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  • Saudi Arabia, UAE and Iran among six countries invited to join BRICS group | CNN Business

    Saudi Arabia, UAE and Iran among six countries invited to join BRICS group | CNN Business



    CNN
     — 

    Oil powers Saudi Arabia and the United Arab Emirates have been invited to become members of the BRICS group of developing nations in its first expansion in over a decade.

    Also invited are Iran, Egypt, Ethiopia and Argentina, South African President Cyril Ramaphosa said Thursday as he wrapped up the annual summit of the group in Johannesburg.

    Saudi Foreign Minister Prince Faisal bin Farhan said the kingdom was awaiting details from the BRICS group on the nature of the membership, and would take an “appropriate decision” accordingly.

    All six countries invited had already expressed an interest in joining. The BRICS group currently includes Brazil, Russia, India, China and South Africa.

    “The membership will take effect from the first of January, 2024,” Ramaphosa said.

    In a video message, Russian President Vladimir Putin congratulated the new BRICS members, adding that the bloc’s global influence would continue to grow.

    “I would like to congratulate the new members who will work in a full-scale format next year,” Putin said.

    “And I would like to assure all our colleagues that we will continue the work that we started today on expanding the influence of BRICS in the world,” the Russian president added.

    China’s President Xi Jinping called the bloc’s expansion “historic,” reflecting its determination to “unite and cooperate with developing countries.”

    “[It will] inject new impetus into the BRICS cooperation mechanism and further strengthen the power of world peace and development,” Jinping said.

    Indian Prime Minister Narendra Modi also welcomed the expansion, saying his country had always believed that adding new members would strengthen the bloc.

    Speaking to Saudi TV channel Al Arabiya, the Saudi foreign minister added that the bloc had “proven itself to be a useful and important channel to strengthen economic cooperation with countries of the so-called Global South.”

    Bin Farhan told the BRICS conference earlier Thursday that the kingdom would continue to be a “secure and reliable energy provider,” adding that total bilateral trade between Saudi Arabia and BRICS nations exceeded $160 billion in 2022.

    If Saudi Arabia accepts the invitation, the world’s largest crude oil exporter will find itself in the same economic bloc as the world’s biggest oil importer, China.

    It will also mean that Russia and Saudi Arabia — both members of OPEC+, a group of major oil producers — will join each other in a new economic bloc. The two countries often coordinate their oil output, which has in the past put Saudi Arabia at odds with its ally, the United States.

    The bloc’s expansion raises the question of potential de-dollarization, a process by which members would gradually switch to using currencies other than the US dollar to conduct trade. The BRICS countries have also been talking about a common currency, an idea analysts have described as unworkable and “unlikely” in the near future.

    Putin said the issue of a common currency was a “difficult question” but added “we will move towards solving these problems.”

    The expansion takes place at a time when some BRICS members, namely Russia and China, are locked into rising tensions with the West.

    Experts have said that choosing to include countries that are openly antagonistic toward the West, such as Iran, could swing the group further toward becoming an anti-Western bloc.

    Built off a term originally coined by former Goldman Sachs economist Jim O’Neill to describe key emerging markets, the group has persisted despite deep differences in political and economic systems among its members.

    “Economically, not many of the countries that are applying to join are particularly large,” O’Neill told Bloomberg earlier this week.

    Existing BRICS members have “had enough difficulty trying to agree just between the five of them,” he added. “So beyond the admittedly hugely powerful symbolism, I’m not quite sure what having a lot more countries in there is going to achieve.”

    BRICS held its first summit in 2009 with four members and then added South Africa the following year. It launched its New Development Bank in 2015.

    The United Arab Emirates President Mohamed bin Zayed al Nahyan said on X, formerly Twitter: “We appreciate the inclusion of the UAE as a member to this important group.”

    Egyptian President Abdel Fattah el-Sisi said his country looked forward to joining BRICS in order to strengthen economic cooperation among its members, as well as “raise the voice of the Global South,” according to the presidential spokesperson.

    — Manveena Suri, Mostafa Salem, Lizzy Yee, Mengchen Zhang and Nadeen Ebrahim contributed to this article.

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  • Vegan Sam Bankman-Fried is subsisting only on bread and water in jail, his attorneys say | CNN Business

    Vegan Sam Bankman-Fried is subsisting only on bread and water in jail, his attorneys say | CNN Business


    New York
    CNN
     — 

    Sam Bankman-Fried pleaded not guilty Tuesday to amended fraud and money laundering charges, appearing in court for the first time since his bail was revoked and he was sent to a Brooklyn jail to await trial.

    Lawyers for the former crypto billionaire, who is vegan, said the detention center is not accommodating his diet and failing to regularly dispense his prescription Adderall.

    “He’s literally now subsisting on bread and water, which are the only things he’s served that he can eat, and sometimes peanut butter,” his attorney, Mark Cohen, told the court.

    Magistrate Judge Netburn said she would contact the Bureau of Prisons about the accommodations.

    Bankman-Fried, also known as SBF, has spent the past 11 days in the Metropolitan Detention Center in Brooklyn, a notoriously overcrowded facility that’s been regularly accused of keeping inmates in inhumane conditions. It’s a far cry from his house arrest, which he spent in the relative luxury of his parents Palo Alto home in California.

    On August 11, Judge Lewis Kaplan revoked SBF’s bail and remanded him to the facility, ultimately siding with prosecutors’ argument that he had attempted to intimidate potential witnesses against him, including his former business partner and ex-girlfriend, Caroline Ellison.

    Bankman-Fried, 31, has pleaded not guilty to multiple conspiracy and fraud charges relating to the collapse of his exchange, FTX, in November. He faces a potential life sentence if convicted on all the charges.

    Before its collapse, FTX was one of the largest crypto-trading platforms in the world, backed by A-list celebrities and featured in Super Bowl commercials. But the company came unglued in the span of a week as concerns about its financial ties to SBF’s crypto hedge fund, Alameda Research, spurred investors and customers to yank their funds. The company filed for bankruptcy and quickly became the center of the federal fraud investigation.

    While awaiting his trial, SBF will be granted a window of time, from 8:30 am to 3 pm, on weekdays to meet with his attorneys, according to a court filing released Monday.

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  • Tesla cuts Model S and X prices by over 6% in China | CNN Business

    Tesla cuts Model S and X prices by over 6% in China | CNN Business


    Beijing
    Reuters
     — 

    Tesla has cut prices for its existing inventories of its premium Model S and Model X cars in China by as much as 6.9%, it said on Wednesday.

    A post from the carmaker on social media platform Weibo showed the price of the Model S cut by 6.7% to 754,900 yuan ($103,477.58) from 808,900 yuan earlier.

    The Model X now starts from 836,900 yuan, down 6.9% from 898,900 yuan earlier.

    Tesla

    (TSLA)     on Monday said it cut prices in China for its Model Y’s long-range and performance versions starting on August 14, which triggered concerns around its profit margins.

    The moves come after sales of Tesla’s China-made vehicles fell 31% in July from June, their first month-on-month decline since December, as the automaker idled some production to prepare for a revamped Model 3 launch.

    By contrast, China’s BYD

    (BYDDF)    increased sales from June.

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  • Russia’s ruble hits a 17-month low to the dollar as the Ukraine war bites | CNN Business

    Russia’s ruble hits a 17-month low to the dollar as the Ukraine war bites | CNN Business


    London
    CNN
     — 

    The ruble hit a 17-month low against the dollar Monday, highlighting the growing squeeze on Russia’s economy from Western sanctions and a slump in export revenues.

    The Russian currency has lost nearly 40% of its value this year, weakening past 100 rubles to the dollar, as Moscow’s war in Ukraine takes a heavy toll.

    The fall in the ruble’s value is one of several negative indicators for the Russian economy, even as President Vladimir Putin insists that Western sanctions are having a limited effect.

    — This is a developing story and will be updated.

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  • PayPal bets on crypto’s future with US-dollar-backed stablecoin | CNN Business

    PayPal bets on crypto’s future with US-dollar-backed stablecoin | CNN Business


    New York
    CNN
     — 

    PayPal is rolling out its first stablecoin as it attempts to capitalize on the “emerging potential” of US dollar-backed digital tokens for consumer payments.

