Good morning! FTX’s lawyers painted a startling picture of the company in a bankruptcy court yesterday. But Sam Bankman-Fried continues to imagine how things could have played out differently.

First, a programming note: The newsletter will be taking a break for Thanksgiving, but we’ll be back in your inboxes on Monday. Happy holidays!

A tale of two FTXs 

There’s the story of a ruined crypto firn, its reputation in tatters, new leaders chasing down assets, creditors increasingly expecting to never see their money again. And then there’s Sam Bankman-Fried’s dream of what might have been.

FTX’s lawyers spoke out yesterday in the company’s first appearance in a Delaware bankruptcy court. And, oof, it was not pretty.

• “FTX was in the control of inexperienced and unsophisticated individuals, and some or all of them were compromised individuals,” said James Bromley, a lawyer from Sullivan & Cromwell working on the FTX bankruptcy.
• “What we have here is a worldwide, international organization, but which was run as a personal fiefdom of Sam Bankman-Fried,” he added, calling the situation “one of the most abrupt and difficult collapses in the history of corporate America and the history of corporate entities around the world.”

The numbers make for grim reading. In a letter that SBF sent to his former employees, a copy of which was reproduced by The Wall Street Journal, the speed of FTX’s slide is laid bare.

• Heading into the spring, SBF claims, Alameda had borrowed $2 billion from FTX that was backed by what he says was $60bn in collateral. In November, that had shifted to $8 billion borrowed against $9 billion in collateral.
• Bromley also told the court that “substantial amounts of money were spent on things not related to the business” including “homes and vacation properties used by the senior executives” that cost about $300 million.
• The company’s lawyers are now attempting to make sense of a complex web of assets. The company’s new management has said it might take until January to prepare a full overview of assets and liabilities.

Meanwhile, SBF continues to imagine an alternate future, starting with the idea of paying back everyone who has been affected and ending with an arguably delusional dream of how he could have remade FTX.

• “I’m going to do what I can to make it up to you guys — and to the customers — even if that takes the rest of my life,” he wrote in his letter. “I believe that there are billions of dollars of genuine interest from new investors that could go to making customers whole.” But he also admitted that he was worried that might not be possible.

• He also explained how if he’d not filed for Chapter 11, he “could have returned large value to customers and saved the business.”
• And, wistfully calling FTX “something really special,” he painted a picture of what an alternative future could have looked like. “There would have had to be changes, of course,” he wrote. “Way more transparency, and way more controls in place, including oversight of myself.” Hindsight is, indeed, 20/20.

Five technologies reshaping mobility

Technology is changing everything about the way we move through the world. As part of our recent special report about the future of mobility, Protocol’s Satchie Snellings took a close look at some of the technologies that will have the most dramatic impact. Here are some choice cuts.

Data: “Municipalities, automakers, and micromobility startups will all need to rely on data insights to meet their mobility goals, from optimizing traffic flow to building and managing smart infrastructure, determining coordinates for new charging stations and e-bike docks.”

Artificial intelligence: “Will you have an autonomous vehicle in your garage by 2032? Perhaps not, but in the next 10 years we will see autonomous technology evolve and integrate into personal vehicles, public transit, and the transportation of goods across the world.”

All-purpose mobility apps: “The concept of mobility as a service has made a strong entrance into the transportation market in recent years, but the next decade will be all about perfecting and launching those platforms to the public in data-driven cities across the world.”

Sustainable aviation fuels: “Sustainable fuels are currently far more expensive to produce than conventional fuel, and not enough people are making them. While this technology will not arrive at scale in time to significantly lower emissions by 2030, the next decade will be a crucial time for perfecting the formula and the price point.”

Electrification: “We can expect to see other major sources of transit, including railways, buses, and planes go electric over the next decade, and we should not underestimate the emergence of e-micromobility. Over the next decade, we will see even more cities rethinking their infrastructure to support sustainable, electric transit.”

A MESSAGE FROM CAPITAL ONE SOFTWARE

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People are talking

Is Dou Shen, the head of Baidu’s AI cloud group, worried about the U.S. chip ban? It deesn’t seem like it:

• “We think the impact is quite limited in the near future … A large portion of our AI Cloud business and even wider AI business does not rely too much on the highly advanced chips.”

