Monthly Archives: June 2022

Apple’s Passkeys aim to replace passwords, here’s why you need them – T3

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You'd be forgiven for missing the Passkey announcement that came as part of Apple's WWDC 2022 keynote. There was a lot of information there, even for a well-versed tech journalist to follow. Among MacOS Ventura features might not be as flashy as the new continuity camera or stage manager but it's arguably far more important.

Passkeys have the potential to completely change web security by eliminating the need for you (or even your password manager) to enter a password on a website. The theory is that if there's no password exchanged, there's nothing that can be compromised.

Perhaps the most important factor though is that Passkeys aren't a Mac-only technology. It is part of the work being done by the FIDO Alliance, which also includes Microsoft and Google, to create a passwordless internet. Apple's version, however, will be synced between your devices using the iCloud Keychain that's also secured using end-to-end encryption.

(Image credit: Apple)

The process of using a Passkey won't feel that different to using Apple's Keychain or Google's Password manager. When you sign up to a site, or update your security settings on an account, you will be given the option to use a Passkey instead of a password. Then each time you visit that site, instead of inputting a password, you will be asked to use your TouchID or FaceID to verify much as you can at the moment to access those stored passwords.

The difference is happening behind the scenes. With Passkeys, no information is actually exchanged. It's all based on a clever WebAuthn standard that includes a public key and a private key and the cryptography between them. The private key never leaves your device, it is simply verified for the site by your own device. This means it can't be phished or leaked as it isn't stored on a web server.

While Apple's Passkeys are designed to work across all Apple devices, the collaboration with the FIDO alliance means that you will be able to access websites on non-Apple devices too. In the keynote, Apple shows a QR code on a website, which can then be scanned by your iPhone to access your passkey again, without sharing it with the website or third-party device.

The beauty of this is that it mean you can still use the security on your work machine, or even a shared computer in a hotel lobby, without worrying about hackers.

While Apple admits the move to Passkeys is a journey, it's a significant one that brings genuine benefits to users. It will take time for websites to provide the facility for one, but I can't wait to ditch my password manager and use it.

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Apple's Passkeys aim to replace passwords, here's why you need them - T3

GUEST ESSAY: We need to talk about crypto crash and its inevitable recovery – Daily Maverick

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A disinterested observer may be bemused, or even gleeful at this red sea. The walls reverberate with I told you sos. I suspect if you are a stakeholder in this new ecosystem, particularly an innocent one, the humour will be lost on you.

I am one of those stakeholders, personally and professionally. But I am still smiling, albeit through gritted teeth, holding on to my optimism with whitened knuckles.

Here is why.

Cryptography has been around for thousands of years but lurched forward in the 1970s as many researchers started developing new techniques for keeping secrets. More importantly, the market for this arcane mathematics grew quickly from military, to telecommunications, to industry, to the Internet. But the industry we generally now refer to as crypto and see daily in the headlines was really borne in 2009, which was when Bitcoin was conceived.

Not to put too fine a point on it, the explosion of innovations since then has been breathtaking hard to follow, hard to digest and hard to predict. Cryptocurrencies, financial services, NFTs, crypto-secured supply chains, the metaverse, gaming, governance-communities and other wondrous things have emerged (and continue daily to do so), all built on the back of cryptography.

This is to say that the quantum of brain power committed to this industry mathematicians, statisticians, computer scientists, economists, financial engineers, innovators, inventors, developers, educators and dreamers has become voluminous and adamant. There are hundreds of thousands of them and new ideas and experiments pour out daily, most of them utterly unconnected to the world of cryptocurrencies and the token prices which so consume the news cycle.

The price of Bitcoin or Ether or any other crypto asset will be of transient consequence to these people with their heads down building new worlds and better, fairer services. At worst, less investment will pour into the sector for a brief period. At best, pretenders and grifters and dodgy projects will disappear.

So the stuff happening deep in the bowels of the cryptoverse is largely unconcerned with the price of Bitcoin. There is simply no chance of this wave ending; these are fertile plains of abundant innovation in myriad matters of human interaction.

In any event, markets have a short memory. A much more serious bear market occurred at the end of 2017 with many tokens up to 80% down from highs. Prior to that, a number of other crashes dating back to 2013, also more merciless and eye-popping than this one. The crypto market recovered quickly from all of them, as I expect it will do from this one.