    The stablecoin, PayPal USD, is fully backed by the US dollar and is “designed to reduce friction” for payments within virtual spaces and provide faster, cheaper transfers of money across borders.

    For now, the use case for the new token appears limited to crypto-related and other “web3” applications. But PayPal is betting on a future in which digital currency is more mainstream and merchants may request payment in stablecoins to avoid credit card processing fees. Similarly, crypto holders can send money instantly across borders without incurring remittance fees charged by banks.

    “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar,” said PayPal CEO Dan Schulman.

    Stablecoins, as their name implies, are designed to hold their value steady, making them a vital tool for traders of cryptocurrencies, which are notoriously volatile. Most stablecoins are tightly pegged to a traditional fiat currency, such as the US dollar, or to a commodity like gold. Stablecoins also act as a sort of on-ramp, allowing investors to more easily cash out their crypto holdings for money that can be used in real life.

    Their purported stability has made stablecoins such as Tether a pillar in the infrastructure of the $1 trillion digital asset market.

    PayPal

    (PYPL)     said its stablecoin will be “compatible with that ecosystem from day one. It will be available “soon” on Venmo, the popular payments app owned by PayPal

    (PYPL)    .

    Stablecoins aren’t always as stable as they purport to be. In May 2022, the “algorithmic” stablecoin TerraUSD collapsed when the crypto token backing it, Luna, collapsed. That triggered a broader panic in the space, wiping about $40 billion from the crypto market. The Securities and Exchange Commission later charged its creator, Do Kwon, with misleading investors about the coin’s stability.

    The value of PayPal USD, or PYUSD, doesn’t rely on a complex algorithm the way Terra did. It is issued by Paxos Trust, a blockchain infrastructure firm, and is fully backed by US dollar deposits, Treasuries and similar cash equivalents, according to the companies.

    In other words: every PayPal USD should be worth $1.00, no matter what.

    With the launch of PYUSD, Paxos and PayPal are “proving the real-world value of blockchain technology,” Paxos CEO Charles Cascarilla said, calling the new token “the most significant leap forward for digital assets and the financial industry.”

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  • ‘This isn’t some random dude with a duffel bag’: To catch fentanyl traffickers, feds dig into crypto markets | CNN Politics

    ‘This isn’t some random dude with a duffel bag’: To catch fentanyl traffickers, feds dig into crypto markets | CNN Politics


    Washington
    CNN
     — 

    The Biden administration has intensified its focus on tracing cryptocurrency payments that some of the most dangerous Mexican drug cartels use to buy fentanyl ingredients from Chinese chemical companies, the latest step in a renewed attempt to crack down on the multibillion-dollar fentanyl trade that kills thousands of Americans each year.

    The use of digital currency has exploded among fentanyl traffickers, with transactions for fentanyl ingredients surging 450% in the last year through April, according to data from private crypto-tracking analysis firm Elliptic.

    Federal agents are doing everything they can to catch up. While US diplomats have made fentanyl a point of emphasis in high-level talks with Mexican and Chinese counterparts, behind the scenes, a multi-agency effort is underway to keep pace with the rapidly changing nature of how fentanyl is financed and trafficked into the US. The work goes beyond the cartels to include tracking dark-web forums where Americans buy fentanyl.

    Current and former law enforcement officials from across the federal government described to CNN the digital-first tactics the administration is developing to disrupt the fentanyl trade.

    The Drug Enforcement Agency is investing in crypto-tracing software and identifying the cartels’ most sophisticated money launderers. The IRS has its most tech-savvy agents tracing payments on dark web forums. And a Department of Homeland Security investigations unit is leading a team of forensic specialists to pore over digital clues from stash houses near the Mexican border.

    Federal agents have been tracking the cartels’ finances and supply routes for years, but DHS, in particular, has ramped up its surveillance efforts in recent weeks, multiple US officials told CNN.

    There have been some notable busts recently, including nearly five tons of fentanyl seized this spring along the border. But there is still a lot of work left to do, officials caution, and the impact of the current surge may not be felt for months down the road.

    Agents have focused on the activities of two Mexican cartels, Sinaloa and Jalisco New Generation Cartel (CJNG), which officials say account for the majority of fentanyl on US streets. Sinaloa Cartel, in particular, has developed sophisticated crypto operations to finance its fentanyl business.

    “We’re dealing with a Fortune 50 company, which is what the Sinaloa Cartel is,” a US official with knowledge of the matter told CNN. “This isn’t some random dude with a duffel bag” selling fentanyl in daylight.

    Cryptocurrency has enhanced cartels’ ability to smuggle fentanyl into the US by allowing them to move vast sums of money instantaneously across a decentralized, digital banking system – all without having to deal with actual banks.

    “The speed the criminals can muster, it’s very hard for law enforcement to keep up,” said one top DEA official, who spoke to CNN on condition of anonymity to describe the agency’s counter-narcotics work.

    Cash is still king for the cartels and often preferred for local operations. But the expanded use of digital currency at both the supply and demand ends of the drug trade has made some traditional law enforcement methods obsolete. For example, drug dealers might hold fewer in-person meetings to hand over cash, reducing the opportunities for stakeouts by federal agents, said Jarod Koopman, head of the IRS’s Cyber and Forensics Services division.

    Cryptocurrency “eliminates the potential for hand-to-hand transactions,” said Koopman, whose team focuses on illicit financial flows, including dark-web purchases that are multiple steps removed from when the cartels get the drugs over the US border. “So now it’s … in a different world where some of the contacts might be online and we’re trying to facilitate or do transactions in a different manner.”

    But digital money also leaves a trail that investigators can follow.

    Federal agents have found cryptocurrency addresses written down on scraps of paper at stash houses in Arizona, Scott Brown, special agent in charge for Homeland Security Investigations (HSI) in that state, told CNN.

    In another case, DHS agents monitored a cartel-connected crypto account for over a year until it sent $200,000 to an accountant they were using to launder money, Brown said. After the accountant used the money to buy property in the US, federal agents are working to seize the property, he said.

    A “significant portion” of fentanyl is sold over the dark web and paid for in cryptocurrency, Brown said, adding: “That is a vulnerability that we can attack much like we attack the money movements in a traditional narcotics investigation.”

    Most of the fentanyl that enters the US comes from ingredients made in China that are then pressed into pills – or packed in powder – and smuggled in from Mexico by drug cartels, according to the DEA.

    A US indictment unsealed in June illustrates the scope of the problem. Just one Chinese chemical company allegedly shipped more than 440 pounds of fentanyl to undercover DEA agents in exchange for payment in cryptocurrency. It was enough drugs to kill 25 million Americans, according to prosecutors.

    The two cartels, Sinaloa and CJNG, have used their control of the fentanyl trade to develop sophisticated money-laundering techniques that exploit cryptocurrency, according to US officials.

    “We’ve identified people in the cartels that specialize in cryptocurrency movements,” the senior DEA official told CNN, describing longstanding efforts to surveil both the cartels.

    The Sinaloa Cartel has made hundreds of millions of dollars from the fentanyl trade, according to the Justice Department. Run by the sons of imprisoned drug lord Joaquín “El Chapo” Guzmán, the cartel has allegedly used airplanes, submarines, fishing boats and tractor trailers to transport fentanyl chemicals and other drugs. Four of the “Chapitos,” as Guzmán’s sons are known, are under indictment in the US for fentanyl trafficking, money laundering and weapons charges.

    With their father in jail, the younger generation of Sinaloa leaders is making more of an effort to cover their tracks and avoid law enforcement scrutiny, including by using cryptocurrency, the senior DEA official told CNN.

    In one case, the Sinaloa Cartel laundered more than $869,000 using cryptocurrency between August 2022 and February 2023, according to a US indictment unsealed in April. But that was likely just a fraction of the Sinaloa money laundered during that time, based on the huge profits the cartel has made in recent years.

    The scheme involved two of the cartel’s top money launderers directing US-based couriers to pick up cash from fentanyl traffickers and deposit the money to cryptocurrency accounts controlled by the cartel, the indictment said.

    “Not every seizure is going to get you to Chapo Guzman,” said Brown, the DHS official in Arizona. “It’s certainly more impactful when we can go after the people that are behind the production of the drugs, behind the production of the precursors, behind the movement of the money, behind running the transportation cells.”