Representatives Cathy McMorris Rodgers and James Comer think TikTok misled members of Congress:

• "Some of the information TikTok provided during the staff briefing appears to be untrue or misleading, including that TikTok does not track U.S. user locations."

White House COVID-19 response coordinator Ashish Jha has a pretty strong view on where you should turn for information:

• "You can decide to trust America's physicians, or you can trust some random dude on Twitter. Those are your choices."

Making moves

HP plans to lay off as many as 6,000 employees, or around 10% of its workforce, over the next three years.

Zendesk has gone private via a sale to private equity firms led by Hellman & Friedman and Permira. The deal is worth $10 billion.

In other news

Twitter has not paid vendors that it owes, according to The New York Times. It reportedly owes “millions of dollars in back payments” that it has skipped since Elon Musk took over.

Some Meta execs have tried to stamp out trashy content, according to The Wall Street Journal. With “better definitions for low-quality content” they’ve reportedly made a major impact on reducing its circulation.

The U.K is deepening an investigation into Apple and Google over their control of web browsers on mobile devices.

Protests erupted at a Foxconn plant in Zhengzhou, China as workers railed against unpaid wages resulting from restrictions to curb a Covid outbreak.

Does Elon Musk represent what many bosses secretly think? That maybe it’s time for workers to stop complaining and work harder?

Tax filing websites shared data with Facebook, according to an investigation by The Verge and The Markup. That data sometimes included “users’ income, filing status, refund amounts, and dependents’ college scholarship amounts.”

The Senate will hold a hearing on Taylor Swift. Sorry, no. I mean, it will hold a hearing on a lack of competition in the ticketing industry.

The verdict is in on the Meta Quest Pro headset and it’s … not good.

Headline

A MESSAGE FROM CAPITAL ONE SOFTWARE

Through its cloud and data journey, Capital One also built its own tools to solve for gaps in the market, and key among them? Capital One Slingshot, a new product from Capital One Software that helps organizations manage Snowflake data costs with alerts, recommendations and performance dashboards.

Learn more

TK

Good morning! Elon Musk isn’t exactly shy about squeezing the most out of his employees, and at Twitter he’s using approaches he’s already employed at Tesla and SpaceX. Let’s dive in.

Is this hardcore?

So, you’ve gone ahead and shown about two-thirds of your staff the door. The ones that remain have signed up to work “long hours at high intensity.” Now, it’s time to show them what that looks like.

Elon Musk has a reputation for his love of “hardcore” working conditions. This isn’t his first rodeo, as The New York Times points out in a piece that identifies some key trends through his approaches at Tesla and SpaceX.

• “A crisis atmosphere and self-imposed austerity gives Mr. Musk the cover to make drastic changes and fire top managers or eliminate large swaths of staff, two former Tesla executives said. It also prepares those who remain to work under extreme conditions to bring about Mr. Musk’s desires, they said.”
• The overall vibe is one of tight belts, perma-crisis, and a general sense of uncertainty.

Beyond layoffs, Musk is making some early moves at Twitter that appear to be recreating what came before at Tesla and SpaceX in an attempt to set a new culture.

• Say hello to austerity, tweeps. “Company allowances for employee wellness, productivity, home internet, training and development, Outschool, daycare, and quarterly team activities have all been discontinued,” according to The Verge

• And expect more oversight. “Every Friday, all Twitter employees are required to send an email update on their work” to Musk, The Verge also reports.
• Did we say the layoffs were over? Not quite; gotta keep people on their toes after all. He laid off members of the sales team yesterday. But he reportedly pinky promised that the company was done with layoffs and may in fact recruit for some roles. And remember that he already fired staff who publicly questioned his approaches.
• All that while also adding new features, obviously.

All told, Musk appears to be creating an atmosphere of nervous uncertainty at Twitter. High standards, high intensity, and high stakes — with the ever-looming threat of firing employees who don’t toe the line and demonstrate “excellence.” Good luck, tweeps.

This judge wants to teach you crypto

Magistrate Judge Zia Faruqui is taking an unusual approach to the way he writes opinions. His rulings have made smart references to "The Big Lebowski," "Dr. Strangelove," and "SNL" parodies of the McLaughlin Group. They also demonstrate a uniquely detailed understanding of how criminals can use cryptocurrency to their advantage — and, more importantly, how they can’t.