More importantly, it is important to retain perspective and context here. Most tech stocks, including giants like Netflix, are down more than 50% off their highs. Even those stocks in unrelated sectors like real estate and insurance are growling like bears. So the question that needs to be asked: is crypto crashing because crypto is toxic kryptonite (in the words of one of richest men in the world), or is crypto crashing because everything is crashing?

Institutional money started pouring into crypto in the last 18 months as it became evident that the asset class was not a bubble. This means that it has started to get caught in the net of big moneys risk-on/risk-off calculations. So when money flees from high-risk bets to low-risk safe harbours, it will flee from emerging markets, high-growth stocks, fancy derivatives. And it will flee from crypto, now sadly correlated with everything else in traditional finance. Crypto is crashing mostly because everything is crashing, save for a few terrible bloopers like the Terra stablecoin of which I have previously written.

Meanwhile, it is indeed painful to watch.

I submit that no one remembers the crypto crash of 2017 because it was simply swamped by the subsequent value of crypto-fueled inventions that came in its wake, and the growth of the industry wiped memories clean.

And I submit that is what will happen again this time, sooner rather than later. DM

Steven Boykey Sidley (Professor of Practice, JBS, University of Johannesburg)

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GUEST ESSAY: We need to talk about crypto crash and its inevitable recovery - Daily Maverick

Chelsea Manning dodges Grimes relationship questions

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Chelsea Manning dodged questions about her relationship with musician Grimes by refusing to talk about her personal life.

The Daily Beast asked the famed whistleblower about her romance with the Genesis singer, and in response Manning drew a line in the sand.

Im not gonna get into my dating life. Theres been a lot of speculation and a lot of news stories. I have not changed my perspective on this: I dont like speculation about my private life, Manning told the publication.

I prefer to keep my private life private. I dont want to create a precedent either. Another concern that I have is I dont want to confirm or deny anything in my private life because I dont want to make it seem like Im open to having people digging into my personal life, real or imagined.

Manning, 34, continued to explain that she doesnt want to get sucked into celebrity-culture stuff but acknowledged that shes based in New York.

Page Six broke the news in March that Grimes, 34, had started dating Manning after her relationship with Elon Musk ended for the second time. Grimes and the Tesla founder share two children.

Theyre getting serious. They U-Hauled it, a source told us of Manning and Grimes fast-paced nature of their relationship. Theyve been living together in Austin.

Our insider also noted that Manning still had her Brooklyn apartment, where she remains when not spending time with Grimes.

Neither Grimes nor Manning has publicly confirmed the relationship, but around the time that we published our exclusive report, 50-year-old Musk began tweeting seemingly transphobic memes. The Daily Beast speculated that they were directed at the couples relationship, as Manning is a transgender woman.

My response was a meme back. The one thing I will say is: he around that time definitely seemed transphobic, and rumor or speculation aside, thats off-limits, Manning told the outlet.

Im going to respond to it. Any transphobia in a transphobic environment is not OK.

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Chelsea Manning dodges Grimes relationship questions

Chelsea Manning dodges question about rumoured relationship with Grimes

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(DIRK WAEM/BELGA MAG/AFP / ANGELA WEISS/AFP / Getty Images)

Chelsea Manning has spoken candidly about keeping her personal life private, as she avoided answering any questions about her rumoured relationship with Grimes.

The 34-year-old former whistleblower, who was previously imprisoned for passing classified information to WikiLeaks, was asked if the dating rumours about her and the 34-year-old musician were true during a recent interview with The Daily Beast.

In response, Manning said that she was not going to discuss her dating life or the speculation around it, before acknowledging how she prefers to keep [her] private life private.

Im not gonna get into my dating life, she explained. Theres been a lot of speculation and a lot of news stories. I have not changed my perspective on this: I dont like speculation about my private life. I prefer to keep my private life private. I dont want to create a precedent either.

She also said that because she doesnt want people to think shes open to discussing her private life, she wont confirm or deny any rumours being spread about her.

Another concern that I have is I dont want to confirm or deny anything in my private life because I dont want to make it seem like Im open to having people digging into my personal life, real or imagined, she explained. I see a lot of people struggling with this, and I dont want to get sucked into celebrity-culture stuff.

However, Manning did address where her hometown is, detailing how she resides in New York when shes not travelling.