    That’s why Brown and his colleagues are trying to make the most of a huge series of fentanyl busts in Arizona and California this spring, when agents seized nearly five tons of the deadly drug, worth over $100 million.

    Evidence was quickly shipped to a forensics lab in Northern Virginia, where DHS analysts hunted for digital clues – things like a common cell phone number called by drug runners near border towns or, better yet, a cryptocurrency account connected to one of the Mexican cartels, according to Brown.

    Based in Phoenix, Brown’s office oversees a recently announced federal task force that aims to thwart drug sales online by infiltrating dark-web forums and tracking crypto payments. The goal is to find “another vulnerability [in] the larger cartel infrastructure” that agents can attack, he said.

    The cartels “are very willing to invest in technology,” Brown said. “That’s one of the things that we need to be equally willing to do.”

    Crypto-based transactions can be traced publicly, giving US officials a much clearer picture of the Mexican cartels’ reliance on Chinese chemical companies to produce fentanyl.

    The Chinese government banned the sale of fentanyl in 2019. But Chinese chemical companies have since shifted to making fentanyl ingredients instead of the finished product, according to US officials and outside experts.

    A recent CNN investigation dug into the activities of US-sanctioned Chinese chemical companies that advertise fentanyl ingredients. When one sanctioned company shut down, another company launched, and told CNN it purchased the sanctioned company’s email, phone number and Facebook page to “attract internet traffic.”

    While the amount of fentanyl directly mailed to the US from China fell dramatically following the 2019 Chinese ban, according to a Brookings Institution study, US officials say Chinese companies are still producing and exporting large quantities of fentanyl ingredients.

    This January 2019 photo shows a display of fentanyl and meth that was seized by federal officers at the Nogales Port of Entry.

    Chinese companies selling ingredients to make fentanyl have received cryptocurrency payments worth tens of millions of dollars over the last five years, enough to potentially produce billions of dollars’ worth of fentanyl sold in the US and other markets, according to research from crypto-tracking firms.

    One of the firms, London-based Elliptic, found 100 China-based chemical companies touting fentanyl, fentanyl ingredients or equipment to make the drugs that accepted payments in cryptocurrency.

    Elliptic didn’t identify any cartel-controlled crypto accounts that sent money to the Chinese companies. That could be due to the cartels’ use of middlemen to buy ingredients and the fact that fentanyl traffickers in Europe also buy from the Chinese companies, according to US officials and cryptocurrency experts interviewed by CNN

    But that data is still only a partial picture of the problem. The Chinese chemicals industry is worth over a trillion dollars, according to some estimates, and comprises tens of thousands of companies, most of them doing legitimate business.

    “It’s impossible to know how many of [those companies] are actually sending chemicals over” to the US that can be used to make fentanyl, a former DEA agent who worked in Mexico told CNN. The former agent spoke on the condition of anonymity because they were not authorized to speak to the media.

    Barring more cooperation from the Chinese government on the issue, which US officials say has been limited, the Biden administration has sanctioned and secured federal indictments against several Chinese companies allegedly involved in the production of fentanyl. Federal agents, meanwhile, follow the money and look for opportunities to seize it.

    “You can at least try to pinch off the financial flow to [the Chinese companies] and then … follow that money trail to whether it’s the Mexican cartels or if it’s in Guatemala or other places, for the actual supply,” Koopman told CNN.

    Cryptocurrency has also allowed cartels to diversify the way they move money around the world. The cartels have a network of money launderers in dozens of countries, from Thailand to Colombia, the senior DEA official said.

    These money launderers, known as “spinners,” might receive drug money in one type of cryptocurrency and convert it to another to try to obscure the source of the funds.

    “They might take Bitcoin and then buy Ethereum with it, and then send the Ethereum to the cartel members,” the senior DEA official said, referring to different types of cryptocurrencies. “The cartels have insulated themselves so they’re not receiving the cryptocurrency directly.”

    The cartels also use “mixing” services, or publicly available cryptocurrency tools, to try to obscure the source of their digital money, the DEA official said. That process is also favored by North Korean hackers who launder stolen cryptocurrency to support Pyongyang’s weapons program, CNN investigations have found.

    The volatility of cryptocurrency means the cartels often quickly look to convert their crypto to cash by moving it through a series of virtual currencies, the senior DEA official told CNN.

    But there are moments in the laundering process where federal agents can strike. A cryptocurrency exchange serving a customer in Mexico might be headquartered in the US, allowing federal agents to issue a subpoena and potentially seize money.

    For Brown, the DHS agent in Arizona, the issue is personal: one of his employees had a family member who died of a fentanyl overdose after buying the drug online , he said.

    “My people are burned out, and yet they come to work and work exceedingly hard every day,” Brown told CNN.

    But he’s optimistic when the subject turns to high-tech methods to hunt the cartels.

    “Are they as anonymous as they think they are? Absolutely … not.”

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  • New York AG accuses crypto firms of deceiving investors in $1 billion fraud | CNN Business

    New York AG accuses crypto firms of deceiving investors in $1 billion fraud | CNN Business



    CNN
     — 

    The fallout from the colossal implosion of Sam Bankman-Fried’s crypto business is still rippling through the digital asset industry nearly a year later.

    On Thursday, New York’s attorney general filed a lawsuit against three digital asset firms that were caught up in the collapse of Bankman-Fried’s empire last fall — Gemini Trust, Genesis Global Capital and Digital Currency Group, parent company of Genesis. The lawsuit accused the companies of lying to investors and covering up more than $1 billion in losses.

    The AG’s office said that an investigation found Gemini, the crypto firm founded by Cameron and Tyler Winklevoss, deceived investors about significant risks associated with a lending service it ran jointly with Genesis. The program, called Gemini Earn, marketed itself as a low-risk investment in which customers could lend crypto assets to Genesis while earning interest payments as high as 8%.

    “These cryptocurrency companies lied to investors,” Attorney General Letitia James said in a statement. “And it was middle-class investors who suffered as a result.” At least 29,000 New Yorkers were among the 230,000 investors whose money was lost, James said.

    James’ lawsuit is the latest effort among US officials to crack down on the trillion-dollar crypto industry, which for years has operated in the shadows of traditional financial regulation. Crypto advocates argue that regulators have dragged their feet in establishing guidelines for digital assets, which they believe are distinct from traditional securities like stocks or bonds.

    In the immediate aftermath of the FTX crash, Genesis froze customer redemptions in its lending unit, citing market turmoil. The lending unit later filed for bankruptcy.

    According to the latest lawsuit, Gemini knew that Genesis’ loans were risky and, at one point, “highly concentrated” with Bankman-Fried’s crypto trading house Alameda Research. Bankman-Fried is currently on trial in federal court in New York, where he has pleaded not guilty to seven counts of fraud and conspiracy.

    “Gemini hid the risks of investing with Genesis, and Genesis lied to the public about its losses,” James said.

    The lawsuit also names former Genesis CEO Soichiro “Michael” Moro and Digital Currency Group CEO Barry Silbert.

    Gemini’s owners, the Winklevoss twins, have said Genesis owed more than $900 million to some 340,000 customers using the Earn program.

    The AG’s lawsuit follows another civil action brought by the Securities and Exchange Commission, which in January sued Genesis and Gemini for offering unregistered securities through the Earn product.

    Gemini responded to the latest suit Thursday with a statement on X (formerly Twitter), claiming that Gemini itself was the victim of a “massive fraud.”

    “The NY AG’s lawsuit confirms what we’ve been saying all along” — that Gemini, its customers and other creditors were lied to about Genesis’ finances. But the company said it “wholly” disagrees with the lawsuit.

    “Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.”

    A Genesis spokesperson said that “while there is no basis for the NYAG’s claims against Genesis, we have been cooperating with all authorities and intend to continue doing so.”

    “Genesis has not violated the law and continues to focus on maximizing recoveries for creditors in its Chapter 11 cases,” the spokesperson added.

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  • Turkey hikes interest rates to 15% as Erdogan reverses policy on fighting inflation | CNN Business

    Turkey hikes interest rates to 15% as Erdogan reverses policy on fighting inflation | CNN Business


    London
    CNN
     — 

    Turkey’s central bank almost doubled interest rates to 15% Thursday in a dramatic reversal of its unorthodox policy of cutting the cost of borrowing to tame painfully high inflation.

