of the resources it would require and because he saw it as the government's job to enforce the antitrust laws.
"Yelp's claims are not new," Google spokesperson Peter Schottenfels said in a statement. "Similar claims were thrown out years ago by the FTC, and recently by the judge in the DOJ's case. On the other aspects of the decision to which Yelp refers, we are appealing. Google will vigorously defend against Yelp's meritless claims."
Crime

Backpage.com Founder Michael Lacey Sentenced To 5 Years In Prison, Fined $3 Million (apnews.com) 59

Three former Backpage executives, including co-founder Michael Lacey, were sentenced to prison for promoting prostitution and laundering money while disguising their activities as a legitimate classified business. The Associated Press reports: A jury convicted Lacey, 76, of a single count of international concealment money laundering last year, but deadlocked on 84 other prostitution facilitation and money laundering charges. U.S. District Judge Diane Humetewa later acquitted Lacey of dozens of charges for insufficient evidence, but he still faces about 30 prostitution facilitation and money laundering charges. Authorities say the site generated $500 million in prostitution-related revenue from its inception in 2004 until it was shut down by the government in 2018.

Lacey's lawyers say their client was focused on running an alternative newspaper chain and wasn't involved in day-to-day operations of Backpage. But Humetewa told Lacey during Wednesday's sentencing he was aware of the allegations against Backpage and did nothing. "In the face of all this, you held fast," Humetewa said. "You didn't do a thing." Two other Backpage executives, Chief Financial Officer John Brunst and Executive Vice President Scott Spear, also were convicted last year and were each sentenced on Wednesday to 10 years in prison. The judge ordered Lacey and the two executives to report to the U.S. Marshals Service in two weeks to start serving their sentences.

The Courts

Telegram CEO Indicted in Paris Court (yourerie.com) 111

An anonymous reader shares a report: Following the arrest of Telegram CEO and co-founder Pavel Durov Saturday, the 39-year-old billionaire, Drov has been indicted on multiple charges after appearing in front of a Paris Court on Wednesday. He has been indicted on charges of Complicity in the administration of an online platform to enable an illicit transaction, by an organized gang. This charge carries a maximum penalty of 10 years imprisonment and a fine of $555,000.

He was also indicted on charges of refusal to communicate at the request of authorities; Complicity in the offenses in particular of making available without legitimate reason a program or data designed to an attack on an automated data processing system, organized gang dissemination of images of minors of a child pornography nature, drug trafficking, organized gang fraud, criminal conspiracy with a view to committing crimes or offenses; Laundering of crimes or offenses by organized games; Provision of cryptology services aimed at ensuring confidentiality functions without compliant declaration. Durov has been placed under judicial supervision with an obligation to provide a deposit of 5 million euros and he must report to the police station twice a week and is banned from leaving France.
From earlier today: Telegram CEO Released By Police, Transferred To Court For Possible Indictment.
Crime

Telegram CEO Released By Police, Transferred To Court For Possible Indictment (arstechnica.com) 84

Telegram CEO Pavel Durov is heading to court for a possible indictment after being released from police custody, authorities in France said on Wednesday. From a report: "An investigating judge has ended Pavel Durov's police custody and will have him brought to court for a first appearance and a possible indictment," according to a statement from the Paris prosecutor's office that was quoted in an Associated Press article. Durov was arrested in Paris on Saturday and questioned by police for several days. The French investigative judge will "decide whether to place him under formal investigation following his arrest as part of a probe into organized crime on the messaging app," Reuters wrote today.

"Being placed under formal investigation in France does not imply guilt or necessarily lead to trial, but indicates that judges consider there is enough to the case to proceed with the probe. Investigations can last years before being sent to trial or shelved," Reuters wrote. The judge's decision on a formal investigation is expected today, the article said. On Monday, prosecutor Laure Beccuau issued a statement saying Durov was arrested "in the context of a judicial investigation" into a "person unnamed." The wording leaves open the possibility that the unnamed person is someone else, but the prosecutor's statement listed a raft of potential charges that may indicate what Durov could be charged with.
Update: Telegram CEO Indicted in Paris Court .
United States

Appliance and Tractor Companies Lobby Against Giving the Military the Right to Repair (404media.co) 142

Device manufacturers across multiple industries are lobbying against proposed legislation that would require military contractors to provide the U.S. military with easier access to repair materials and information, according to a document obtained by 404 Media.