Protocol’s Veronica Irwin sat down with Faruqui to ask why and how he does it. Here are some choice cuts.

On learning about crypto:

• “There was another prosecutor, Christopher Brown [... and …] he had the sense of ‘this is getting bigger, and we should start looking into it.’ Our U.S. attorney at the time, Jessie Liu, had this idea of using financial investigations in a way that was not limited to just white collar crime .... A lot of what we were investigating was related to following the money and so she wanted us to be this multidisciplinary unit.”

On why he’s taking an off-the-wall approach to writing opinions:

• “We're public servants! And in order for the public to have faith and trust us, they need to understand what it is that we're doing and what we're saying. Humor is one way, not using a lot of legalese is another way.”

On underestimating the technical understanding of judges:

• “One misconception is that the judges can't understand this technology — we can. And that’s not just judges, it's anybody. People have these views in two extremes. It’s either that ‘crypto is fake, it's not real,’ or ‘it's so technical that you can't understand it.’ And my takeaway, as I’ve discussed and as hopefully comes out in my opinions, is just that crypto is understandable.”

Read more: Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

A Message from Okta

As the first independent born-in-the-cloud identity provider, Okta applied its modern approach to identity and access management to IGA with Okta Identity Governance, which is now generally available. Okta Identity Governance, which is part of Okta’s broader workforce identity vision, unifies IAM and IGA to improve enterprises’ security posture.

Learn more

People are talking

Su Zhu, co-founder of the failed crypto hedge fund Three Arrows Capital, thinks the FTX fallout will be bigger than you might expect:

• “Some industry leaders have said the FTX collapse set the industry back by five years … I think it’s even longer than that — seven or eight years — maybe even longer.”

Michael Weening, CEO of cloud software company Calix, sees the Twitter fallout as a fantastic moment to hire people:

• "From our perspective this is a great opportunity, as people who would not speak to us before are disillusioned and looking."

Making moves

Chiang Shang-yi is now semiconductor strategy officer at Foxconn. Chiang, previously at TSMC, will report to the CEO at Foxconn, and the role hints at the company’s desire to build chips.

Intel’s Randhir Thakur is leaving the company. Thakur had been managing Intel’s contract manufacturing efforts, but will now “pursue opportunities outside the company.”

China is trying to restaff Foxconn’s factories after a recent exodus of workers, the Financial Times reports. Authorities are turning to villages from across the Henan province to find workers.

JD.com is cutting salaries of senior execs by 10% to 20%, according to Reuters. The savings will go toward improving benefits for other staff members, and the move is part of the Chinese government's "common prosperity" push.

How did Bob Chapek’s exit from Disney come about? Top execs, including the company’s CFO, went to the board with concerns, the WSJ reports.

Hyperloop Transportation Technologies is merging with a SPAC called Forest Road Acquisition Corp. II, according to Bloomberg. The deal could be worth $400 million.

In other news

Crypto’s contagion concerns continue to mount. Genesis is trying to raise funds from Binance and Apollo Global Management, the WSJ reports, though a spokesperson said it had “no plans to file bankruptcy imminently." Coinbase shares continue to tumble, though the company says it has no “material exposure” to FTX.

Funds stolen in a hack of FTX are being laundered into bitcoin and ether, CNBC reports.

The Senate will hold an FTX hearing on Dec. 1. Rostin Behnam, chair of the Commodity Futures Trading Commission, will be one of the witnesses.

Tech layoffs have H-1B visa holders scrambling to find new jobs before they’re required to leave the country.

Amazon’s warehouse-monitoring algorithms are trained by workers in India and Costa Rica who review camera footage, according to a report by The Verge and the Bureau of Investigative Journalism.

Meta abandoned plans to build a VR fitness app and acquired Within Unlimited instead, according to the FTC, which is trying to block the purchase.

Carl Ichan shorted Gamestop way back in January 2021. He still holds a large position on that bet, Bloomberg reports, but it’s not clear exactly how much it’s worth.

IBM is suing Micro Focus, claiming that the British company copied some of its mainframe software.

Mazda plans to invest $10 billion into EVs, and may also invest in battery manufacturing.

And Domino’s is going electric. Well, it’s trying it out at least — it’s adding 800 Chevrolet Bolts to its pizza-delivering fleet.

