TechRisk Notes#19: DOJ is after DeFi hackers + G7 to regulate AI
Also, G7 acknowledged the need to govern AI, Apple restricted internal use of ChatGPT, Ledger came under fire with its new crypto key recovery feature, and more. [21 May 2023]
EmergingTech Spotlight
Group of Seven (G7) - G7 leaders acknowledged the need for governance of generative artificial intelligence (AI) and immersive technologies. The leaders agreed to have ministers discuss the technology as the "Hiroshima AI process" and report results by the end of the year. [more]
In the recent Senate hearing on AI, industry reps, primarily OpenAI CEO Sam Altman, agreed on the need to regulate new AI technologies, while politicians seemed happy to hand over responsibility for drafting rules to the companies themselves. [more]
AI Pioneer Yoshua Bengio warned that the current approach to developing AI comes with significant risks where tech companies’ competitive strategy with AI is “unhealthy”. That could lead to “danger to political systems, to democracy, to the very nature of truth”. Additionally, he pointed out the importance that access to Generative AI be closely monitored so that tracking could be performed on potentially illegal or dangerous uses. [more]
For his pioneering research in deep learning, Bengio was a co-winner of the 2018 Turing Award, among the highest honors in computer science, and is referred to as one of the “Godfathers of A.I.” alongside Geoffrey Hinton and Yann LeCun, who shared the award.
In a recent interview with IEEE Spectrum, former MIT, Carnegie Mellon, and Stanford University faculty member—and serial entrepreneur—Rodney Brooks pointed out that “the large language models are good at is saying what an answer should sound like, which is different from what an answer should be”. He also noted that “It gives an answer with complete confidence, and I sort of believe it. And half the time, it’s completely wrong.”[more]
Tech giant Apple reportedly restricted internal use of the AI chatbot over data leak concerns. Apple and Samsung join a growing list of companies and global governments restricting or prohibiting ChatGPT's use, including JPMorgan Chase, Verizon, Northrop Grumman, and Amazon. [more]
UBS abandoned a multi-year effort to utilise quantum computing for trading after concluding that it offered no significant advantage over existing technologies, according to the person who led the project. [more]
IBM Corp. and Google LLC have pledged $150 million to support two universities’ quantum computing research efforts, i.e. the University of Chicago and the University of Tokyo. Besides financial resources, researchers will also receive access to quantum computing hardware from Google. [more]
Web3 Cryptospace Spotlight
Crypto wallet maker Ledger came under fire this week for its new “Ledger Recover” feature, with remarks indicating that the service – which stores encrypted user seed phrases with third-party custodians – undermines Ledger’s stated commitment to privacy and security[more]. Ledger co-founder and ex-CEO Éric Larchevêque took the criticism against Ledger as “a total PR failure, but absolutely not a technical one”. He also noted that “Ledger is still safe, there is no backdoor, the Ledger Recover is not a conspiracy, no one will ever force anyone to use Recover”. [more]
The United States Department of Justice’s (DOJ) crypto tsar is cracking down on Decentralized Finance (DeFi) hackers and exploiters amid a four-year rise in illicit crypto activity. In a recent Financial Times report, Eun Young Choi, director of the Justice Department’s National Cryptocurrency Enforcement Team (NCET), indicated that the department is focusing on thefts and hacks involving DeFi, and “particularly chain bridges”. [more]
Arbitrum-based decentralized exchange (DEX) Swaprum has allegedly conducted a rug-pull on its users, with $3 million worth of customer deposits being swiped from the platform. Following the incident, Swaprum’s Twitter, Telegram and Github accounts have all been deleted, however Swaprum’s website is still operational.[more]
According to Elliptic analysis conducted on behalf of Nikkei, North Korean hackers have stolen $2.3B in crypto assets from businesses worldwide over the last five years. Japan is a major target for these hackers as they stole $721 billion from firms in the country — equating to 30% of their illicit wealth. It is followed by Vietnam, where they stole $540 million and $281 million from Hong Kong. Additionally, the hackers appear to focus on Japan and Vietnam crypto exchanges due to their poor security. Elliptic reported that North Korean hackers hacked at least three exchanges in Japan between 2018 and 2021.[more]
LayerZero Labs, the development firm behind cross-chain messaging platform LayerZero, has announced a record-high $15 million bug bounty in partnership with the crypto-focused bug bounty platform Immunefi. Commenting on the launch of the bounty program, LayerZero Labs CEO Bryan Pellegrino noted the project has “enough money to pay out plenty of rewards” and “The security of the protocol comes before anything else”. [more]
According to May 19 proposal to Aave protocol, a bug in an older version of crypto lending protocol Aave prevents users from interacting with and withdrawing Wrapped Ether (WETH), Tether (USDT), Wrapped Bitcoin (WBTC) or Wrapped Matic (WMATIC) pools on Aave V2. Although withdrawals are currently impossible, the team stated that funds are "perfectly safe," as the bug can be fixed after a governance vote. [more]