The legislation, Section 828 of the Defense Reauthorization Act, aims to address the military's current inability to repair equipment ranging from fighter jets to Navy battleships without relying on contractors. Sen. Elizabeth Warren highlighted the issue in a May hearing, citing examples of how repair restrictions lead to increased costs and operational delays for the Department of Defense.

The lobbying effort extends beyond military contractors to include organizations representing industries such as irrigation equipment, motorcycles, tractors, plumbing, medical devices, and consumer technology. In a letter to lawmakers, these groups argue that the legislation would impose significant burdens on contractors and undermine existing technical data rights statutes.
The Courts

SEC Threatens Legal Action Against NFT Marketplace OpenSea (x.com) 21

U.S. Securities and Exchange Commission (SEC) has issued a Wells notice to OpenSea, the leading non-fungible token (NFT) marketplace, threatening legal action over alleged securities violations. The SEC contends that NFTs traded on OpenSea's platform may constitute securities, a move that could have far-reaching implications for the digital art and collectibles industry. OpenSea CEO Devin Finzer denounced the SEC's action as an overreach that could stifle innovation and harm creators. The company pledged $5 million to cover legal fees for NFT creators and developers who receive Wells notices.
Power

Publicly Available EV Charger Network Doubles Under Biden-Harris Administration (electrek.co) 247

An anonymous reader quotes a report from Electrek: Over 192,000 publicly available charging ports are now online, and approximately 1,000 new chargers are being added each week. To build on this momentum, the federal government has awarded $521 million in grants to further expand the national network, with new chargers being deployed across 29 states, two Federally Recognized Tribes, and the District of Columbia.

The $521 million investment is divided into two key areas: 41 community projects ($321 million) and 10 corridor fast-charging projects ($200 million). The grant awards also support President Biden's Justice40 Initiative, which aims for 40% of the overall benefits of federal investments to flow to disadvantaged communities, with over half of the funding going to sites in disadvantaged communities.
US Transportation Secretary Pete Buttigieg emphasized the importance of this initiative, stating, "The Biden-Harris Administration has been clear about America leading the EV revolution, and thanks to the historic [Bipartisan Infrastructure Law] package, we're building a nationwide EV charger network to make sure all drivers have an accessible, reliable, and convenient way to charge their vehicles."
Medicine

FDA Expands Probe of Ecstasy-Based Drug Studies (arstechnica.com) 32

ole_timer shares a report from Ars Technica, written by Beth Mole There's more bad news for the company behind an experimental MDMA therapy for post-traumatic stress disorder, which the Food and Drug Administration roundly rejected earlier this month. According to a report from The Wall Street Journal, the FDA is now expanding an investigation into clinical trials behind the experimental psychedelic therapy -- even though the agency has already rejected it. Agency investigators reportedly interviewed four additional people last week, asking questions regarding whether the trials underreported side effects.

People involved in the trial have previously alleged, among other things, that ill effects, such as suicidal thoughts, went undocumented, and trial participants were discouraged from reporting them to bolster the chances of FDA approval. Overall, the MDMA trials faced crushing criticism amid the FDA's review, with outside experts and agency advisers calling out allegations of sexual misconduct at one trial site, as well as flaws in overall trial designs, multiple sources of biases, and claims that the company behind the therapy, Lykos, fostered a cult-like belief in psychedelics.