A Message from Okta

Security tools should accelerate technology adoption. But often, the tools actually disrupt and slow down forward movement. With Okta tools, organizations have the compliance and security protection to grow while still protecting themselves from risk.

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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

Good morning! Adam Selipsky runs the world’s strongest force in cloud computing, AWS. When we sat down with him recently, we asked him for his insights on the state of the industry. Let’s dive right in.

The cloud according to Adam Selipsky

AWS is gearing up for re:Invent, its annual cloud computing conference. This year, announcements are expected to focus on its end-to-end data strategy and delivering new industry-specific services. Ahead of that, CEO Adam Selipsky sat down with Protocol’s Donna Goodison to discuss the state of the cloud computing industry. Here are some choice cuts.

One the ubiquity of cloud computing in the C-suite:

• “There was a time years ago where there were not that many enterprise CEOs who were well-versed in the cloud. Then you reached the stage where they knew they had to have a cloud strategy, and they were…asking their teams, their CIOs, “okay, do we have a cloud strategy?” Now, it's actually something that they're, in many cases, steeped in and involved in, and driving personally.”

On how far through the cloud transition we are:

• “Only … in the vicinity of 10% of IT has moved to the cloud. It really is still day one. The opportunity is still very much in front of us, very much in front of our customers, and they continue to see that opportunity and to move rapidly to the cloud.”

On cloud customers attempting to cut costs:

• “Some customers are doing some belt-tightening … What we see a lot of is folks just being really focused on optimizing their resources, making sure that they're shutting down resources which they're not consuming. By the way, they should be doing that all the time. The motivation's just a little bit higher in the current economic situation.”

On what to do with all your data:

• “A lot of people are drowning in their data and don't know how to use it to make decisions … By putting good governance in place about who has access to what data and where you want to be careful within those guardrails that you set up, you can then set people free to be creative.”

On what’s left for AWS to build:

• “We're not done building yet, and I don't know when we ever will be. We continue to both release new services because customers need them and they ask us for them and, at the same time, we've put tremendous effort into adding new capabilities inside of the existing services that we've already built. Both prongs of that are important.”

Read more: The full Adam Selipsky Q&A

And then there were … 2,500? 

And then there were … 2,500?

In the wake of Elon Musk’s ultimatum to Twitter staff Thursday to leave the company or commit to a “hardcore” culture, the social media platform now reportedly has less than a third of the staff it had at the start of the month.

Just how big is the impact of the exodus? According to The New York Times and Fortune, internal estimates at Twitter suggest that 1,200 more employees chose to leave the company last week, leaving its headcount somewhere around the 2,500 mark. (The exact number will likely remain somewhat of a mystery for now.) Here’s how the cuts appear to be affecting teams, per the NYT:

• “One team known as Twitter Command Center, a 20-person organization crucial to preventing outages and technology failures during high-traffic events, had multiple people from around the world resign, two former employees said.”
• “The ‘core services’ team, which handles computing architecture, was cut to four people from more than 100.”
• “Other teams that deal with how media appears in tweets or how profiles show follower counts were down to zero people.”

And even more layoffs could be coming to the sales and partnership divisions of the company, according to Bloomberg:

• ”On Friday, Musk asked leaders in those organizations to agree to fire more employees. Robin Wheeler, who ran marketing and sales, refused to do so, the people said. So did Maggie Suniewick, who ran partnerships. Both lost their jobs as a result, the people added.”

But Musk rallied his remaining troops, asking engineers to head into Twitter’s HQ on Friday, so that he could gain a better understanding of the company's codebase.

• “Only those who cannot physically get to Twitter HQ or have a family emergency” were excused, per an email sent by Musk that was published by CNBC. He even encouraged people from further afield to fly in, CNBC reported.
• He ended up working on what he called a “code review” until 1:30 a.m. on Saturday.

And now comes a crunch moment: The soccer World Cup, which started yesterday, is typically a period of heavy use for the social network.

• The platform faltered under the weight of tweets during the 2010 World Cup, and has also struggled to deal with soccer-related racism and abuse.

The coming days and weeks will reveal whether Musk’s Twitter can cope with the realities of a heavily diminished staff. It could get ugly.

Bye, Bob. Hi, Bob.