The one thing I will say is that I live entirely in New York, she added. I dont know where this idea came about that I would live remotely close to Texas. I travel a lot, but Im based in New York.

Last March, Page Six reported that, following her second split with Elon Musk, Grimes had begun dating Manning. The musician and Tesla founder share two children,X A-Xii, two, and Exa Dark Siderl, six months, together.

Theyre getting serious. They U-Hauled it, a source told the publication about Manning and Grimes. Theyve been living together in Austin.

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The pair were spotted interacting on Twitter that same month, as Grimes tweeted that she had been postponing her appearance on a YouTubers twitch stream, like ten times, because she kept not being in LA. In response, Manning tweeted: vouch.

Although neither Grimes and Manning have confirmed their relationship, The Daily Beast discussed how Elon Musk had tweeted transphobic memes at the time, when rumours first circulated about his exs new partner.

According to the publication Musks memes seemed like subtweets about Manning, as she is a transgender woman. In response, the security consultant expressed how the business magnates tweets, at the time, definitely seemed transphobic.

My response was a meme back, she explained. The one thing I will say is: he around that time definitely seemed transphobic, and rumour or speculation aside, thats off-limits. Im going to respond to it. Any transphobia in a transphobic environment is not OK.

Last April, Musk had shared a tweet that said: If our twitter bid succeeds, we will defeat the spam bots or die trying! And authenticate all real humans.

Mannings meme, in response to Musk, featured a cartoon girl, with pink hair, holding her hand up and frowning, as the text next to the photo reads: A billionaire occupying your mind rent free.

In the second part of the meme, that same girl could be seen smiling and wearing a shirt with the transgender flag on it, as the text reads: Occupying a billionaires mind rent free.

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Chelsea Manning dodges question about rumoured relationship with Grimes

Will Julian Assange be extradited to the U.S.? Where his case stands now – NPR

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Stella Assange, wife of WikiLeaks founder Julian Assange, speaks in front of the U.K. Home Office in London as protesters demand Julian Assange's release on May 17. Home Secretary Priti Patel signed the extradition order on Friday. Dan Kitwood/Getty Images hide caption

Stella Assange, wife of WikiLeaks founder Julian Assange, speaks in front of the U.K. Home Office in London as protesters demand Julian Assange's release on May 17. Home Secretary Priti Patel signed the extradition order on Friday.

Julian Assange is another step closer to trial in the U.S., where he faces 18 federal counts related to his publishing classified diplomatic cables and sensitive military reports from the Iraq and Afghanistan wars.

On Friday, the British government formally ordered the WikiLeaks founder to be extradited but Assange has two weeks to appeal that order from the U.K.'s Home Office.

"This is disappointing news that should concern anyone who cares about the First Amendment and the right to publish," Assange's attorney, Barry Pollack, said. "The decision will be appealed."

U.K. authorities arrested Assange in April of 2019, as the U.S. unsealed an indictment accusing him of a criminal conspiracy resulting in "one of the largest compromises of classified information in the history of the United States."

A federal grand jury indicted Assange in the Eastern District of Virginia. If he loses his appeal and is extradited, his first court appearance would be in the Albert V. Bryan U.S. Courthouse in Alexandria, Va., just outside of Washington, D.C. The case is assigned to District Judge Claude M. Hilton.

If Assange is convicted, he could face up to 10 years in prison for each of the 17 most serious felony counts against him although the Justice Department notes, "Actual sentences for federal crimes are typically less than the maximum penalties."

The U.K. Home Office said British courts had not found extradition would be incompatible with Assange's "human rights, including his right to a fair trial and to freedom of expression."

"That last point is pretty crucial," London-based journalist Willem Marx told NPR. It's where legal experts believe Assange will focus his appeal, Marx says, adding "as well as on this really interesting potential political motivation his team allege [is] behind this extradition request."

The extradition fight has dragged on since Assange was jailed in the U.K. in 2019. A British magistrate ruled in Assange's favor in early 2021, saying he faced a high risk of suicide if he were sent into the U.S. justice system. But the U.S. appealed that decision and won.

In March, the U.K. Supreme Court ruled Assange couldn't appeal the lower court's ruling against him, saying his case "didn't raise an arguable point of law." One month later, another judge formally approved the U.S. extradition request, putting the next move in the hands of Home Secretary Priti Patel who then signed the extradition order.