    Annual consumer price inflation has come down from a two-decade high of 85.5% in October but was still 39.6% in May.

    The central bank said that there were indications that underlying inflation in Turkey was increasing, even as inflation in many other countries trends downwards.

    “The strong course of domestic demand, cost pressures and the stickiness of services inflation have been the main drivers,” the central bank said in a statement.

    This is the first rate decision by Turkey’s central bank since last month’s reelection of President Recep Tayyip Erdogan.

    It is also the first rate increase in more than two years, and the central bank’s first decision since the appointment earlier this month of new governor Hafize Gaye Erkan, a former Goldman Sachs banker and the first woman to hold the position.

    In its statement, the central bank said it hiked rates to bring down inflation “as soon as possible,” and that it would continue to do so gradually “until a significant improvement in the inflation outlook is achieved.”

    Liam Peach, senior emerging markets economist at Capital Economics, wrote in a Thursday note that there were “encouraging signs” from the central bank that further rate hikes were ahead.

    The London-based research firm expects Turkish interest rates to rise as high as 30% later this year.

    Erdogan had ordered his central bank to cut rates nine times since late 2021, taking them to 8.5%, even as inflation around the world started to accelerate and most economies were doing the opposite. In that time, the value of the Turkish lira crashed 170% to a record low against the US dollar.

    A weaker lira has aggravated Turkey’s cost-of-living crisis by making foreign imports more expensive, and pushed the government to use up billions of its foreign currency reserves in an attempt to boost the currency’s value.

    Erdogan — who has fired four central bank governors in as many years — has since tried to reassure investors that he intends to normalize Turkish economic policy by filling key posts with more orthodox figures such as Erkan.

    This month, Erdogan also appointed Mehmet Simsek, Turkey’s former deputy prime minister and finance minister, and a former economist for US wealth management firm Merrill Lynch, as his finance minister.

    But the lira weakened further after Thursday’s rate hike news, dropping more than 2% to a new record low of 24 to the US dollar.

    Craig Erlam, senior market analyst at Oanda, noted that the rate hike had come in at the lower end of market forecasts, and investors couldn’t afford to relax too soon.

    “Erdogan hasn’t really hesitated to sack [central bank] governors that raise rates in the past, so investors will never feel fully at ease as long as he’s president,” he wrote in a note.

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  • Turkey kills ISIS leader in Syria operation, Erdogan says | CNN

    Turkey kills ISIS leader in Syria operation, Erdogan says | CNN



    CNN
     — 

    Turkish President Recep Tayyip Erdogan claimed on Sunday that the country’s intelligence forces had killed the leader of ISIS in Syria as he vowed to continue the country’s fight against terrorism.

    In a broadcast, Erdogan said Turkey’s National Intelligence Organization had been tracking a man known as Abu al-Hussein al-Husseini Al-Qurshi “for a long time.”

    “This person was neutralized in the operation carried out by MIT (Turkish National Intelligence Organization) yesterday in Syria,” he said. “From now on, we will continue our fight without discrimination against terrorist organizations.”

    He added that Turkey’s fight against terrorism contributes to Europe’s security, claiming that Europe “is not aware of this or does not want to be aware of it.”

    Al-Qurshi was named ISIS leader after the death of his predecessor, Abu al-Hasan al-Hashmi al-Qurayshi, who was killed last October by the Free Syrian Army in Syria.

    Little was known about Al-Qurshi, but at the time of his appointment, ISIS described him as an “old fighter.”

    Erdogan’s announcement came after a recent absence from the public eye due to illness.

    Media reports had speculated that his health was deteriorating just two weeks before a crucial election.

    The speculation followed a televised interview on Tuesday, which was interrupted after Erdogan left his chair in the middle of a question, before returning to explain he had a “serious stomach flu.”

    Following Tuesday’s incident, Erdogan was advised by his doctors to rest at home and canceled a number of public events.

    On Thursday, the Turkish government rejected news reports about his health as “baseless claims.” He appeared on video link the same day for the inauguration of the Akkuya nuclear power plant.

    Erdogan made his return to public stage for the first time in three days on Saturday, at an aviation festival in Istanbul, where he rallied his supporters as he seeks to extend his 20-year stint in power.

    Turkey goes to the polls on May 14, just three months after a devastating earthquake and amid soaring inflation and a currency crisis that last year slashed nearly 30% off the lira’s value against the dollar.

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  • Paper airplane designed by Boeing engineers breaks world distance record | CNN

    Paper airplane designed by Boeing engineers breaks world distance record | CNN

    Sign up for CNN’s Wonder Theory science newsletter. Explore the universe with news on fascinating discoveries, scientific advancements and more.



    CNN
     — 

    It’s a bird… It’s a plane… It’s a paper airplane!

    The world record for the farthest flight by paper airplane has been broken by three aerospace engineers with a paper aircraft that flew a grand total of 289 feet, 9 inches (88 meters), nearly the length of an American football field.

    They beat the previous record of 252 feet, 7 inches (77 meters) achieved on April 2022 by a trio in South Korea. Prior to that, the record had not been broken in over a decade.

    “It really put things on the map and it’s a really proud moment for family and friends,” said Dillon Ruble, a systems engineer at Boeing and now paper airplane record holder, in a release. “It’s a good tie in to aerospace and thinking along the lines of designing and creating prototypes.”

    Ruble worked alongside Garrett Jensen, a strength engineer also with Boeing, and aerospace engineer Nathaniel Erickson. The trio are recent graduates who studied aerospace engineering and mechanical engineering at Missouri University of Science and Technology.

    The feat required months of effort, as the team put in nearly 500 hours of studying origami and aerodynamics to create and test multiple prototypes. The engineers put their final design to the test on December 2, 2022, in Crown Point, Indiana, where the record was achieved on Ruble’s third throw.

    “We hope this record stands for quite a while — 290 feet (88 meters) is unreal,” Jensen said in the release. “That’s 14 to 15 feet (4.2 to 4.6 meters) over the farthest throw we ever did. It took a lot of planning and a lot of skill to beat the previous record.”

    The team had decided their best chance at beating the world record would be with an airplane design that focused on speed and minimized drag, so that the plane could fly a far distance in a short amount of time.

    Gathering inspiration from various hypersonic aircrafts, vehicles that can fly faster than five times the speed of sound (Mach 5), specifically the NASA X-43A, the team had come up with the winning paper aircraft design — later named “Mach 5.”

    “Full-scale and paper airplanes have vast differences in their complexity, but both operate on the same fundamental principles,” said Ruble, via email. “Some of the same design methodologies can be applied to both. One of these methods was our trial-and-error design process. For instance, we would theorize about a fold we could change on our plane, fold it, throw it, and compare the distance to previous iterations to determine if the change was beneficial.”

    Ruble (from left) and Erickson fold their paper airplanes with witnesses overseeing. The engineers had to pay careful attention to the numerous rules and guidelines set forth by the Guinness World Record Team.

    To find the best technique when it came to throwing the paper airplane, the team ran various simulations and analyzed slow-motion videos of their previous throws.

    “We found the optimal angle is about 40 degrees off the ground. Once you’re aiming that high, you throw as hard as possible. That gives us our best distance,” Jensen said in the statement. “It took simulations to figure that out. I didn’t think we could get useful data from a simulation on a paper airplane. Turns out, we could.”

    Even down to the paper, which the team had decided that A4 (slightly longer than typical letter sized paper) was the best for manipulating and folding into the winning airplane. With these meticulously thought-out design choices, and careful attention to the numerous rules and guidelines set forth by the Guinness World Record Team, the three were set to break a record.

    On its record-breaking distance flight the plane was in the air for roughly six seconds. The Guinness paper plane record for duration of flight is currently 29.2 seconds.

    “The design objectives for an air-time record would be vastly different from the low-drag version we built for the longest-distance record,” Ruble said via email. “Increasing the wingspan and decreasing the aspect ratio would be the first steps in producing this type of plane.”

    Paper airplane aside, Ruble added that this tedious method of back-and-forth trials served as a testament to the importance of rigorous prototyping in the real world.