Disney dropped a bombshell overnight: Bob Chapek is out as its CEO, to be replaced by former CEO Bob Iger. Ouch.

• Chapek was, you may remember, Iger’s hand-picked successor. But when Chapek took over as CEO with Iger still in place as chair of the board, their relationship soured. Iger stepped down at the end of 2021.
• Iger will return for the next two years and help find another successor, which hopefully goes better this time.

Streaming has been an ongoing headache for Disney. Despite record revenue and profits in some of its divisions over the past year — albeit with a weakening in the most recent quarter — the company has faced growing losses in its direct-to-consumer business, which include Disney+ and Hulu.

• In the most recent quarter, that division lost $1.47 billion, double the loss it made in the same period a year earlier.
• The company has blamed increases in programming, production, marketing and technology costs for the widening gap.
• It recently had started planning hiring freezes, layoffs, and other cost-cutting measures, according to CNBC.

Bob Iger could shake things up when it comes to content and streaming. Given he has a mandate “to set the strategic direction for renewed growth,” according to Disney, he may have little choice.

• He will be “viewed as a catalyst to improve the content aspects of Disney,” according to a note by Wells Fargo analyst Steven Cahall seen by The Wall Street Journal.
• Worth noting, per CNBC: “Iger … believed Disney+ should underprice competitive streaming services to maximize its price-value perception among consumers. Chapek decided to raise Disney+’s price to $10.99 without ads as of Dec. 8, making it more expensive than other no-ad streaming services.”

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People are talking

Palo Alto Networks CEO Nikesh Arora sees a silver lining in the current economic clouds:

• “You go in there and say, ’Listen, I can replace seven vendors for you. I can get you to a better security outcome.’”

Mastodon founder Eugen Rochko said Elon Musk has a real chance of destroying Twitter:

• "It takes a lot to run a social media platform ... that deals with real-time data, and losing most of your engineers is not a good thing."

Meta CTO Andrew Bosworth isn’t a fan of Blind, according to anonymous Meta staff posting on the platform. Per one commenter:

• “Our CTO went off on a rant talking about how bad blind is for your mental health.”

Bill Gates explained some of the strange things he’s done to raise awareness of sanitation:

• "I drank water from fecal sludge with Jimmy Fallon, shared the stage with a jar of human feces, and smelled pit latrine odor."

Making moves

TikTok is still hiring, despite the bloodbath of layoffs through the tech sector.

Indonesian online learning platform Ruangguru laid off “hundreds” of employees, according to Bloomberg.

In other news

Amazon’s Alexa division is in turmoil, according to Insider. Struggling against “huge losses,” it was hit hard by recent layoffs and was referred to by one former employee as “a wasted opportunity."

Companies are worried about increased investor activism as a result of new proxy-voting rules that make it easier for activist shareholders to elect new board members.

Elizabeth Holmes was sentenced to more than 11 years in prison. She plans to appeal.

A name to know: Caroline Ellison, the former CEO of Alameda Research. This WSJ profile of her is worthy of your time. Relatedly: Here's a profile of SEC chair Gary Gensler. Also related: FTX owes its 50 top creditors almost $3.1 billion.

Salesforce is insisting some employees return to the office, Insider reports. CEO Marc Benioff had previously said that office mandates wouldn't work.

Ticketmaster is being investigated by the Justice Department over antitrust concerns, The New York Times reported.

Microsoft is on a mission to convince governments that its $69 billion acquisition of Activision Blizzard is a good idea. The outcome could shape how much more Big Tech can grow.

Tesla recalled 321,000 vehicles in the U.S. due to a software issue that affects the rear lights of the cars.

The FCC finally released its broadband maps. They provide a more accurate picture of coverage than your ISP might like you to see.

Sponsored content from Conga

Protocol sat down with Randy Littleson, chief marketing officer at Conga, to talk about how revenue lifecycle management can help organizations create predictability, even in an unstable economic environment.

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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

It’s not common for judges to make pop cultural references, nor to have the level of cryptocurrency expertise Faruqui has. His rulings have made smart references to "The Big Lebowski," "Dr. Strangelove," and "SNL" parodies of the McLaughlin Group. They also demonstrate a uniquely detailed understanding of how criminals can use cryptocurrency to their advantage and, more importantly, how they can’t: in a January forfeiture decision, for example, Faruqui noted that “cash poses a greater challenge to law enforcement than cryptocurrency in unhosted wallets.” In another, he called anonymity on the blockchain a “myth,” clarifying that cryptocurrency is an inefficient tool for criminals evading sanctions.