Protesters gather outside the Home Office last month to demand Julian Assange's immediate release in London. Dan Kitwood/Getty Images hide caption

Protesters gather outside the Home Office last month to demand Julian Assange's immediate release in London.

U.S. prosecutors accuse Assange, 50, of helping Chelsea Manning, a former U.S. Army intelligence analyst who had a top-secret security clearance, to crack a password on Defense Department computers connected to the Secret Internet Protocol Network in 2010. The U.S. government uses the network to share classified information and material.

The charges against Assange have grown in number and detail, outlined in three separate indictments that were previously under a court seal. The most serious counts against him include conspiracy to obtain and disclose national defense information. The least serious charge Assange faces is the first one leveled against him: conspiracy to commit computer intrusion.

Assange has been fighting extradition for years, going so far as to jump bail and live in the Ecuadorian Embassy in London for seven years to elude the authorities. At the time, he was concerned both about U.S. espionage charges and also an extradition request over rape allegations in Sweden (which have since been dropped).

WikiLeaks has published a massive number of documents on its website and has also given information to journalists. The subjects include some 490,000 sensitive military reports from the Iraq and Afghanistan wars, along with around 800 Guantanamo Bay detainee assessments and about 250,000 State Department cables.

By publishing unredacted sensitive documents, the U.S. says in court filings, Assange revealed the names of people who shared information or otherwise helped the U.S. despite potential repercussions not only in Iraq and Afghanistan, but also in China, Iran and Syria.

The initial federal charges focused on Assange's contacts with Manning. But in 2020, a new indictment alleged that Assange also recruited hackers from groups such as Anonymous, LulzSec and Gnosis to launch cyberattacks against government agencies, cybersecurity firms and other entities, hoping to compromise internal databases and gather sensitive documents.

Assange has insisted he was acting as a journalist, working for transparency and exposing secrets. But his critics, including the U.S. government, counter that he's attempting to use the First Amendment to shield himself from being held responsible for allegedly illegal actions.

Assange's defenders, including the American Civil Liberties Union, say the U.S. should drop the charges against him. For one thing, they note, the information he published was true.

A U.S. prosecution of Assange "would be unprecedented and unconstitutional," the ACLU's Ben Wizner said last December, "and would open the door to criminal investigations of other news organizations."

But the Justice Department says the charges against Assange aren't for receiving classified information, but for allegedly working to obtain that information through illegal hacking. It also says the charges aren't a response to him publishing U.S. secrets in bulk, but to revealing specific confidential information about people facing dangerous reprisals.

"Julian Assange is no journalist," said Assistant Attorney General for National Security John C. Demers, when he announced a raft of felony charges against Assange.

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Will Julian Assange be extradited to the U.S.? Where his case stands now - NPR

Why cryptocurrencies have gone from the next hot thing to a full-on meltdown – NPR

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A Bitcoin ATM is seen at a subway station in Brooklyn Heights in New York City on June 13. Bitcoin and other cryptocurrencies have plunged in value in recent days. Michael M. Santiago/Getty Images hide caption

A Bitcoin ATM is seen at a subway station in Brooklyn Heights in New York City on June 13. Bitcoin and other cryptocurrencies have plunged in value in recent days.

The cryptocurrency world is in chaos.

Just months ago, crypto companies were advertising heavily during the Super Bowl after virtual currencies enjoyed a dizzying rally in 2021.

Today, Bitcoin and other cryptos are plunging, and companies such as Coinbase, which runs the largest crypto exchange in the U.S, are announcing layoffs.

"The crypto house is on fire, and everyone is just rushing to the exits because there is a complete loss of confidence in the space," says Ed Moya, a senior markets strategist at financial firm Oanda.

Here's what's going on.

Because they are being hit by the same factors impacting stocks and other assets.

Consumer prices are surging at the fastest annual pace in over four decades, and the Federal Reserve is hiking interest rates aggressively to bring down inflation.

On Thursday, the Fed raised rates by three-quarters of a percentage point and indicated it could raise them again by the same amount at its next meeting in July if needed to cool down prices.

Higher interest rates make borrowing costs more expensive for people and companies, and that's raising concerns about an economic recession.

Stocks have fallen dramatically from records set in January, with the broad S&P 500 index entering a bear market this week (when an index falls 20% or more from its recent high).

