November 10, 2022
Illustration: Christopher T. Fong/Protocol
Good morning! Binance is no longer coming to the rescue of FTX, and the complex web of connections that the failing crypto exchange belongs to means that could have a profound effect on the broader industry. That's what we're digging into this morning.
But first a quick housekeeping note: We will be off tomorrow and on Sunday to commemorate Veterans Day. We'll be back in your inbox on Monday morning.
Binance isn’t buying FTX after all. The crypto giant said Wednesday it had decided that it would "not pursue the potential acquisition” based on a “corporate due diligence” review.
The effects will ripple across the crypto industry. Most immediately, ether and bitcoin dropped in a broad sell-off, with bitcoin hitting a two-year low. It's also left D.C.’s crypto allies skeptical of the industry. But the ultimate impact has yet to be seen, as the trading firm’s complex web of relationships continues to unravel, writes Protocol’s Tomio Geron.
Such a tangled web makes predictions difficult. Alameda itself had exposure to several other crypto lending outfits that had collapsed earlier this year, including Voyager, to which it said it would repay $200 million in September, and BlockFi, which FTX backed with a line of credit earlier this year.
Read more: The FTX fallout is spreading all over crypto
A lesser man would look at the battered fintech landscape and say, “Party over, oops, out of time.” But not Elon Musk! Musk is going to party like it’s 1999, with his new toy called Twitter, writes Protocol's Owen Thomas.
Musk wants to turn Twitter into a super app, a do-it-all service called X that encompasses communication, news, shopping, and payments. He's been talking about it for a while now.
Musk’s wannabe super app faces a ton of competitors that didn’t exist two decades ago. One of the chief ones is run by someone close to him.
But the biggest challenge Musk’s super app may face is Musk. As PayPal learned, getting people to trust you with their money requires painstaking attention to detail, from the design of a checkout button to fraud-catching algorithms. Musk hasn’t been in that business for decades. There’s a lot he missed the first time, and a lot he has to learn. And there is little sign that he has the patience required.
Read more: Elon Musk is recycling his X.com playbook for Twitter
Meta announced its largest ever workforce reduction yesterday, with layoffs totaling more than 11,000 employees. It appears that very few business units were spared, including those responsible for building Meta’s metaverse vision: Reality Labs.
Reducing head count in Reality Labs is meaningful. A cut of any degree there is a telling sign of just how difficult the road ahead might be in achieving Zuckerberg’s vision of the “holy grail” of social networks, as he characterized the metaverse at the 2022 SXSW conference, Protocol’s Nick Statt writes.
The recent rate of spending speaks volumes about how much Zuckerberg has prioritized the company’s shift toward building the metaverse. Meta has continued to spend lavishly on Reality Labs.
The concern now is that Zuckerberg might be too ambitious and too early to the next-generation internet that he envisions. With its stock price having plunged by nearly 70% this year, Meta is taking drastic measures to ensure the company can survive in the short term — at least until the technology evolves to where it needs to be to enable the types of products and experiences Zuckerberg seems to be banking on.
Read more: Meta layoffs are a sign the metaverse might not save the company after all
While tech can be a transformational tool for change, there must be a balance to ensure we are not only depending on multilateral institutions to implement policy and standards, as authoritative regimes can easily dismiss those initiatives. Instead, we must have a holistic diplomatic approach that ensures tech diplomacy and collaboration can be spread through various platforms.
President Joe Biden thinks Elon Musk’s links to foreign countries deserve some scrutiny:
And Sophie in ‘t Veld, a member of the European Parliament, has other concerns about Musk:
Al Gore said he hopes the greenhouse gas inventory will give climate negotiators a critical tool to hone in on the most polluting sites in individual countries:
Upstart CEO Dave Girouard said fintech lenders are going to feel the squeeze of high interest rates in 2023:
Redfin laid off 862 employees, or 13% of its workforce. It’s also shuttering its iBuyer business, RedfinNow.
Aerospace startup Astra laid off 16% of its staff after the company had tripled its headcount in the past year to more than 400 employees.
Nintendo has a new subsidiary. Nintendo and DeNA, a mobile games company, are creating a joint venture company called Nintendo Systems to “strengthen the digitalization” of Nintendo’s business.
Elon Musk mandated in-office work at Twitter in his first email to staff, which was seen by Bloomberg. The new rule, effective immediately, requires employees spend at least 40 hours in the office each week. Musk also warned of “difficult times" to come, adding: “The road ahead is arduous and will require intense work to succeed.”
RIP Twitter’s short-lived “Official” badge. The company scrapped the program aimed at high-profile users the day it rolled it out. And fake accounts are already embracing pay-for verification, presaging the chaos that is yet to come.
A name you may want to know better: Yoel Roth, Twitter’s global head of safety and security. He seems to have become somewhat of an ally to Elon Musk, and the WSJ has a profile of him.
John Kerry unveiled the Energy Transition Accelerator, a new carbon credit program aimed at mobilizing private capital to help middle-income countries transition away from coal and toward renewable energy.
GitHub debuted private vulnerability reporting on the platform, aiming to avoid surprise disclosures of zero-day vulnerabilities in open-source software projects.
Okta updated its passwordless authentication system with a new capability aimed at countering the illegitimate use of biometric login data.
IBM is in talks with the Biden administration on potential export controls for quantum computers. As Protocol was first to report last week, there’s mounting pressure to move quickly — particularly from the National Security Agency and other intelligence agencies, which see China’s progress on quantum as a significant concern.
Zoom is expanding outside of the home office. The company is collaborating with AMC to offer work meetings on the silver screen for groups that are between 75 and 150 people. The theater company is even providing “food and beverage offerings, possible movie viewings, and concierge-style personalized handling of meeting needs.” Just think: Next year, you might be able to buy fresh movie theater popcorn, Red Vines, and a Coke before your quarterly all-hands.
New tech innovations like Web3, blockchain, and AI have massive potential to strengthen democracies and global economic security while decreasing the digital divide. However, these innovations come with significant risks. Political scientist Ian Bremmer underscores disruptive technology as one of three looming global crises for which we are largely unprepared.
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