Chase to Block Crypto Transfers in U.K., Citing Fraud

ALSO: US Treasury sanctions Sinaloa-connected crypto wallet, Pudgy Penguin hits Walmart shelves and more |

Sept. 26, 2023 The biggest crypto news and ideas of the day  Were you forwarded this newsletter? Sign up here. Don't want this newsletter? Unsubscribe Supported By Welcome to The Node! This is Daniel Kuhn here to take you through the latest in crypto news and why it matters.   In today's news: Chase is banning crypto-linked payments in the U.K. NFT brand Pudgy Penguin is selling plush dolls in 2,000 Walmart stores. And Ben Armstrong, aka BitBoy, was arrested after an altercation with his former business partner.   The takeaway: Variant co-founder Li Jin writes that Web3's problem isn't with UX, but with product-market fit. U.K. Ban JPMorgan's U.K. subsidiary Chase is banning all crypto-linked payments starting Oct. 16, according to an email to customers. "If we think you're making a payment related to crypto assets, we'll decline it," the email read, citing rates of crypto fraud for the move. The block will apply to transactions to and from Chase debit cards and bank accounts. U.K. banks have historically been reluctant to work with crypto providers, such that the Financial Conduct Authority recently facilitated discussions between banks and crypto firms to foster banking relationships.  Armstrong's Arrest Ben Armstrong, the crypto influencer once known as BitBoy, was arrested and released on bail on Monday following a confrontation with his former business partner, part of which was live-streamed on social media. The Gwinnett County Sheriff's Department website shows one "Benjamin Charles Armstrong" was arrested for "loitering/prowling" and for "simple assault by placing another in fear." His bond was set at $2,600. BitBoy Crypto, the company Armstrong co-founded, voted unanimously to oust the controversial crypto day trader in August in part due to Armstrong's alleged substance abuse. A message from Foundry The staking market on Ethereum, Tezos, Cosmos, Solana, Cardano and others, as investors tackle regulation and uncertain conditions.   Gary Gensler Is Wrong About Proof-of-Stake Tokens The Securities Exchange Commission Chair said the "investing public" may expect a return from staking. Polymesh's Graeme Moore argues that doesn't make these cryptocurrencies securities.   IRS Proposed Rule on Digital Asset Broker Reporting Could Kill Crypto in America The proposal creates unworkable requirements for decentralized finance in the U.S. and serves as an important cautionary tale. O, FAC! The Office of Foreign Assets Control (OFAC) has sanctioned an Ethereum wallet tied to Jimenez Castro, a Mexican male with ties to the Sinaloa cartel, as a part of a counter narcotics operation. Arkham Research found the blacklisted wallet was first active in January, and interacted with the Binance crypto exchange. In a statement, the U.S. Treasury said crypto was just one of Castro's tools allegedly used to launder money and "transfer proceeds from illicit fentanyl sales in the United States to Sinaloa Cartel leaders in Mexico." Nine other wallets were sanctioned as part of the narcotics operation. Largest Retailer Popular NFT project Pudgy Penguins debuted its Pudgy Toys collection across 2,000 Walmart stores in the U.S. These toys, which have been available online since May and will sell for $2.99-$11.97, come with a unique birth certificate that allows owners to play as digital "Forever Pudgy" characters inside Pudgy World, a metaverse built on the zkSync Era blockchain. Pudgy's CEO Luca Netz said the deal with the largest retailer in the U.S. "is a testament to the evolution of how consumers engage with brands in the digital era."  The Takeaway: User Issue (Mike Van Den Bos/Unsplash, modified by CoinDesk) Variant Fund co-founder Li Jin writes today's guest column.   Discussions about accelerating adoption of crypto often focus on improving UX. The popular thinking goes: web3 products lag behind from a user experience perspective, onboarding poses multiple points of friction, and technological concepts come with learning curves; creating a more seamless experience for using web3 apps will unlock greater adoption. While improving crypto UX is certainly important, I believe that the more significant and urgent barrier to adoption is building things that people want. Web3 has a product-market fit problem, not a UX problem. Product-market fit is when a product satisfies a strong market need. For consumer builders, the elegance and challenge in building for consumers is that humans have remarkably consistent needs across time. That's why Maslow's hierarchy of needs continues to resonate nearly a century after its introduction, with universal needs ranging from the physiological (food; shelter; clothing) to psychological (belonging; love; entertainment; esteem).  