Cryptocurrencies have hardly been immune. Since Bitcoin hit an all-time high in November, the value of the world's most popular digital currency has fallen by about 70%, and its rivals are also suffering. Ether is down by around 70% this year, and so is Dogecoin.

Bitcoin's backers have always claimed the digital currency would be an "inflation hedge," but in fact, it hasn't behaved that way.

As shares of tech companies have plummeted, so has Bitcoin's value.

"What this episode, this crash in crypto prices, shows is that cryptocurrencies are by and large speculative financial assets that are subject to macroeconomic forces, such as changes in interest rates," says Eswar Prasad, an economics professor at Cornell University.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on Thursday. Fears about the Fed's aggressive actions against inflation have raised concerns about the impact on the economy. Spencer Platt/Getty Images hide caption

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on Thursday. Fears about the Fed's aggressive actions against inflation have raised concerns about the impact on the economy.

The sharp falls in cryptocurrencies are driving some companies into problems.

Celsius, which takes cryptocurrency deposits from individuals and lends them out, stopped withdrawals because it's facing financial trouble. Binance, a cryptocurrency exchange, halted Bitcoin withdrawals for several hours on Monday.

The problems at Celsius are undermining confidence in the broader cryptocurrency space just weeks after the collapse of a stablecoin called TerraUSD.

Crypto companies are responding by re-evaluating their plans for the future.

Coinbase, a cryptocurrency exchange platform, reduced its staff by almost a fifth.

In a memo to staff, the company's CEO said Coinbase "grew too quickly."

"We appear to be entering a recession," Brian Armstrong wrote.

Some backers of cryptocurrencies still believe a "crypto winter" could lead to a "crypto spring." In the past, deep downturns have led to strong rebounds.

But according to Moya, the analyst at Oanda, the economic landscape is different now, and so is crypto's outlook.

In fact, with the Fed continuing to raise interest rates aggressively and with inflation still high, there is likely to be more pain ahead across all markets, including cryptocurrencies.

Fed Chair Jerome Powell speaks during a news conference at the Federal Reserve Building in Washington, D.C., on Wednesday. The central bank raised interest rates by three-quarters of a percentage point, its biggest hike since 1994. Olivier Douliery/AFP via Getty Images hide caption

Fed Chair Jerome Powell speaks during a news conference at the Federal Reserve Building in Washington, D.C., on Wednesday. The central bank raised interest rates by three-quarters of a percentage point, its biggest hike since 1994.

It's been a rude awakening for the millions of people who bought cryptocurrencies, especially if they got into the craze last year.

Prasad says 2021 was "the height of crypto mania."

The total value of all the digital currencies in the world swelled to $3 trillion. Crypto companies inked sponsorship deals with professional sports teams, and Coinbase, Crypto.com, eToro, and FTX shelled out millions of dollars to buy ads during the Super Bowl.

Crypto.com hired actor Matt Damon as a spokesman, and an FTX ad featured the curmudgeonly comedian Larry David.

The message from these companies was that crypto represents the future of finance and it was best not to miss out.

"The technological razzle-dazzle of cryptocurrency swept in a lot of retail investors who didn't realize the sort of risks they were taking on," Prasad says.

Today, the total value of crypto market has been shaved to about $1 trillion. And if you bought Bitcoin on Feb. 14, the day after that Super Bowl ad bonanza, it is now worth about half of what you paid for it.

The exterior of Crypto.com Arena is seen in Los Angeles on Jan. 26. Many cryptocurrency companies hired celebrities to pitch their products and signed sponsorship deals. Rich Fury/Getty Images hide caption

The exterior of Crypto.com Arena is seen in Los Angeles on Jan. 26. Many cryptocurrency companies hired celebrities to pitch their products and signed sponsorship deals.

The increase in amateur investors, combined with the growing complexity of some of the cryptocurrency products, are worrying regulators.

Crypto markets are still fairly new, and there's a lack of clarity even about the most basic things, like who is in charge of overseeing the space.

Right now, both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) claim oversight of parts of the crypto market.

"If there is no guidance whatsoever, people will be taken advantage of, and we want to prevent that" says Cam Harvey, a finance professor at Duke University. "Right now, we have basically nothing."

The SEC is stepping up enforcement actions against crypto companies and considering new rules. Meanwhile, in an executive order, President Biden asked government agencies to make policy recommendations.

