An anonymous reader shares a report: Costing tens of thousands of dollars each, Nvidia's pioneering AI chips make up a hefty chunk of the $400 billion that Big Tech plans to invest this year -- a bill expected to hit $3 trillion by 2029. But unlike 19th-century railroads, or the Dotcom boom's fiber-optic cables, the GPUs fueling today's AI mania are short-lived assets with a shelf life of perhaps five years.

As with your iPhone, this stuff tends to lose value and may need upgrading soon because Nvidia and its rivals aim to keep launching better models. Customers like OpenAI will have to deploy them to stay competitive. So while it's comforting that the companies spending most wildly have mountains of cash to throw around (OpenAI aside), the brief useful life of the chips and the generous accounting assumptions underpinning all of this investment are less consoling.

Michael Burry, who made his name betting against US housing and who's recently turned to the AI boom, waded in this week, warning on X that hyperscalers -- industry jargon for the giant companies building gargantuan data centers -- are underestimating depreciation. Far from being a one-off outlay, there's a danger of AI capex becoming a huge recurring expense. That's great for Nvidia and co., but not necessarily for hyperscalers such as Google and Microsoft. Some face a depreciation tsunami that's forcing them to be extra vigilant about controlling other costs. Amazon has plans to eliminate roughly 14,000 jobs.

And while Wall Street is used to financing fast-depreciating assets such as aircraft and autos, it's worrying that private credit funds are increasingly using GPUs as collateral to finance loans. This includes lending to more speculative startups known as neoclouds, who offer GPUs for rent. Microsoft alone has signed more than $60 billion of neocloud deals.

Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to charges tied to FTX's collapse, U.S. Attorney Damian Williams announced Wednesday night. CoinDesk reports: The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) also announced (PDF) charges against the two, saying Ellison manipulated the price of FTT, an exchange token issued by FTX, at exchange founder Sam Bankman-Fried's direction. The duo are cooperating with investigators, Williams announced. The U.S. Attorney for the Southern District of New York (SDNY) did not specify what they were being charged with.

In a statement, SEC Deputy Enforcement Director Sanjay Wadhwa said the three "were active participants in a scheme to conceal material information from FTX investors, including through the efforts of Mr. Bankman-Fried and Ms. Ellison to artificially prop up the value of FTT, which served as collateral for undisclosed loans that Alameda took out from FTX pursuant to its undisclosed, and virtually unlimited, line of credit." Highlighted in the complaint are multiple times when Bankman-Fried made public statements, and provided investors with documentation via audited financial statements, that Alameda received no preferential treatment from FTX.

Ellison was a close confidant of Bankman-Fried's, and has been targeted by prosecutors for her role in manipulating FTX's exchange token FTT, which Alameda had used as collateral for investments. In early December Ellison, who is thought to reside in Hong Kong or Nassau, was spotted in Manhattan at a coffee shop leading many to suspect she was working with authorities. Shortly after, Ellison retained the law firm WilmerHale to represent herself. WilmerHale counts Stephanie Avakian, a former director of the SEC's Division of Enforcement, as one of its top attorneys. Further reading: FTX Founder Bankman-Fried To Be Released on a $250 Million Bond Package While He Awaits Trial

An anonymous reader shares a report: In mid-2020, FTX's chief engineer made a secret change to the cryptocurrency exchange's software. He tweaked the code to exempt Alameda Research, a hedge fund owned by FTX founder Sam Bankman-Fried, from a feature on the trading platform that would have automatically sold off Alameda's assets if it was losing too much borrowed money. In a note explaining the change, the engineer, Nishad Singh, emphasized that FTX should never sell Alameda's positions. "Be extra careful not to liquidate," Singh wrote in the comment in the platform's code, which it showed he helped author. Reuters reviewed the code base, which has not been previously reported.

The exemption allowed Alameda to keep borrowing funds from FTX irrespective of the value of the collateral securing those loans. That tweak in the code got the attention of the U.S. Securities and Exchange Commission, which charged Bankman-Fried with fraud on Tuesday. The SEC said the tweak meant Alameda had a "virtually unlimited line of credit." Furthermore, the billions of dollars that FTX secretly lent to Alameda over the next two years didn't come from its own reserves, but rather were other FTX customers' deposits, the SEC said.