His knowledge isn’t the product of spending time on crypto Twitter. Rather, before taking the judge position Faruqui was one of a group of prosecutors in the U.S. Attorney’s office in Washington, D.C., that called themselves the “Bitcoin Strikeforce,” and worked with agencies like the IRS and FBI in federal investigations. There, Faruqui prosecuted cases that involved terrorism, child pornography, and weapons proliferation. Particularly well known was a case involving a dark-web site called “Welcome to Video,” which had facilitated some 360,000 downloads of sexually exploitative videos of children to 1.28 million members worldwide using bitcoin. Bitcoin’s immutable ledger was used to find the perpetrators.

A magistrate judge doesn’t set precedent in the same way as a Supreme Court justice — stare decisis only must be obeyed by lower courts, and Farqui’s is not the highest. But the ways Faruqui has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster. Crypto lawyers have drawn on his prior decisions in the context of the Tornado Cash sanctions, for example.

Faruqui spoke with Protocol about the power of his position, and what people in crypto should understand about the law.

This conversation was edited for clarity and brevity.

How did you learn about cryptocurrency?

It’s when I was a prosecutor that I really learned about it. There was another prosecutor, Christopher Brown — you know, the other Chris Brown — and he had taken an interest in this when we were both working on financial crime in the Washington, D.C. U.S. Attorney’s office. He had the sense of “this is getting bigger, and we should start looking into it.”

Our U.S. attorney at the time, Jessie Liu, had this idea of using financial investigations in a way that was not limited to just white collar crime, or even narcotics cases, but also for cyber investigations, to national security investigations, and in civil cases. A lot of what we were investigating was related to following the money and so she wanted us to be this multidisciplinary unit.

That’s how we started out with our “Bitcoin StrikeForce,” or so we called ourselves. But I have to say, we started with the goal of wanting to make T-shirts, and we never did that while I was there. And now I’m gone! So if they have them, I don't know if I’ll get one.

You should get an alumni T-shirt.

Yeah, exactly!

Your decisions have also gotten a lot of attention. I mean, you’re quoting "SNL," you’re quoting "The Big Lebowski," you’re quoting "Dr. Strangelove." What are you trying to accomplish with that?

We're public servants! And in order for the public to have faith and trust us, they need to understand what it is that we're doing and what we're saying. Humor is one way, not using a lot of legalese is another way. But I think there are many judges who are trying to make the judiciary more accessible, and so people can see the work that we're doing and understand what we're doing and then make their own opinions about if it's right or wrong. But at least, if it's understandable, then there's still some trust in the framework even if you don't agree with how our decisions are stated.

Are you trying to get through to people who are into crypto in particular?

We are ambassadors for the judiciary to the people in our courtroom — it's a very frightening proposition being in court if you've been federally charged, and people have perceptions of what they think can happen there in terms of fairness or unfairness. Then, there’s other people who might be dealing with it: family members, friends, victims who might be in a courtroom gallery, etc.

But then it goes far beyond that. I do a lot of work with the Administrative Office of the Courts, our central body doing civic education and outreach to high schools, because I want college and high school students and law students to have an experience where they get a chance to talk to a judge. So my goal is certainly not just getting to one segment of the population, but it's making decisions accessible to whoever's interested in reading them.

What has it felt like for you switching from that prosecutor role to magistrate judge?

Lawyers are trying to take different frameworks from one topic and apply them to another, and then convince you that that is or is not appropriate. Being a judge is very different because you're evaluating what the parties present to you as the applicable legal frameworks, and deciding how new, groundbreaking technology fits into legal frameworks that were written 10 or 15 years ago.

And that’s tech generally. Crypto, some argue, evolves even faster.

I think a lot of people would say that’s why they’re pushing for the use of cryptocurrency, because it is fast-moving. But that's not really a place where judges get involved in saying how it ought to be regulated. Judges are just getting around to answering the question of, “do these regulations apply” and “how do they apply?” And different judges make different decisions. There was, famously, a judge in Florida that said cryptocurrency was not money because you couldn't put it underneath your bed, and that's what money is: something that is tangible. So different people are going to have different decisions. And that's not just true for crypto, but also other areas of the law.