    Ruble and Jensen began their paper plane engineering careers while in middle school, participating in paper airplane events held at Boeing. Ruble said he enjoyed making the paper come to life and the hard work he had to put in to find ways to improve his designs. Both were also fans of origami as kids.

    The record-breaking team hopes their accomplishment will inspire other young and aspiring aerospace engineers to chase their dreams.

    For those looking to create their own record-breaking paper plane design, the feat is not impossible, but may take some time (and skill).

    “Mach 5 flies best at high relative velocity, but to achieve this condition, the aircraft must be launched in a specific manner,” said Ruble via email. “This technique, in addition to the complexity of the plane, means that only the most experienced paper aircraft enthusiasts would have success with the design.

    “However, by starting with publicly available designs, anyone can hone their skills to throw paper airplanes farther and higher than all of their friends,” he added.

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  • Inside the international sting operation to catch North Korean crypto hackers | CNN Politics

    Inside the international sting operation to catch North Korean crypto hackers | CNN Politics

    Watch Alex Marquardt’s report on the sting operation on Erin Burnett OutFront on Monday, April 10, at 7 p.m. ET.



    CNN
     — 

    A team of South Korean spies and American private investigators quietly gathered at the South Korean intelligence service in January, just days after North Korea fired three ballistic missiles into the sea.

    For months, they’d been tracking $100 million stolen from a California cryptocurrency firm named Harmony, waiting for North Korean hackers to move the stolen crypto into accounts that could eventually be converted to dollars or Chinese yuan, hard currency that could fund the country’s illegal missile program.

    When the moment came, the spies and sleuths — working out of a government office in a city, Pangyo, known as South Korea’s Silicon Valley — would have only a few minutes to help seize the money before it could be laundered to safety through a series of accounts and rendered untouchable.

    Finally, in late January, the hackers moved a fraction of their loot to a cryptocurrency account pegged to the dollar, temporarily relinquishing control of it. The spies and investigators pounced, flagging the transaction to US law enforcement officials standing by to freeze the money.

    The team in Pangyo helped seize a little more than $1 million that day. Though analysts tell CNN that most of the stolen $100 million remains out of reach in cryptocurrency and other assets controlled by North Korea, it was the type of seizure that the US and its allies will need to prevent big paydays for Pyongyang.

    The sting operation, described to CNN by private investigators at Chainalysis, a New York-based blockchain-tracking firm, and confirmed by the South Korean National Intelligence Service, offers a rare window into the murky world of cryptocurrency espionage — and the burgeoning effort to shut down what has become a multibillion-dollar business for North Korea’s authoritarian regime.

    Over the last several years, North Korean hackers have stolen billions of dollars from banks and cryptocurrency firms, according to reports from the United Nations and private firms. As investigators and regulators have wised up, the North Korean regime has been trying increasingly elaborate ways to launder that stolen digital money into hard currency, US officials and private experts tell CNN.

    Cutting off North Korea’s cryptocurrency pipeline has quickly become a national security imperative for the US and South Korea. The regime’s ability to use the stolen digital money — or remittances from North Korean IT workers abroad — to fund its weapons programs is part of the regular set of intelligence products presented to senior US officials, including, sometimes, President Joe Biden, a senior US official said.

    The North Koreans “need money, so they’re going to keep being creative,” the official told CNN. “I don’t think [they] are ever going to stop looking for illicit ways to glean funds because it’s an authoritarian regime under heavy sanctions.”

    North Korea’s cryptocurrency hacking was top of mind at an April 7 meeting in Seoul, where US, Japanese and South Korean diplomats released a joint statement lamenting that Kim Jong Un’s regime continues to “pour its scarce resources into its WMD [weapons of mass destruction] and ballistic missile programs.”

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    Here’s how to keep your passwords safe, according to a hacker

    “We are also deeply concerned about how the DPRK supports these programs by stealing and laundering funds as well as gathering information through malicious cyber activities,” the trilateral statement said, using an acronym for the North Korean government.

    North Korea has previously denied similar allegations. CNN has emailed and called the North Korean Embassy in London seeking comment.

    Starting in the late 2000s, US officials and their allies scoured international waters for signs that North Korea was evading sanctions by trafficking in weapons, coal or other precious cargo, a practice that continues. Now, a very modern twist on that contest is unfolding between hackers and money launderers in Pyongyang, and intelligence agencies and law enforcement officials from Washington to Seoul.

    The FBI and Secret Service have spearheaded that work in the US (both agencies declined to comment when CNN asked how they track North Korean money-laundering.) The FBI announced in January that it had frozen an unspecified portion of the $100 million stolen from Harmony.

    The succession of Kim family members who have ruled North Korea for the last 70 years have all used state-owned companies to enrich the family and ensure the regime’s survival, according to experts.

    It’s a family business that scholar John Park calls “North Korea Incorporated.”

    Kim Jong Un, North Korea’s current dictator, has “doubled down on cyber capabilities and crypto theft as a revenue generator for his family regime,” said Park, who directs the Korea Project at the Harvard Kennedy School’s Belfer Center. “North Korea Incorporated has gone virtual.”

    Compared to the coal trade North Korea has relied on for revenue in the past, stealing cryptocurrency is much less labor and capital-intensive, Park said. And the profits are astronomical.

    Last year, a record $3.8 billion in cryptocurrency was stolen from around the world, according to Chainalysis. Nearly half of that, or $1.7 billion, was the work of North Korean-linked hackers, the firm said.

    The joint analysis room in the National Cyber ​​Security Cooperation Center of the National Intelligence Service in South Korea.

    It’s unclear how much of its billions in stolen cryptocurrency North Korea has been able to convert to hard cash. In an interview, a US Treasury official focused on North Korea declined to give an estimate. The public record of blockchain transactions helps US officials track suspected North Korean operatives’ efforts to move cryptocurrency, the Treasury official said.

    But when North Korea gets help from other countries in laundering that money it is “incredibly concerning,” the official said. (They declined to name a particular country, but the US in 2020 indicted two Chinese men for allegedly laundering over $100 million for North Korea.)

    Pyongyang’s hackers have also combed the networks of various foreign governments and companies for key technical information that might be useful for its nuclear program, according to a private United Nations report in February reviewed by CNN.

    A spokesperson for South Korea’s National Intelligence Service told CNN it has developed a “rapid intelligence sharing” scheme with allies and private companies to respond to the threat and is looking for new ways to stop stolen cryptocurrency from being smuggled into North Korea.

    Recent efforts have focused on North Korea’s use of what are known as mixing services, publicly available tools used to obscure the source of cryptocurrency.

    On March 15, the Justice Department and European law enforcement agencies announced the shutdown of a mixing service known as ChipMixer, which the North Koreans allegedly used to launder an unspecified amount of the roughly $700 million stolen by hackers in three different crypto heists — including the $100 million robbery of Harmony, the California cryptocurrency firm.

    Private investigators use blockchain-tracking software — and their own eyes when the software alerts them — to pinpoint the moment when stolen funds leave the hands of the North Koreans and can be seized. But those investigators need trusted relationships with law enforcement and crypto firms to move quickly enough to snatch back the funds.

    One of the biggest US counter moves to date came in August when the Treasury Department sanctioned a cryptocurrency “mixing” service known as Tornado Cash that allegedly laundered $455 million for North Korean hackers.

    Tornado Cash was particularly valuable because it had more liquidity than other services, allowing North Korean money to hide more easily among other sources of funds. Tornado Cash is now processing fewer transactions after the Treasury sanctions forced the North Koreans to look to other mixing services.

    Suspected North Korean operatives sent $24 million in December and January through a new mixing service, Sinbad, according to Chainalysis, but there are no signs yet that Sinbad will be as effective at moving money as Tornado Cash.

    The people behind mixing services, like Tornado Cash developer Roman Semenov, often describe themselves as privacy advocates who argue that their cryptocurrency tools can be used for good or ill like any technology. But that hasn’t stopped law enforcement agencies from cracking down. Dutch police in August arrested another suspected developer of Tornado Cash, whom they did not name, for alleged money laundering.

    Private crypto-tracking firms like Chainalysis are increasingly staffed with former US and European law enforcement agents who are applying what they learned in the classified world to track Pyongyang’s money laundering.