According to the Journal, the recent interviews were being conducted by the FDA's Office of Regulatory Affairs, which oversees inspections, and a subdivision of that office called Biomedical Research Monitoring Program, which works to ensure the quality and integrity of data submitted to FDA. Notably, when the agency rejected MDMA, it advised Lykos to conduct a new trial. While the FDA's rejection and expanded investigation are bad enough for Lykos, the company announced this month that it's laying off 75 percent of its staff and overhauling its leadership. The moves were in response to the FDA's rejections, the company said. Additionally, a scientific journal retracted three of the company's MDMA studies, citing "protocol violations amounting to unethical conduct" in its trials, echoing claims raised amid the FDA review.

Censorship

Zuckerberg Says He Regrets Not Being More Outspoken About 'Government Pressure' (thehill.com) 288

In a letter to the House Judiciary Committee, Meta CEO Mark Zuckerberg expressed regret for not being more vocal about "government pressure" to censor COVID-19-related content. He also acknowledged that Meta shouldn't have demoted a New York Post story about President Biden's family before the 2020 election. The Hill reports: Zuckerberg said senior Biden administration officials "repeatedly pressured" Meta, the parent company of Facebook and Instagram, to "censor" content in 2021. "I believe the government pressure was wrong, and I regret that we were not more outspoken," he wrote to House Judiciary Chair Jim Jordan (R-Ohio). "Like I said to our teams at the time, I feel strongly that we should not compromise our content standards due to pressure from any Administration in either direction -- and we're ready to push back if something like this happens again," Zuckerberg added.

The Meta CEO also said the company "shouldn't have demoted" a New York Post story about corruption allegations involving President Biden's family ahead of the 2020 election while waiting for fact-checkers to review it. The social media company has since updated its policies and processes, including no longer demoting content in the U.S. while waiting for fact-checkers, he noted. Zuckerberg also said in Monday's letter that he does not plan to make contributions to local jurisdictions to support election infrastructure this cycle, like he did during the 2020 election.

The contributions, which were "designed to be non-partisan," were accused of being unfairly distributed between left-leaning and right-leaning areas and labeled "Zuckerbucks" by Republicans. "Still, despite the analyses I've seen showing otherwise, I know that some people believe this work benefited one party over the other," Zuckerberg said. "My goal is to be neutral and not play a role one way or another -- or to even appear to be playing a role."
House Judiciary Republicans touted the letter as a "big win for free speech," writing on X: "Mark Zuckerberg just admitted three things: 1. Biden-Harris Admin 'pressured' Facebook to censor Americans. 2. Facebook censored Americans. 3. Facebook throttled the Hunter Biden laptop story."

"Mark Zuckerberg also tells the Judiciary Committee that he won't spend money this election cycle. That's right, no more Zuck-bucks. Huge win for election integrity," it added.
AI

OpenAI Supports California AI Bill Requiring 'Watermarking' of Synthetic Content 30

OpenAI said in a letter that it supports California bill AB 3211, which requires tech companies to label AI-generated content. Reuters reports: San Francisco-based OpenAI believes that for AI-generated content, transparency and requirements around provenance such as watermarking are important, especially in an election year, according to a letter sent to California State Assembly member Buffy Wicks, who authored the bill. "New technology and standards can help people understand the origin of content they find online, and avoid confusion between human-generated and photorealistic AI-generated content," OpenAI Chief Strategy Officer Jason Kwon wrote in the letter, which was reviewed by Reuters.

AB 3211 has already passed the state Assembly by a 62-0 vote. Earlier this month it passed the senate appropriations committee, setting it up for a vote by the full state Senate. If it passes by the end of the legislative session on Aug. 31, it would advance to Governor Gavin Newsom to sign or veto by Sept. 30.
Crime

Telegram Founder Arrest Part of Cybercrime Inquiry, Say Prosecutors (theguardian.com) 98

Pavel Durov, the Russian-born billionaire co-founder of the Telegram messaging app, was arrested in France in connection with an investigation into criminal activity on the platform and a lack of cooperation with law enforcement, prosecutors announced on Monday. From a report: Durov, who has French citizenship, was detained at Le Bourget airport, just outside Paris, on Saturday evening after arriving from Azerbaijan on his private jet. His surprise arrest has sparked debate over free speech worldwide and led to an outcry in Moscow. The Paris prosecutor Laure Beccuau said the investigation concerned crimes related to illicit transactions, child sexual abuse, fraud and the refusal to communicate information to authorities.