Your best-known crypto decisions strongly assert that crypto is traceable. One way people try to make it less traceable is with mixers, and Tornado Cash was sanctioned by OFAC not too long ago. Do you think the legal reasoning was sound enough for similar sanctions to be applied to other mixers, or decentralized exchanges?

I don't know. I think there's been some discussion that people may litigate some of these things, so I can't comment, because those frequently do come to our courthouse. And I think there are certainly people opining on that, yes and no. So much of what judges do is that we rely on the parties that are before us to tell us what's right and what's wrong. And then, you know, obviously, they'll have different views, and we make a decision based on what people say in front of us.

Are you aware that some legal analysis of the Tornado Cash sanctions references your recent decision in a cryptocurrency sanctions case?

There's just so little that’s been written about in the law about crypto, and that means that people are trying to take breadcrumbs from prior decisions and put them together to make something. That's what good lawyers will always do. Even legislators might look at that as they try to think about where the gaps are. As a prosecutor I had a case where we sued three Chinese banks to give us their bank records, and it had never been done before. Afterwards, Congress passed a new law, using the decisions from judges in this court and the D.C. circuit court, the court above us. So I'm sure people look at prior decisions and try to apply them in the ways that they want to. So no, it doesn’t surprise me that people did that.

Are there any misconceptions about how the law applies to crypto, or how your decisions should be interpreted, that you wish you could get across?

One misconception is that the judges can't understand this technology — we can. And that’s not just judges, it's anybody. People have these views in two extremes. It’s either that “crypto is fake, it's not real,” or “it's so technical that you can't understand it.” And my takeaway, as I’ve discussed and as hopefully comes out in my opinions, is just that crypto is understandable. It’s just like money — it has value, it's used, it’s what people think it is.

This idea that “people can't understand it” — that's wrong. The lawyer's fundamental job is to take super complex and technical things and boil them down to very easily digestible arguments for a judge, for a jury, or whoever it might be.

Good morning! Today, we’re turning to the security experts on our Braintrust to find out how you should be thinking about cyber next year. Let’s dive in.

What to ask your CISO in 2023 

Is your company secure? As Andrew Howard, CEO at Kudelski Security, told Protocol, the answer to that question is “always no.”

So, as you look to next year and start to plan how to think about security over the coming months, we asked the security experts in our Braintrust to tell us what every CEO should ask their CISO in 2023. Here’s a choice cut of what they suggested.

How do we make it harder for attackers to access our apps, but not for our users?

— Jameeka Green Aaron, CISO for customer identity at Okta

• “Balancing security and usability is often presented as a zero-sum game, and that’s just not true anymore. We have anti-phishing technologies like passkeys and FastPass that provide additional layers of security without adding friction for users.”

How are we making security a part of everyone’s job?

— Ryan Orsi, worldwide cloud foundations partner lead for security-MSSP/identity/ops/management at AWS

• “Creating a culture of security begins with education and awareness to all levels and all roles within a company on what security policies and controls exist, how each department/team directly interacts with them, and training to empower individuals with methods to detect the common tricks bad actors use in a social engineering attack.”

How are we lowering our cyber risk to become a harder target for attackers, whilst driving efficiency in our cyber security program?

— Marcus Fowler. SVP of strategic engagements and threat at Darktrace

• “In order to maximize ROI in the face of budget cuts, CISOs will need to demonstrate investment into proactive tools and capabilities that continuously improve their cyber resilience … This maximizes human resources on the team, enabling them to work on higher level tasks.”

Read more: What cybersecurity question should every CEO ask their CISO in 2023?

This is hardcore

Elon Musk set out a big ultimatum earlier this week, asking employees to hit “Yes” on a Google form by 5 p.m. ET Thursday if they want to remain at the company — on the provisio that they would “need to be extremely hardcore” and work “long hours at high intensity.” It may not have played out the way Musk hoped it would.