    Elliptic, a London-based firm with ex-law enforcement agents on staff, claims it helped seize $1.4 million in North Korean money stolen in the Harmony hack. Elliptic analysts tell CNN they were able to follow the money in real-time in February as it briefly moved to two popular cryptocurrency exchanges, Huobi and Binance. The analysts say they quickly notified the exchanges, which froze the money.

    “It’s a bit like large-scale drug importations,” Tom Robinson, Elliptic’s co-founder, told CNN. “[The North Koreans] are prepared to lose some of it, but a majority of it probably goes through just by virtue of volume and the speed at which they do it and they’re quite sophisticated at it.”

    The North Koreans are not just trying to steal from cryptocurrency firms, but also directly from other crypto thieves.

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    After an unknown hacker stole $200 million from British firm Euler Finance in March, suspected North Korean operatives tried to set a trap: They sent the hacker a message on the blockchain laced with a vulnerability that may have been an attempt to gain access to the funds, according to Elliptic. (The ruse didn’t work.)

    Nick Carlsen, who was an FBI intelligence analyst focused on North Korea until 2021, estimates that North Korea may only have a couple hundred people focused on the task of exploiting cryptocurrency to evade sanctions.

    With an international effort to sanction rogue cryptocurrency exchanges and seize stolen money, Carlsen worries that North Korea could turn to less conspicuous forms of fraud. Rather than steal half a billion dollars from a cryptocurrency exchange, he suggested, Pyongyang’s operatives could set up a Ponzi scheme that attracts much less attention.

    Yet even at reduced profit margins, cryptocurrency theft is still “wildly profitable,” said Carlsen, who now works at fraud-investigating firm TRM Labs. “So, they have no reason to stop.”

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  • The US case against Binance calls out one of the worst-kept secrets in crypto | CNN Business

    The US case against Binance calls out one of the worst-kept secrets in crypto | CNN Business

    Editor’s Note: A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.


    New York
    CNN
     — 

    If you live in America, you’re not allowed to trade crypto derivatives. And if you’re a big international platform for trading crypto derivatives, you can’t let Americans trade those products if you haven’t registered with the boring-sounding but not-to-be-trifled-with federal regulator known as the Commodity Futures Trading Commission, or CFTC.

    Today, that regulator sued Binance, the world’s largest cryptocurrency exchange, for allegedly doing just that. (And if that name sounds familiar, it may because back in November, Binance briefly flirted with bailing out its smaller rival, FTX. Obviously, Binance took one look under the hood at FTX, now at the center of a massive federal fraud investigation, and promptly bailed.)

    Here’s the deal: The CFTC alleges that Binance and its CEO violated US trading laws by, among other things, secretly coaching “VIP” customers within the United States on how to evade compliance controls.

    The commission, which regulates US derivatives trading, said the company and its CEO, Changpeng Zhao, “instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits.”

    Which, you know, isn’t something you want to be caught doing. The CFTC can’t bring criminal charges, but it can seek heavy fines and potentially ban Binance from registering in the US in the future.

    Binance said the lawsuit was “unexpected and disappointing,” adding that it has made “significant investments” in the past two years to ensure that US-based investors are not active on the platform.

    As news of the lawsuit broke Monday, Zhao, known as “CZ,” tweeted the number 4, pointing to a part of a previous statement: “Ignore FUD, fake news, attacks, etc.” (FUD is a commonly used acronym among crypto folks that stands for “fear, uncertainty, doubt.”)

    Binance has long argued that it isn’t subject to US laws because it doesn’t have a physical headquarters in America. Or anywhere, really — CZ claims that the company’s headquarters are wherever he is at any point in time, “reflecting a deliberate approach to attempt to avoid regulation,” according to the CFTC’s lawsuit.

    The CFTC’s lawsuit is certainly not great news for Binance, or for crypto more broadly. But it’s not quite the seismic event that was FTX’s collapse, or even the Terra/Luna meltdown. (You can read more about those here and here but, tl;dr: Those 2022 events were, to use a technical term, holy-crap-sell-everything-call-your-dad-and-cry moments for crypto investors.)

    Prices of bitcoin and ethereum, the two most popular cryptocurrencies, fell more than 3% Monday. Which is to say, it was just another day trading virtual currencies.

    Perhaps the most significant part of the lawsuit is the way the CFTC loudly calls out one of the worst-kept secrets in all of crypto: That not only are US customers gaining access to risky offshore crypto derivatives they shouldn’t be allowed to access, but it’s also pretty darn easy to do so. All anyone needs is a VPN and an iron stomach, because crypto derivatives are leveraged bets on wildly unstable assets. (And like everything in this newsletter, that shouldn’t be taken as any kind of advice.)

    The likely outcome, said Timothy Cradle, a crypto compliance and regulation expert at Blockchain Intelligence Group, will be that Binance ends up paying “hundreds of millions of dollars” in fines and will be prevented from registering a derivatives exchange in the future. That’s “a terminal blow for users of their service located in the US and a significant hit to Binance’s revenue” as the suit alleges US users make up 16% of the revenue for Binance’s derivatives product.

    Monday’s news adds yet another layer of regulatory scrutiny on crypto’s biggest players. The Internal Revenue Service and Securities and Exchange Commission are also reportedly also investigating Binance, per Bloomberg.

    Meanwhile, Coinbase, the largest US-listed crypto exchange, received a so-called Wells notice (typically a precursor to enforcement action) last week from the SEC for possible securities law violations.

    And just to pile on: The crypto industry earlier this month lost two of its biggest connections to the mainstream finance world — Silvergate and Signature Bank.

    All in all, not a great month for the industry that is perpetually straining credibility even when it’s hot. And right now, it is decidedly not.

    Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)

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  • Turkey’s earthquake caused $34 billion in damage. It could cost Erdogan the election | CNN

    Turkey’s earthquake caused $34 billion in damage. It could cost Erdogan the election | CNN

    Editor’s Note: A version of this story first appeared in CNN’s Meanwhile in the Middle East newsletter, a three-times-a-week look inside the region’s biggest stories. Sign up here.


    Abu Dhabi, UAE
    CNN
     — 

    The devastating earthquake that hit Turkey on February 6 killed at least 45,000 people, rendered millions homeless across almost a dozen cities and caused immediate damage estimated at $34 billion – or roughly 4% of the country’s annual economic output, according to the World Bank.

    But the indirect cost of the quake could be much higher, and recovery will be neither easy nor quick.

    The Turkish Enterprise and Business Confederation estimates the total cost of the quake at $84.1 billion, the lion’s share of which would be for housing, at $70.8 billion, with lost national income pegged at $10.4 billion and lost working days at $2.91 billion.

    “I do not recall… any economic disaster at this level in the history of the Republic of Turkey,” said Arda Tunca, an Istanbul-based economist at PolitikYol.

    Turkey’s economy had been slowing even before the earthquake. Unorthodox monetary policies by the government caused soaring inflation, leading to further income inequality and a currency crisis that saw the lira lose 30% of its value against the dollar last year. Turkey’s economy grew 5.6% last year, Reuters reported, citing official data.

    Economists say those structural weaknesses in the economy will only get worse because of the quake and could determine the course of presidential and parliamentary elections expected in mid-May.

    Still, Tunca says that while the physical damage from the quake is colossal, the cost to the country’s GDP won’t be as pronounced when compared to the 1999 earthquake in Izmit, which hit the country’s industrial heartland and killed more than 17,000. According to the OECD, the areas impacted in that quake accounted for a third of the country’s GDP.

    The provinces most affected by the February 6 quake represent some 15% of Turkey’s population. According to the Turkish Enterprise and Business Confederation, they contribute 9% of the nation’s GDP, 11% of income tax and 14% of income from agriculture and fisheries.

    “Economic growth would slow down at first but I don’t expect a recessionary threat due to the earthquake,” said Selva Demiralp, a professor of economics at Koc University in Istanbul. “I don’t expect the impact on (economic) growth to be more than 1 to 2 (percentage) points.”

    There has been growing criticism of the country’s preparedness for the quake, whether through policies to mitigate the economic impact or prevent the scale of the damage seen in the disaster.

    How Turkey will rehabilitate its economy and provide for its newly homeless people is not yet known. But it could prove pivotal in determining President Recep Tayyip Erdogan’s political fate, analysts and economists say, as he seeks another term in office.