The history of consumer startups is one of continual innovation in solving for human needs in novel ways. Though people often dismiss new consumer apps as incremental innovations in flippant categories ("teens making dance videos"), the truth is that successful startups offer a step-function improvement in enabling people to achieve a core need. Amazon sold us books (and everything else) in just a few clicks, dramatically easing the process of procuring goods. Facebook enabled us to connect with those we care about instantly. Tinder exposed us to an order of magnitude more potential romantic partners than anyone could stumble on in real life.  There is a lot of evidence that when the user benefit is great enough, users are willing to jump through UX hurdles and learn new behaviors, in crypto and beyond. Examples include the first iPhone (which lacked a touch keyboard), the internet itself, and all crypto assets and applications that have had significant adoption to date (NFTs during the last bull market being a primary example). For products that solve a core need, unfamiliar and complicated UX hasn't been a blocker. Despite the long list of multifaceted user needs, so far, explorations of the opportunities that crypto can uniquely address have been largely limited to the financial realm. While income is a widespread need, products where income derives from speculation work when the market goes up, but lose their appeal as prices fall. It's a tough sell, especially when there are alternatives for users to attain income with less risk and uncertainty. There is an opportunity for crypto builders to build products that better address other human needs, such as belonging, community, and entertainment. What could that look like?  On a small scale, NFT communities and DAOs have satisfied some people's need for belonging, forging novel social graphs on the basis of asset ownership. To those who say that shared financial interest can't be the basis for "real" relationships, consider that many of our real-world connections are predicated on ownership, whether that's neighboring homeowners, startup employees, or Pokémon card collectors. There's an opportunity to leverage onchain assets as the basis for new communities that solve for belonging, esteem, and connection. In August 2023 alone, 94.5 million NFTs were minted across Ethereum and L2s; as the volume of user activities grows, imagine inferring users' interests based on onchain actions and exposing connections based on a rich activity history. Onchain media expands our entertainment options, giving us skin in the game for what we consume and create online. On platforms like Sound.xyz, Friend.tech, and Zora, users can bet on media and creators they believe in, enhancing their experience of the content and turning these networks into financialized games. In a world where all media is incepted as NFTs, there will be a new economic dimension that can enrich our experience of the internet. These are just starting points for what it could look like for crypto to find product-market fit and address needs beyond just income. There's room for much more experimentation from here. To achieve widespread adoption and evolve beyond their current niche, crypto products need to enhance the human experience—through solutions that wouldn't be possible without crypto.    Read the full article here.   – Li Jin @LiJin18 A message from Phemex Future 'Shock'? Phemex Probably Won't Be Even Mildly Surprised   Phemex, a centralized exchange making moves to partially decentralize, is celebrating Bitcoin's 15th anniversary by placing a big bet: If the bellwether token is worth $50,000 or more on October 31st, the exchange will pay out 1,000 BTC to Phemex Soul Pass holders. To do the easy math, that's $50 million. Sure, it's unlikely that BTC's dollar-denominated value will double in the short term – but would you bet that much that it won't?   In the more likely scenario that BTC stays in its current $25,000 to $30,000 trading range – where it has been, given a little leeway, since March – Phemex is still giving away 1 BTC. Continue Reading Off-Chain Signals  Binance and CZ Turn a Deaf Ear to SEC Accusations – Unchained Binance co-founder Yi He writes "every battle is a do-or-die situation" – WSJ  Paradigm setting up new policy lab at 'critical' time for crypto regulation – Blockworks Cartesi rollup network goes live with first app Honeypot – The Block MoneyGram unveils non-custodial wallet to bridge the worlds of crypto and fiat currency with USDC – Fortune Justin Sun just offered the $8m HTX hacker a job if funds are returned – DL News 'I'm the Umbrella Guy' We are committed to making sure Consensus is a place where the women of crypto, blockchain and Web3 feel they belong. We know the first step to doing that is making sure that women have representation in our speaker lineup and attendees.   Now is your chance to join our Women of Consensus community and get a pair of Pro or Explorer passes for 90% off. These passes are limited so act fast!    Use code C24WOMEN at checkout and secure your women's passes now. The Node: A newsletter from CoinDesk Were you forwarded this newsletter? Sign up here.  Don't want this newsletter? Unsubscribe. Copyright © 2023 CoinDesk, All rights reserved.  250 Park Avenue South New York, NY 10003, USA See all of CoinDesk's newsletters | Manage subscriptions | Opt out