Musk appears to have been scrambling on the approach to the deadline in an effort to reduce the exodus at Twitter. Per The New York Times:

• “Musk and his advisers held meetings with some Twitter workers whom they deemed ‘critical’ to stop them from leaving, four people with knowledge of the conversations said.”
• “He sent out confusing messages about the company’s remote work policy, appearing to soften his stance on not allowing people to work from home before warning their managers, according to those people.”

Yet hundreds of staff don’t want to be hardcore, according to The Verge. It reports that “after the deadline hit, hundreds of employees quickly started posting farewell messages and salute emojis in Twitter’s Slack, announcing that they had said no to Musk’s ultimatum.”

• There is currently no official word on how many people decided to leave.
• For Musk’s part, he tweeted: “The best people are staying, so I’m not super worried.”

The company now appears to be in turmoil. In fact, maybe the most turmoil of its recent life. According to The Verge’s reporting, “multiple ‘critical’ teams inside Twitter have now either completely or near-completely resigned.”

• “There's just not enough technical expertise anymore to keep the site running,” Melissa Ingle, a former Twitter contractor, told MIT Technology Review. “Unless major changes are made, I don’t see how it lasts the month,” she added.
• Meanwhile, Twitter closed down its offices until Nov. 21, which Platformer’s Zoë Schiffer reported was because “Musk and his team are terrified employees are going to sabotage the company.”

​The mobile gaming slump

Revenue from mobile games is predicted to decline for the first time in history this year, reports Protocol’s Nick Statt.

• The whole game industry is expected to contract by 4.3%, according to market research firm Newzoo, driven by a 6.4% decline in mobile game spending on top of a 4.2% decline in console game spending.

Mobile gaming has typically offset losses in console and PC gaming and has been the largest and fastest-growing sector in the industry for years. So this year's decline marks a surprising downturn for mobile.

What’s driving the declines? In fact, as with many parts of the economy right now, a confluence of factors has created a particularly difficult time for game developers, and not just mobile ones.

• Consumers are spending less on gaming due to inflation increasing the price of everyday goods.
• A number of high-profile console and PC games have also suffered from delays this year, setting up a return to growth in 2023.
• The digital advertising market on which many mobile games rely for revenue is also having a tough year.

Read more: Mobile gaming's surprising slump is dragging down the game market

​A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event are now available to live-stream.

Watch here

People are talking

John J. Ray, FTX’s new CEO who has overseen many bankruptcies, including Enron’s, said the company’s situation is “unprecedented”:

• “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

Doug Leone, Sequoia’s global managing partner, suggested that the firm was taking a hard look at its investing principles:

• “I can tell you that, for the next three to six months, we’re going to dream a little less.”

Binance CEO Changpeng “CZ” Zhao doesn’t see much opportunity in India:

• “I don’t think India is a very crypto-friendly environment.”

Making moves

Amazon layoffs will continue into 2023, CEO Andy Jassy said. He also said they were “the most difficult decision” of his tenure so far.

GoTo is cutting 1,300 jobs, or about 12% of the workforce of Indonesia's biggest tech company.

Roku is laying off 200 employees in the U.S., about 7% of its total workforce, Variety reported.

Meta fired more than 20 employees and contractors over the last year for improperly taking over user accounts.

Ella Irwin is Twitter’s new head of trust and safety, according to The Information. She replaces Yoel Roth, who recently left the company.

In other news

FTX used corporate funds to buy homes in the Bahamas for its employees, according to a bankruptcy declaration. It also appears that Sam Bankman-Fried transferred assets to the Bahamian government in the wake of the bankruptcy.

Where does growth come from for Meta? Mark Zuckerberg reportedly told employees that business messaging, not the metaverse, would likely be the “next major pillar” of its business.

Elizabeth Holmes will be sentenced today after having been convicted of four counts of defrauding investors. She faces up to 20 years in prison.

Two senators are pushing for a hard ban on the U.S. government working with Chinese chipmakers, POLITICO reported.

How do you get people to trust AI predictions? Here are some ideas.

Masa Son owes SoftBank nearly $5 billion, according to the Financial Times.

How does copyright apply to generative AI? Um, great question. Relatedly: TechCrunch took a close look at Unstable Diffusion, a group that is trying to monetize generative AI porn.

The FCC ordered ISPs to provide “nutrition labels” for their broadband offerings, clearly describing fees, caps, and more.

​A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event are now available to live-stream.

Watch here

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you Sunday.