And in Congress, Sen. Cynthia Lummis (R-WY) has teamed up with Sen. Kirsten Gillibrand (D-NY), on the first comprehensive crypto legislation. The bill would give more regulatory authority to the Commodity Futures Trading Commission.

Still, for now, many analysts don't think the broader financial system is at risk. The total value of the cryptocurrency market is still less than the total market value of a big company like Apple.

But this recent downturn has raised some serious concerns.

Continued here:
Why cryptocurrencies have gone from the next hot thing to a full-on meltdown - NPR

Tether: The Coin That Could Wreck Crypto – The New York Times

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Even by cryptos often-surreal standards, Tether has a peculiar history. The company was founded in 2014 by Brock Pierce, a cryptocurrency evangelist who, as a child actor, starred in the Mighty Ducks movies. He and his partner, Reeve Collins, later handed control of the firm to a former plastic surgeon named Giancarlo Devasini, who has stored some of Tethers assets in a bank in the Bahamas run by one of the creators of the Inspector Gadget cartoon.

Tether has grown rapidly. Last year, it issued roughly 50 billion stablecoins, more than tripling the worldwide supply. If we have to redeem till the last cent, we can do it, Mr. Ardoino said in the interview.

The company is operated by about 50 employees in Europe, Asia and Latin America. Its chief executive, JL van der Velde, is a Dutch businessman whose LinkedIn profile suggests he is based in Hong Kong; the company declined to confirm his location. He and Mr. Devasini, the chief operating officer, rarely speak publicly. Tethers public face is Mr. Ardoino, who describes his colleagues as normal people amazed by the companys growth.

They didnt think initially that it would maybe go so big, Mr. Ardoino said. They werent prepared to be public persons. Theres nothing bad about it.

At times, Tether has insisted that its stablecoins were fully backed by U.S. dollars. But last year, the New York attorney general, Letitia James, called those claims a lie.

A few years earlier, a cryptocurrency exchange affiliated with Tether had lost $850 million in a business deal gone sour. To cover the losses, the exchange, Bitfinex, took loans from Tethers reserves, leaving the stablecoin partly unbacked, according to Ms. Jamess investigation.

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Tether: The Coin That Could Wreck Crypto - The New York Times

The get-rich-quick days of crypto are over. Investors are losing their shirts, but industry players say this is healthy – Yahoo Finance

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It seemed like there was nowhere to hide in the crypto market this week.

Forced selling and liquidity troubles have resulted in one of the worst quarterly price performances of the crypto space, Lucas Outumuro, head of research at IntoTheBlock, wrote Friday in his newsletter.

Overall, this week concludes a historic crash for crypto. We have witnessed record-level activity in multiple metrics as mayhem ensues throughout the market, Outumuro wrote. While it may still be too early to call the bottom, there are some evident similarities with previous bear markets.

Bitcoin, the largest cryptocurrency by market value, fell below $20,000 on Saturday for the first time since December 2020. Ether, the second-largest cryptocurrency, dropped below $1,000, a level not seen since January 2021. The overall cryptocurrency market cap is below $1 trillion, from an all-time high north of $3 trillion.

As they anxiously watch on-chain movement, investors are wondering whats ahead. Industry players are nearly certain that many projects will disappear, while adding that this reveals issues with centralization and leverage issues, but to some of them, theres a silver lining.

This is healthy, Corey Miller, growth lead at cryptocurrency exchange dYdX, told Fortune.

The domino effect within the cryptocurrency market will likely continue, at least in the short term, industry players predict. More pain is ahead for investors and projects exposed to excessive leverage or other operational issues. It seems to all trace back to Terra.

Though macroeconomic factors, including higher than expected inflation numbers in the U.S., set the stage for headwinds to come, the Terra ecosystem collapsewith failed algorithmic stablecoin TerraUSD (UST) and its original cryptocurrency Luna (LUNC) becoming nearly worthlesswas an undeniable big bang in the space.

At its height, UST and LUNC were worth $60 billion, and after they collapsed to about zero in May, the impact on connected institutions became apparent this week. One of the cryptocurrency markets biggest lending platforms, Celsius Network, paused its withdrawals on Sunday, sparking rumors of bankruptcy. Reports concerning the state of multibillion-dollar fund Three Arrows Capital followed soon after, fueling further fears of contagion and systemic risk. As days go on, more and more firms, companies, and platforms alike are coming forward with updates on their financial health or lack thereof.