FTC and states sues Amazon over monopoly / SAG-AFTRA authorizes video game strike / Threads struggles to retain users

Plus: Meta could announce chatbots, VR headset at this week's Connect event

Inside Tech For September 26, 2023

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Welcome to Inside Tech! Here are today's top stories: The FTC and 17 states have sued Amazon, claiming the online marketplace abuses its power. The SAG-AFTRA union has authorized a strike against video game companies. Meta plans to launch chatbots with personalities on Facebook and Instagram.  If you find this newsletter useful, please share it with your friends and colleagues. Thank you!  Beth p/beth-duckett

1 The U.S. government and 17 states have sued Amazon, accusing the e-commerce giant of illegally abusing its market dominance to push out rivals. The long-anticipated antitrust lawsuit, led by the Federal Trade Commission (FTC) and state attorneys general, accuses Amazon of treating third-party sellers unfairly and manipulating prices, harming competition and consumers.  More: The lawsuit, filed in a Washington district court on Tuesday, stems from a years-long investigation and represents one of the most substantial legal challenges against the company.  The FTC and states claim Amazon violated antitrust laws through anti-discounting measures that have punished merchants for offering lower prices elsewhere. According to their complaint, Amazon effectively forces merchants to use its logistics services and set the lowest prices on its platform, curbing sellers' ability to compete on other platforms.  The lawsuit alleges that Amazon favors its own products in search results. Zoom out: The FTC is now seeking a permanent injunction to bar Amazon from "engaging in its unlawful conduct," according to FTC Chair Lina M. Khan. In response, Amazon's general counsel and head of public policy, David Zapolsky, said the FTC is "wrong on the facts and the law." Zapolsky argued that Amazon's practices have spurred competition and innovation and led to "greater selection, lower prices, and faster delivery speeds" for customers. Q: In your opinion, has Amazon's growth and market dominance benefitted consumers, or do you think the drawbacks outweigh any advantages? Join the conversation here.

2 SAG-AFTRA members have voted to authorize a strike for video game performers ahead of the latest contract negotiations with gaming companies. The move could pressure major video game companies, including Activision Blizzard, Electronic Arts, and Epic Games, to address SAG-AFTRA's remaining "critical issues," including protections for actors against artificial intelligence. More: The strike authorization, which received 98.32% support, doesn't automatically initiate a strike but could boost negotiation leverage. The SAG-AFTRA union, which represents movie and TV actors as well, is also striking against Hollywood studios. The video game actors are seeking the same wage increase as film and TV workers. In both cases, discussions have centered on the use of AI to recreate actors' images and voices. As games are computer-generated, the risk of AI replacement is high for video game performers, said Ray Rodriguez, SAG-AFTRA's chief contracts officer.

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3 Threads, Instagram's competitor to Elon Musk's X, is struggling to retain users after its July launch, according to the latest data from Insider Intelligence. What the numbers say: According to Insider Intelligence, Threads is projected to have 23.7 million monthly users in the U.S. by the end of 2023, far fewer than Facebook, Instagram, and TikTok, which are expected to reach 177.9 million, 135.2 million, and 102.3 million users. Meanwhile, X is forecasted to reach 56.1 million monthly U.S. users but could decline to 47 million by 2025 as more people leave the platform. Insider expects Threads to have 30 million users by 2025. The bigger picture: Threads gained over 100 million signups shortly after launch, making it the fastest-growing app on record. However, daily active users have since dropped precipitously. While Threads got an initial boost from Twitter's mistakes, it shouldn't count solely on X users defecting for future growth, according to Insider Intelligence's principal analyst Jasmine Enberg. However, Meta could have a "clearer avenue to monetize Threads" if Musk decides to introduce a monthly subscription fee for all X users, which could also drive more advertiser interest in Threads. To become a major player in the social media market, Enberg emphasized that Threads needs an identity beyond being an Instagram extension or X alternative.