The auto-liquidation exemption written into FTX code allowed Alameda to continually increase its line of credit until it "grew to tens of billions of dollars and effectively became limitless," the SEC complaint said. It was one of two ways that Bankman-Fried diverted customer funds to Alameda. The other was a mechanism whereby FTX customers deposited over $8 billion in traditional currency into bank accounts secretly controlled by Alameda. These deposits were reflected in an internal account on FTX that was not tied to Alameda, which concealed its liability, the complaint said.

Crypto lending platform BlockFi announced that it has secured a $250 million revolving credit facility from FTX, BlockFi CEO Zac Prince said in a tweet on Tuesday, and the company subsequently announced in a press release. CoinDesk reports: Prince said the move "bolsters our balance sheet and platform strength." He added that "the proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed." This is not the first time FTX CEO Sam Bankman-Fried has stepped in to bail out a major crypto company impacted by the recent market downturn. Last week, crypto broker Voyager Digital (VOYG) secured a revolving line of credit with Bankman-Fried-founded quant trading shop Alameda Research.

Though it is now in the position of backstopping a broader market crash, FTX is reportedly one of the firms that liquidated Celsius -- the troubled decentralized crypto lending platform that was forced to halt all user withdraws last week. Celsius, one of BlockFi's competitors, reportedly ran out of funds to repay depositors due to a series of risky decentralized finance bets. In the press release, BlockFi said the credit facility is contingent on the execution of "definitive documents," which the two companies expect to be completed in "the coming days."

Three Arrows Capital failed to meet demands from lenders to stump up extra funds after its digital currency bets turned sour, tipping the prominent crypto hedge fund into a crisis that comes as a credit crunch grips the industry. Financial Times reports: The group's failure to meet margin calls this past weekend makes the group the latest victim of an acute fall in the prices of many tokens like bitcoin and ether that is rippling across the market. Singapore-based Three Arrows is among the biggest and most active players in the crypto industry with investments across lending and trading platforms. Lenders have sharply tightened up how much credit is on offer following tremors over the past month.

Celsius, a major crypto financial services company, blocked withdrawals last week, while a pair of major tokens collapsed in May. US-based crypto lender BlockFi was among the groups that liquidated at least some of Three Arrows's positions, meaning it reduced its exposure by taking collateral the fund had put down to back its borrowing, according to people familiar with the matter. Three Arrows, which made a "strategic" investment in BlockFi in 2020, had borrowed bitcoin from the lender, the people said, but had been unable to meet a margin call. One of the people said the liquidation had occurred by mutual consent.

Decentralized finance project Beanstalk Farms suffered one of the largest-ever flash-loan exploits on Sunday, sending its price tumbling. From a report: The credit-focused, Ethereum-based stablecoin protocol suffered a total loss of around $182 million and the attacker got away with around $80 million of crypto tokens, according to blockchain security firm PeckShield, which had flagged the incident on Twitter. The project's native token BEAN fell about 75% from its $1 peg against the dollar, pricing from CoinGecko showed. The protocol's creators disclosed their identities on Beanstalk's Discord server, and said that they were not involved in the attack. "We are not aware of the identity of the individuals who were involved. Like all other investors in Beanstalk, we lost all of our deposited assets in the Silo, which was substantial," the founders wrote. It isn't yet clear whether investors who lost funds will be reimbursed -- or if so, how and to what extent. Unlike traditional lending, which requires a loan to be secured with a collateral or credit checks, DeFi smart contracts allow users to borrow huge sums of stablecoins in what are known as flash loans, without any form of security. Flash loans, where the entire process of borrowing and returning the loan happens in a single transaction on the blockchain, are fairly popular among arbitrage traders.

The Germany-based spyware startup Wolf Intelligence exposed its own data, including surveillance target's information, passports scans of its founder and family, and recordings of meetings. From a report: A startup that claims to sell surveillance and hacking technologies to governments around the world left nearly all its data -- including information taken from infected targets and victims -- exposed online, according to a security firm who found the data. Wolf Intelligence, a Germany-based spyware company that made headlines for sending a bodyguard to Mauritania and prompting an international incident after the local government detained the bodyguard as collateral for a deal went wrong, left a trove of its own data exposed online. The leak exposed 20 gigabytes of data, including recordings of meetings with customers, a scan of a passport belonging to the company's founder, and scans of the founder's credit cards, and surveillance targets' data, according to researchers.