    The government’s 2023 budget, released before the earthquake, had planned for increased spending in an election year, foreseeing a deficit of 660 billion liras ($34.9 billion).

    The government has already announced some measures that analysts said were designed to shore up Erdogan’s popularity, including a near 55% increase in the minimum wage, early retirement and cheaper housing loans.

    Economists say that Turkey’s fiscal position is strong. Its budget deficit, when compared to its economic output, is smaller than that of other emerging markets like India, China and Brazil. That gives the government room to spend.

    “Turkey starts from a position of relative fiscal strength,” said Selva Bahar Baziki of Bloomberg Economics. “The necessary quake spending will likely result in the government breaching their budget targets. Given the high humanitarian toll, this would be the year to do it.”

    Quake-related public spending is estimated at 2.6% of GDP in the short run, she told CNN, but could eventually reach as high as 5.5%.

    Governments usually plug budget shortfalls by taking on more debt or raising taxes. Economists say both are likely options. But post-quake taxation is already a touchy topic in the country, and could prove risky in an election year.

    After the 1999 quake, Turkey introduced an “earthquake tax” that was initially introduced as a temporary measure to help cushion economic damage, but subsequently became a permanent tax.

    There has been concern in the country that the state may have squandered those tax revenues, with opposition leaders calling on the government to be more transparent about what happened to the money raised. When asked in 2020, Erdogan said the money “was not spent out of its purpose.” Since then, the government has said little more about how the money was spent.

    “The funds created for earthquake preparedness have been used for projects such as road constructions, infrastructure build-ups, etc. other than earthquake preparedness,” said Tunca. “In other words, no buffers or cushions have been set in place to limit the economic impacts of such disasters.”

    The Turkish presidency didn’t respond to CNN’s request for comment.

    Analysts say it’s too early to tell precisely what impact the economic fallout will have on Erdogan’s prospects for re-election.

    The president’s approval rating was low even before the quake. In a December poll by Turkish research firm MetroPOLL, 52.1% of respondents didn’t approve of his handling of his job as president. A survey a month earlier found that a slim majority of voters would not vote for Erdogan if an election were held on that day.

    Two polls last week, however, showed the Turkish opposition had not picked up fresh support, Reuters reported, citing partly its failure to name a candidate and partly its lack of a tangible plan to rebuild areas devastated by the quake.

    The majority of the provinces worst affected by the quake voted for Erdogan and his ruling AK Party in the 2018 elections, but in some of those provinces, Erdogan and the AK Party won with a plurality of votes or a slim majority.

    Those provinces are some of the poorest in the country, the World Bank says.

    Research conducted by Demiralp as well as academics Evren Balta from Ozyegin University and Seda Demiralp from Isik University, found that while the ruling AK Party’s voters’ high partisanship is a strong hindrance to voter defection, economic and democratic failures could tip the balance.

    “Our data shows that respondents who report being able to make ends meet are more likely to vote for the incumbent AKP again,” the research concludes. “However, once worsening economic fundamentals push more people below the poverty line, the possibility of defection increases.”

    This could allow opposition parties to take votes from the incumbent rulers “despite identity-based cleavages if they target economically and democratically dissatisfied voters via clear messages.”

    For Tunca, the economic fallout from the quake poses a real risk for Erdogan’s prospects.

    “The magnitude of Turkey’s social earthquake is much greater than that of the tectonic one,” he said. “There is a tug of war between the government and the opposition, and it seems that the winner is going to be unknown until the very end of the elections.”

    Nadeen Ebrahim and Isil Sariyuce contributed to this report.

    This article has been corrected to say that the research, not the survey, was conducted by the academics.

    Sub-Saharan African countries repatriate citizens from Tunisia after ‘shocking’ statements from country’s president

    Sub-Saharan African countries including Ivory Coast, Mali, Guinea and Gabon, are helping their citizens return from Tunisia following a controversial statement from Tunisian President Kais Saied, who has led a crackdown on illegal immigration into the North African country since last month.

    • Background: In a meeting with Tunisia’s National Security Council on February 21, Saied described illegal border crossing from sub-Saharan Africa into Tunisia as a “criminal enterprise hatched at the beginning of this century to change the demographic composition of Tunisia.” He said the immigration aims to turn Tunisia into “only an African country with no belonging to the Arab and Muslim worlds.” In a later speech on February 23, Saied maintained there is no racial discrimination in Tunisia and said that Africans residing in Tunisia legally are welcome. Authorities arrested 58 African migrants on Friday after they reportedly crossed the border illegally, state news agency TAP reported on Saturday.
    • Why it matters: Saied, whose seizure of power in 2021 was described as a coup by his foes, is facing challenges to his rule at home. Reuters on Sunday reported that opposition figures and rights groups have said that the president’s crackdown on migrants was meant to distract from Tunisia’s economic crisis.

    Iranian Supreme Leader says schoolgirls’ poisoning is an ‘unforgivable crime’

    Iranian Supreme Leader Ayatollah Ali Khamenei on Monday said that the poisoning of schoolgirls in recent months across Iran is an “unforgivable crime,” state-run news agency IRNA reported. Khamenei urged authorities to pursue the issue, saying that “if it is proven that the students were poisoned, the perpetrators of this crime should be severely punished.”

    • Background: Concern is growing in Iran after reports emerged that hundreds of schoolgirls had been poisoned across the country over the last few months. On Wednesday, Iran’s semi-official Mehr News reported that Shahriar Heydari, a member of parliament, said that “nearly 900 students” from across the country had been poisoned so far, citing an unnamed, “reliable source.”
    • Why it matters: The reports have led to a local and international outcry. While it is unclear whether the incidents were linked and if the students were targeted, some believe them to be deliberate attempts at shutting down girls’ schools, and even potentially linked to recent protests that spread under the slogan, “Women, Life, Freedom.”

    Iran to allow further IAEA access following discussions – IAEA chief

    Iran will allow more access and monitoring capabilities to the International Atomic Energy Agency (IAEA), agency Director General Rafael Grossi said at a press conference in Vienna on Saturday, following a trip to the Islamic Republic. The additional monitoring is set to start “very, very soon,” said Grossi, with an IAEA team arriving within a few days to begin reinstalling the equipment at several sites.

    • Background: Prior to the news conference, the IAEA released a joint statement with Iran’s atomic energy agency in which the two bodies agreed that interactions between them will be “carried out in the spirit of collaboration.” Iranian President Ebrahim Raisi said he hopes the IAEA will remain neutral and fair to Iran’s nuclear energy program and refrain from being affected “by certain powers which are pursuing their own specific goals,” reported Iranian state television Press TV on Saturday.
    • Why it matters: Last week, a restricted IAEA report seen by CNN said that uranium particles enriched to near bomb-grade levels have been found at an Iranian nuclear facility, as the US warned that Tehran’s ability to build a nuclear bomb was accelerating. The president of the Atomic Energy Organization of Iran (AEOI), Mohammad Eslami, rejected the recent IAEA report, which detected particles of uranium enriched to 83.7% at the Fordow nuclear facility in Iran, saying there has been ‘“no deviation” in Iran’s peaceful nuclear activities.

    A new sphinx statue has been discovered in Egypt – but this one is thought to be Roman.

    The smiling sculpture and the remains of a shrine were found during an excavation mission in Qena, a southern Egyptian city on the eastern banks of the River Nile.

    The shrine had been carved in limestone and consisted of a two-level platform, Mamdouh Eldamaty, a former minister of antiquities and professor of Egyptology at Ain Shams University said in a statement Monday from Egypt’s ministry of tourism and antiquities. A ladder and mudbrick basin for water storage were found inside.

    The basin, believed to date back to the Byzantine era, housed the smiling sphinx statue, carved from limestone.

    Eldamaty described the statue as bearing “royal facial features.” It had a “soft smile” with two dimples. It also wore a nemes on its head, the striped cloth headdress traditionally worn by pharaohs of ancient Egypt, with a cobra-shaped end or “uraeus.”

    A Roman stela with hieroglyphic and demotic writings from the Roman era was found below the sphinx.

    The professor said that the statue may represent the Roman Emperor Claudius, the fourth Roman emperor who ruled from the year 41 to 54, but noted that more studies are needed to verify the structure’s owner and history.