4 France has received a software update from Apple designed to address radiation concerns for the iPhone 12. French authorities are currently evaluating the update, which may soon be available to iPhone 12 users in the country. More: France's regulator recently ordered Apple to halt sales of the iPhone 12 after testing showed that the device emitted excessive electromagnetic waves when in contact with the body. According to Apple, the finding was due to a specific French testing protocol, and is not a safety concern. The company still pledged to issue a new software update to fix the problem. France's regulator plans to test the update, which it expects will "bring the model in line with the European standards applied in France" and allow Apple to resume sales. Zoom out: France's move raised concerns in other European nations, including Belgium, which also requested the software upgrade. However, Belgium's regulator told Reuters that the update is currently limited to France. Italy is also awaiting French deliberations on the update before making a decision.

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5 Meta plans to launch personality-driven AI chatbots on its platforms, with the rollout expected as soon as next week, per The Wall Street Journal. The "Gen AI Personas" are set to launch across Instagram, Facebook, and WhatsApp, targeting Gen Z users. More: Meta's chatbots reportedly feature unique personalities, including "Bob the Robot," inspired by Futurama's sassy Bender character. Another bot, "Alvin the Alien," supposedly seeks personal information from users to better "understand humans." Other bots could be geared toward productivity, including coding assistance. Meta plans to develop "dozens" of the bots and is working on a tool to allow celebrities to create their own chatbots for fan interactions, according to the WSJ. Zoom out: The company plans to announce the bots at its Meta Connect event on Sept. 27-28. Meta is also expected to show off its Meta Quest 3 VR headset and second-generation Ray-Ban Stories smart glasses.

6 Blue Origin, Jeff Bezos' space company, is replacing its CEO Bob Smith with Amazon hardware chief Dave Limp. Limp, Amazon's senior VP of devices and services, has managed the development and launch of products including the Echo, Alexa, and Amazon's Fire tablets.  More: After 13.5 years at Amazon, Limp announced in August that he would be leaving the company. However, Bezos has now tapped Limp to replace Smith, who resigned and is leaving Blue Origin in early December. Limp has experience in the space industry, overseeing Amazon's Kuiper satellite broadband project. Smith will now remain at Blue Origin until January 2 to assist with the transition. Zoom out: Blue Origin has been developing the New Shepard rocket for space tourism, which hasn't flown since a failed uncrewed mission in September 2022. The company's other projects include New Glenn, a powerful rocket for satellite launch contracts, and a future moon lander for NASA's Artemis lunar exploration program.

7 Quick Hits:  Revolutionize your no-code apps with AI-enhanced experiences. Learn how integrating PerfectApps' web apps with ChatGPT can supercharge your customer experiences.* Meta is rehiring some of the employees it laid off earlier this year, mostly in engineering and tech roles. Roblox acquired Finnish AI startup Speechly, which specializes in voice moderation technology. Roblox plans to use Speechly's technology to improve its voice chat service. Spotify announced it will use OpenAI's technology to translate podcasts into other languages, maintaining the speaker's original voice and style. Meta tweaked its Quest 3 pricing in select countries, with U.S. prices remaining unchanged before launch in Q4 2023. DockerCon is back and better than ever! Join us NEXT WEEK in LA for 2 days of sessions that unlock innovation. Use code DCHALF at checkout for 50% off!* *This is a sponsored post.

Upcoming Events OCT 16 Meet Our Fund 5, Building and Investing in AI San Mateo, California Save Your Seat * This is a sponsored event

Knowledge Hub Term of the Day Influencer marketing: Influencer marketing utilizes social media personalities, bloggers, vloggers, and other content creators to promote a brand or product. Read More Question of the Week Do you share details about your salary with your coworkers? Join the conversation

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Beth Duckett AI and technology writer Beth is the writer of Inside's AI and Tech newsletters, with a career spanning journalism and editing since 2007. She has written for publications including The Arizona Republic, USA Today, and others, and authored a book on the solar industry in 2016. Reach out to her at Beth.Duckett@yahoo.com. This newsletter was edited by Eduardo Garcia

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