Earlier in the day the French president, Emmanuel Macron, gave the first confirmation that Durov had been arrested as part of a judicial inquiry in relation to Telegram. "In a state governed by the rule of law, freedoms are upheld within a legal framework, both on social media and in real life, to protect citizens and respect their fundamental rights," Macron wrote on X, adding that the arrest was "in no way a political decision." "It is up to the judiciary, in full independence, to enforce the law," he said. A senior official at Ofmin, a French agency set up last year to prevent violence against children, said Durov's arrest was linked to Telegram's failure to properly fight crime on the app, including the spread of child sexual abuse material.

Your Rights Online

Macron on Telegram CEO's Arrest: French Government Was Not Involved (politico.eu) 85

President Emmanuel Macron said Monday that the French government was not involved in the arrest of Telegram founder and CEO Pavel Durov. From a report: "The arrest of Telegram's president on French territory took place as part of an ongoing judicial investigation. This is in no way a political decision. It is up to the judges to decide," Macron said. Durov was detained Saturday night after his private jet arrived in Paris. The Paris prosecutor has not yet communicated the reasons for the arrest of Durov, who founded the messaging app in 2013.

The tech chief currently remains in policy custody. The arrest follows probes "accusing Telegram of being complicit in numerous affairs linked to drug trafficking, apology for terrorism and cyberbullying," French daily Le Monde reported. In a statement, Telegram said that its CEO -- a Russian-born French-Emirati citizen -- had "nothing to hide" and that the company abided by EU law.

[...] "More than anything else, France is committed to freedom of expression and communication, innovation and entrepreneurship," Macron said Monday. "In a state governed by the rule of law, on social networks as in real life, freedoms are exercised within a framework established by law to protect citizens and respect their fundamental rights."

Businesses

Telegram Says CEO Durov Has 'Nothing To Hide' (bbc.com) 79

Messaging app Telegram has said its CEO Pavel Durov, who was detained in France on Saturday, has "nothing to hide." From a report: Mr Durov was arrested at an airport north of Paris under a warrant for offences related to the app, according to officials. The investigation is reportedly about insufficient moderation, with Mr Durov accused of failing to take steps to curb criminal uses of Telegram. The app is accused of failure to co-operate with law enforcement over drug trafficking, child sexual content and fraud.

Telegram said in a statement that "its moderation is within industry standards and constantly improving." The app added: "It is absurd to claim that a platform or its owner are responsible for abuse of that platform." Telegram said Mr Durov travels in Europe frequently and added that it abides by European Union laws, including the Digital Services Act, which aims to ensure a safe and accountable online environment. "Almost a billion users globally use Telegram as means of communication and as a source of vital information," the app's statement read. "We're awaiting a prompt resolution of this situation. Telegram is with you all." Judicial sources quoted by AFP news agency say Mr Durov's detention was extended on Sunday and could last as long as 96 hours.

Google

'Don't Trust Google for Customer Service Numbers. It Might Be a Scam.' (msn.com) 52

Google may be the most successful company in the world. But a Washington Post reporter argues that Google "makes you largely responsible for dodging the criminals who are hurting legitimate businesses and swindling people." On Monday, I found what appeared to be impostors of customer service for Delta and Coinbase, the cryptocurrency company, in the "People also ask" section high up in Google. A group of people experienced in Google's intricacies also said this week that it took about 22 minutes to fool Google into highlighting a bogus business phone number in a prominent spot in search results...

If you look at the two impostor phone numbers in Google for Delta and Coinbase, there are red flags. There are odd fonts and a website below the bogus numbers that wasn't for either company. (I notified Google about the apparent scams on Monday and I still saw them 24 hours later.) The correct customer help numbers did appear at the very top, and Google says businesses have clear instructions to make their customer service information visible to people searching Google.