Story continues

From big players to everyday investors, the impact is being felt far and wide. Even major cryptocurrency-related companies, like Coinbase, Gemini, BlockFi and Crypto.com, recently announced layoffs and headcount reductionsseveral of them having just spent millions on Super Bowl ads as cryptos market cap was near its peak.

Things are really shaky right now and its going to take a while for things to stabilize. People are watching and waiting to see if something else will topple, Michael Safai, managing partner at cryptocurrency trading firm Dexterity Capital, told Fortune. To be a trusted ecosystem, investors have to feel confident that when they put money in, theyre able to get it out. This is definitely setting back a lot of that trust.

Currently, were in a bit of a hangover, Jason Urban, co-head of Galaxy Digital Trading, told Fortune. In the near term, continued volatility is expected.

I think for the next three to six weeks, people are going to be figuring out what exactly has happened, and who is well healed and who is not. Thats the first step, Urban said. Subsequently, there are going to be projects that don't make it, and there are going to be projects that become wildly successful, he added.

What we are seeing now is excessive risk being wiped out from the ecosystem, Miller, growth lead at cryptocurrency exchange dYdX, told Fortune, which he says is a healthy development. While it does reveal many interconnected links within crypto, these wipeouts support the idea that crypto as a whole remains resilient to existential risks.

Coming out of this crash, major players in crypto say changes are all but certain in the space. There might be a hesitancy towards certain projects, depending on their code and pitch, or with platforms offering extremely high yield by over-leveraging. Regulation may also soon follow, but many in the space remain bullish on future innovation.

Urban compared the current state of the crypto market to the bursting of the internet bubble in 2000. Looking ahead, he predicts that alongside the distress, innovation will come out of this time period. Many others echoed his remarks.

In stocks and crypto, you will see companies that were sustained by cheap, easy moneybut didnt have valid business prospectswill disappear, Mark Cuban, avid cryptocurrency investor, told Fortune. Like [Warren] Buffett says, When the tide goes out, you get to see who is swimming naked.

While this will be a very bad period for poorly built or not very useful projects, things will be much less bad for valuable ones, Sam Bankman-Fried, chief executive officer of cryptocurrency exchange FTX, also told Fortune. I don't think we'll see sectors die out but we might see some rotate to more sophisticated versions.

In the long term, Safai sees less excessive yield and leverage.

Theres going to be a lot of shaking up to be done, Safai said. [T]his era of being able to get exceptional yield for nothing is over. This is when a lot of leverage is going to get pulled out of the system, and this will ultimately make the crypto ecosystem safer.

This downturn has revealed the crypto-related projects and funds that were utilizing more risk than what was prudent, Miller said. Similar to other downturns, many players become forced sellers and are subsequently washed out.

In response to the carnage this time around, government regulators have already signaled interest in furthering the development of a regulatory framework for the cryptocurrency market. Those within the space have mixed feelings about government intervention, but it might be happening whether they like it or not.

We believe that regulation is a positive development in our industry as it will force players to disclose more details on their activities so that clients can better assess the potential risks associated and how they vary across different companies, Adam Reeds, co-founder and chief executive officer at cryptocurrency lending platform Ledn, told Fortune.

While recent events, like the collapse of UST and LUNC, has posed a threat to crypto market sentiment and is a catalyst for regulation, it will ultimately not stop the growth of innovation in Web3, Isla Perfito, chief executive officer of Sator, a blockchain-based entertainment platform, told Fortune.

Though some industry veterans see similarities between this downturn and previous crypto winters, some lessons specific to this crash will carry extra weight going forward.

The biggest thing to come out of this downturn will be a focus on fundamentals, says Tom Dunleavy, Messari senior research analyst.

In the past, [t]he new and most interesting projects got the capital, and grew to unbelievably large sizes for what they were actually accomplishing (or could really accomplish), Dunleavy told Fortune. The focus going forward will be on strong protocols, strong teams, and strong use cases.

He also predicts that this downturn will essentially end the wars between Ethereum (ETH) competitors. There is going to be BTC [or Bitcoin] and ETH, and then a long tail of projects fighting for the remaining 20% to 30% of crypto market cap."

Major takeaways from this crash will also shape the future of the space, industry players say.

Everyone is having to take a good hard look at their risk management right now, but exchanges seem to be pretty inoculated from this madness. With less capital at everyones fingertips, the question for traders will be how to more intelligently deploy capital and optimize activity in a world where leverage is limited, Safai said.