Security researchers from CSIS Security discovered the data on an unprotected command and control server and a public Google Drive folder. The researchers showed screenshots of the leaked data during a talk at the Virus Bulletin conference in Montreal, which Motherboard attended. "This is a very stupid story in the sense that you would think that a company actually selling surveillance tools like this would know more about operational security," CSIS co-founder Peter Kruse told Motherboard in an interview. "They exposed themselves -- literally everything was available publicly on the internet."

Steven Levy, who has been extensively covering the world of hackers for decades (fun fact: the first time he wrote about it, the word "hacker" didn't really mean much), is sharing the changing perception about hacker conferences, and hackers themselves. In a newsletter, Backchannel's Levy writes about Black Hat conference: What I find most striking in the coverage of these events is that they are no longer seen as outlaw gatherings, but rather conclaves that form a valuable portion of the digital security mosaic. This is a big change from the long period, beginning in the late 1980s, during which the term "hacker" became synonymous with malfeasants, punks, and criminals. The glorious originals -- people who invented just about everything great we do on computers, including the internet -- were outraged at the denigration of a word that was once a badge of honor. [...]
The hackers who attend those conferences are true to that ethic. There's a core morality to both events, built on privacy, equal access to systems, and personal freedom. There's indignation at poorly built systems. There's contempt at those who see computers and the internet as means of controlling people instead of seeing them as tools of liberation.
So who gets to decide what a hacker is in 2016? The question comes up constantly because the term retains some fuzziness. I'll put aside the unquestioned hacker status of coders and designers who innovate on products and private infrastructure. Blissfully, it's now OK for Silicon Valley geeks to proudly declare themselves hackers, the best example of which is Facebook CEO Mark Zuckerberg's naming of his corporate philosophy as "The Hacker Way." But I'm wondering about those people who take the law into their own hands, sometimes not even taking care to limit collateral damage of innocent people. While true hackers generally don't wreak actual destruction, there are some who invade or even tamper with systems for what they consider moral purposes. Some call it hacktivism. Does that mean they are still hackers? That's tough to answer. Hacking into a system doesn't make you a hacker. Using a computer to steal a credit card or a Bitcoin doesn't do it, either. If you work for China and hack into Google; if you work for Russia and hack into the DNC; or if you work for the United States of America and plant a software time bomb in a nuclear centrifuge in Iran -- you are not necessarily a hacker.

HughPickens.com writes: There is more than one way to get a student loan in China as People's Daily Online reports that many Chinese university students use their nude pictures as IOUs on online lending platforms, putting themselves at the risks of having everybody -- including their parents -- see them naked. Borrowers are also required to upload pictures of their ID cards and report their family information, including their address and cellphone numbers. "The nude photos will be made public if the borrowers fail to repay their debts with interest," an insider was quoted as saying. The credit varies based on the borrower's education background. Usually an undergraduate student can receive 15,000 yuan ($2,277) in credit, while those studying at famous universities as well as doctorate students can receive even larger loans. Snapshots of threatening collection messages have also gone viral, with a photo of a female borrower and a message reading how the lender would send the photo and her naked video footage to her family members if she could not pay back her 10,000 yuan borrowed on an annual interest rate of 24 percent within a week. "Naked IOUs started long ago. Not only university students but many others also borrowed money with nude pictures," says insider surnamed Zhang. Zuo Shenggao from Jingshi Law Firm says that nude photos are actually invalid as collateral in terms of laws. "Nude photos are not property. It is in the category of reputation rights," says Shenggao. "If anyone threatens to publish the photos online, they will violate the clients' reputation. At the same time, they are also spreading pornographic material. Both are illegal and they will commit double offense,"

A financial firm in Latvia is offering 90 day loans with no collateral except your immortal soul. Kontora doesn't require a credit check or proof of employment, only a signed document agreeing that the company owns your soul if you fail to pay and that the soul in question is a "previously unmortgaged property." The loans are also subject to a one-percent-per-day interest rate.

Barry mentions his "sender pays" spamfighting plan more than once in his answers to your questions, and discuessed it at length in an InternetWeek.com article published on Feb. 20. Is Barry's plan workable? Do you have a better idea? Or should we all just get used to spam as part of the online experience, and learn to live with it and block it as best we can?