The larger issue is "a persistent pattern of bad guys finding ways to trick Google into showing scammers' numbers for airlines, hotels, local repair companies, banks or other businesses." The toll can be devastating when people are duped by these bogus business numbers. Fortune recently reported on a man who called what a Google listing said was Coinbase customer support, and instead it was an impostor who Fortune said tricked the man and stole $100,000...

Most of the time, you will find correct customer service numbers by Googling. But the company doesn't say how often people are tricked out of time and money by bogus listings — nor why Google can't stop the scams from recurring.

The article makes two points.
  • Google says when they identify listings violating their rules, they move quickly against them.

Crime

Sam Bankman-Fried Didn't Have 'Character of a Thief', Argues Author Michael Lewis (decrypt.co) 95

An anonymous reader shared this story from the blog Decrypt: Michael Lewis, author of Going Infinite, an account of the rise and fall of Sam Bankman-Fried, has argued that the disgraced FTX founder didn't have "the character of a thief" in a new The Washington Post article. "His crime was of a piece with his character. The character wasn't the character of a thief. It was the character of a person numb to risk." Lewis explained in the final paragraphs of a 4,500 word essay adapted from a new introduction to his book. "Unable to feel risk himself, he can't really imagine other people feeling much at all about the risk he has subjected them to...."

Lewis doubled down on previous claims that Bankman-Fried wasn't running a Ponzi scheme, arguing that "The crime was unnecessary to the business in a way that, say, Bernie Madoff's was not," and that "The crime made no sense." The collapse of FTX, he added, "might have been avoided and FTX might have survived."

"That doesn't mean I think that Sam Bankman-Fried is innocent. It merely informs how I feel about him," Lewis explained. "I think the truth is closer to 'young person with an intellectually defensible but socially unacceptable moral code makes a huge mistake in trying to live by it' than "criminal on the loose in the financial system.'"

From from The Daily Beast: Lewis also pointed to bankruptcy court filings from FTX in the weeks after Bankman-Fried's sentencing showing that "against the $8.7 billion in missing customer deposits, FTX was now sitting on something like $14.5 to $16.3 billion." "Whatever the exact sum, it was enough to repay all depositors and various other creditors at least 118 cents on the dollar — that is, everyone who imagined they had lost money back in November 2022 would get their money back, with interest," Lewis writes.
Michael Lewis's article offers some vivid details: Inside of three years, he'd gone from socially and emotionally isolated 25-year-old with an upper-middle-class bank account to leader of a small army of math nerds and (according to Forbes magazine) not merely the world's richest person under 30 but maybe the fastest creator of wealth in recorded history... He'd gone from having no friends as a child to having too many as an adult without ever developing a capacity for friendship....

The prosecutors didn't need Sam's help. Sam helped them anyway by ignoring the counsel of his lawyers and testifying on his own behalf... As Lewis Kaplan, the federal judge who presided over the case, said later: "When he wasn't outright lying, he was often evasive, hairsplitting, dodging questions and trying to get the prosecutor to reword questions in ways that he could answer in ways he thought less harmful than a truthful answer to the question that was posed would have been. I've been doing this job for close to 30 years. I've never seen a performance quite like that...." [T]he judge ordered Sam to rise so that he might address him directly. Two hours or so earlier, Sam had shuffled into the courtroom in prison khakis with his head down and his hands oddly clasped behind his back. Just before he'd entered, his guards had told him he was meant to be wearing handcuffs and asked if he could create the impression that he was doing so...

"There is a risk that this man will be in a position to do something very bad in the future, and it's not a trivial risk, not a trivial risk at all," said the judge. "So, in part, my sentence will be for the purpose of disabling him." He then sentenced Sam to 25 years in prison, with no possibility of parole.

A few minutes later, Sam dutifully clasped his hands behind his back and shuffled out of the courtroom.

Lewis adapted his 4,500-word article from the upcoming (updated) paperback edition of his book — which was originally published in 2023 on the same day jurors were selected for Bankman-Fried's trial...

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