This will be important because a handful of trading firms make up a significant amount of market activity, and the market doesnt want to be without them, he said. Shops that navigated other lengthy crypto downturns will lean on that experience and probably come out far stronger, to the benefit of the industry.

This story was originally featured on Fortune.com

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The get-rich-quick days of crypto are over. Investors are losing their shirts, but industry players say this is healthy - Yahoo Finance

FBI Warns of Cryptocurrency Scammers on LinkedIn – Decrypt

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Cryptocurrency investment scammers on LinkedIn are a significant threat to user safety, FBI special agent Sean Ragan said Friday.

In an interview with CNBC, Ragan said he believes LinkedIn has a problem when it comes to investment scams.

This type of fraudulent activity is significant, Ragan said. There are many potential victims, and there are many past and current victims.

The Microsoft-owned social network claims to have 830 million members in more than 200 countries.

These scammers arent lazy either, so they might seem very convincing.

They are always thinking about different ways to victimize people, victimize companies, Ragan told the network. And they spend their time doing their homework, defining their goals and their strategies, and their tools and tactics that they use.

The FBI has seen an uptick in investment-related fraud, according to Regan. The Federal Trade Commission reported that U.S. cryptocurrency traders lost $575 million due to investment fraud from January 2021 until March 2022.

LinkedIn emphasizes business news and relationships, which may create a false sense of security against the backdrop of common romance and online scams. The CNBC report notes that fake profiles often claim to be associated with legitimate and successful companies, or to represent people with entrepreneurial spirit.

LinkedIns director of trust, privacy, and equity Oscar Rodriguez acknowledged the number of scammers increasing on its platform.

Over the last few months, weve seen a rise in fraudulent activity happening across the Internet, including here on LinkedIn, Rodriguez wrote in a blog post Thursday.

The company said it has a track record of proactively removing suspicious content and accounts it suspects may lead to fraud. In 2021, LinkedIn removed over 136 million instances of spam and scam content on its platform, according to a recent company transparency report. It also removed over 31.6 million fake accounts last year.

Rodriguez told CNBC that more proactive education on the risks of using LinkedIn is something hed like to see going forward.

LinkedIn does not currently offer profile verification for notable users, unlike Twitter and Instagram. But not even verification is foolproof: Twitter has also seen verified accounts abused by crypto and NFT scammers.

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FBI Warns of Cryptocurrency Scammers on LinkedIn - Decrypt

Cryptocurrency Tax Dodgers Beware Of Operation Hidden Treasure – TronWeekly

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As the use of cryptocurrencyhas grown, the IRS has initiated an investigation into taxpayers who are seeking to hide their cryptocurrency income. Cryptocurrency adoption is at an all-time high, and regulators are keeping a close eye on the digital asset market.

Authorities are attempting to regulate digital assets and determine whether or not they can be taxed. The goal of Operation Hidden Treasure is to catch investors who arent disclosing their cryptocurrency income and arent reporting it.

The Internal Revenue Service (IRS) report was detailed in a press release issued by the Tax Law Offices of David W. Klasing on 16 June 2022. The Internal Revenue Service (IRS) has initiated an investigation into taxpayers who try to conceal their crypto revenue.

The IRS has developed a task force made of professionals in tracking various sorts of crypto income, as well as integrating the civil and criminal divisions of the IRS to combat crypto tax fraud, in order to accomplish the initiatives goals.

According to the press release, one of the most prevalent methods used by investors to avoid paying taxes is to conduct repeated transactions of less than $10,000. Other investors use shell firms to conceal the name of the companys owner. By concealing the investors name and party, he or she is able to engage in several activities.

Operation Hidden Treasure is also investigating cloaking blockchain technology, which allows some exchanges to provide trading services to users while keeping their identities hidden. The report further stated,

Whether the unreported income was intentional, or a mistake is difficult to prove and the larger the amount of unreported income the less likely the IRS will be to believe your noncompliance was non willful or unintentional.

The programme would also investigate and track undeclared cryptocurrency profits generated through anonymous transactions. The IRS is now keeping a close eye on cryptocurrencies because investors believe it can help them remain anonymous.

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Cryptocurrency Tax Dodgers Beware Of Operation Hidden Treasure - TronWeekly