    The discovery was made in the eastern side of Dendera Temple in Qena, where excavations are still ongoing.

    Sphinxes are recurring creatures in the mythologies of ancient Egyptian, Persian and Greek cultures. Their likenesses are often found near tombs or religious buildings.

    It is not uncommon for new sphinx statues to be found in Egypt. But the country’s most famous sphinx, the Great Sphinx of Giza, dates back to around 2,500 BC and represents the ancient Egyptian Pharoah Khafre.

    By Nadeen Ebrahim

    Ziya Sutdelisi, 53, a former local administrator, receives a free haircut from a volunteer from Gaziantep, in the village of Buyuknacar, near Pazarcik, Kahramanmaras province on Sunday, one month after a massive earthquake struck southeast Turkey.

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  • Prosecutors want Sam Bankman-Fried to use a flip phone as part of a more restrictive bail package | CNN Business

    Prosecutors want Sam Bankman-Fried to use a flip phone as part of a more restrictive bail package | CNN Business



    CNN
     — 

    The use of a flip phone, or some non-smartphone, is one of several restrictions that prosecutors and Sam Bankman-Fried’s attorneys are jointly asking the judge to approve.

    The lawyers have been working to satisfy concerns raised by Judge Lewis Kaplan, who said he could “conceivably” revoke Bankman-Fried’s bail after he found there was a “threat” of witness tampering.

    The crypto entrepreneur reached out to the former general counsel of FTX and used a virtual private network, or VPN, days after the judge said he wanted to restrict the use of encrypted devices.

    Bankman-Fried was charged with multiple counts of conspiracy and fraud in what prosecutors allege is one of the largest financial frauds in US history. He pleaded not guilty to charges he misused customer funds in FTX to prop up related hedge fund Alameda Research, make venture investments, and donate to political campaigns to influence policy.

    Bankman-Fried was released on a $250 million bond and is confined to the home of his parents, Stanford University law professors, in Palo Alto, California.

    Under the proposal, Bankman-Fried’s new laptop will “be configured so that he is only able to log on to the internet through the use of specified VPNs, and that the VPNs only permit the defendant to access websites that have been whitelisted through the VPNs.”

    Among the websites are programs he could use to prepare for his defense, including Zoom, Microsoft Office, Python, and Adobe Acrobat. Monitoring tools also would be installed on his laptop and he would be prohibited from buying electronic devices.

    Bankman-Fried also would be restricted from scrolling the internet, with his access limited to court-approved websites. The lawyers proposed several sites to help prepare his defense, including YouTube, read-only websites showing crypto prices, and research websites. Bankman-Fried also asked to view others for his personal use, including news sites, Netflix, Spotify, Uber Eats, Amazon and baseball and football sites.

    The judge previously raised concerns about Bankman-Fried’s access to his parents’ computers, cell phones and internet. Attorneys proposed the parents sign affidavits stating they won’t let their son use their devices, which would be password protected. In addition, each device would have software that would photograph or take video of the user.

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  • The US dollar is at a crossroads | CNN Business

    The US dollar is at a crossroads | CNN Business

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Wall Street investors are reaching for their neck braces in preparation for yet another volatile swing in stock markets: A surging US dollar.

    The greenback — which is not just the dominant global currency but also “the key variable affecting global economic conditions,” according to the New York Federal Reserve — reached a 20-year high last year after the Fed turned hawkish with its aggressive rate hikes.

    Since then, inflation seemed to have softened, pushing the dollar down. But in recent weeks, as a slew of economic data has shown the Fed’s inflation battle is far from over, the currency soared by about 4% from its recent lows, and now sits near a seven-week high.

    Investors are stressing about this sudden rebound, since a stronger dollar means American-made products become more expensive for foreign buyers, overseas revenue decreases in value and global trade weakens.

    Multinational companies, naturally, aren’t thrilled about any of this. And around 30% of all S&P 500 companies’ revenue is earned in markets outside the US, said Quincy Krosby, chief global strategist for LPL Financial.

    What’s happening: The US dollar “finds itself at a significant crossroads yet again,” said Krosby. “While the Fed remains steadfastly data dependent, the dollar’s course as well remains focused on inflation and the Fed’s monetary response.”

    “The strong US dollar has been a headwind for international earnings and stock performance (for US investors),” wrote Wells Fargo analysts in a recent note.

    February was a rough month for markets: The Dow ended February down 4.19%, the S&P 500 fell 2.6% and the Nasdaq lost just over 1%.

    What’s next: Investors are clearly focused on the next Fed policy meeting, which is still three weeks away, for signals about the direction of rates. But until then, investors may gain some insight Tuesday when Fed Chairman Jerome Powell speaks before the Senate Banking Committee.

    They’ll also be watching next Friday’s jobs report for any softening in the labor market that could temper the Fed’s hawkish mood.

    Don’t forget the debt ceiling: Another significant threat to the dollar is looming in Congress — the ongoing debt ceiling fight. The United States could start to default on its financial obligations over the summer or in the early fall if lawmakers don’t agree to raise the debt limit — its self-imposed borrowing limit — before then, according to a new analysis by the Bipartisan Policy Center.

    That could potentially lead to a disastrous downgrade to America’s credit rating and could send the dollar spiraling as investors start to sell off their US assets and move their money to safer currencies.

    “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans — many people — would lose their jobs and certainly their borrowing costs would rise,” Treasury Secretary Janet Yellen told CNN in January.

    ▸ A lot has changed in the last twenty years. The gender pay gap hasn’t.

    In 2022, US women on average earned about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly earnings of both full- and part-time workers.

    That’s a big leap from the 65 cents that women were earning in 1982. But it has barely moved from the 80 cents they were earning in 2002.

    “Higher education, a shift to higher-paying occupations and more labor market experience have helped women narrow the gender pay gap since 1982,” the Pew analysis noted. “But even as women have continued to outpace men in educational attainment, the pay gap has been stuck in a holding pattern since 2002, ranging from 80 to 85 cents to the dollar.”

    ▸ Initial jobless claims, which measures the number of people who filed for unemployment insurance for the first time last week, are due out at 8:30 a.m. ET on Thursday.

    This will be the last official jobs data investors see before February’s heavily anticipated unemployment report next Friday.

    Economists are expecting 195,000 Americans to have filed for unemployment, which is higher than the seasonally adjusted 192,000 who applied two weeks ago.

    Initial claims have come in lower than expected in recent weeks and remain well below their pre-pandemic levels.

    The white-hot labor market in the US added more than 500,000 jobs in January, blowing analysts’ expectations out of the water and bringing the unemployment rate to its lowest level since May of 1969.

    That’s bad news for the Federal Reserve where policymakers have been attempting to tame inflation by cooling the economy through painful interest rate hikes.

    ▸ It’s a big day for groceries. Kroger (KR), Costco (COST) and Anheuser-Busch (BUD) all report earnings on Thursday.

    Investors will be watching closely for clues about consumer sentiment during an uncertain retail earnings season. On Tuesday, Kohl’s reported that it had a rough holiday season and executives at the company put the blame on inflation. The company said higher prices squeezed sales and forced it to mark down some products to entice shoppers — which hurt its profit margin.

    Those comments echoed those of other big box retailers like Walmart (WMT) and Target (TGT), who have said consumers are feeling the pinch of inflation.

    Still, Target and Walmart’s bottom lines were bolstered by food sales even as consumers pulled back on discretionary purchases.

    The US Senate voted on Wednesday to overturn a Biden administration retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other ESG factors when picking investments.

    As my CNN colleagues Ali Zaslav, Clare Foran and Ted Barrett write: The rule is not mandated – it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.

    Republicans complained that the rule is a “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines.

    “This rule isn’t about saying the left or the right take on a given environmental, social, or governance issue is ‘correct,’” countered Senator Patty Murray (D-WA) on the Senate floor Wednesday. “It’s about acknowledging these factors are reasonable for asset managers to consider.”

    The measure will next go to President Joe Biden’s desk as it was passed by the House on Tuesday. The administration, however, has issued a veto threat. As a result, passage of the resolution could pave the way for Biden to issue the first veto of his presidency.

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  • Russia’s economy is hurting despite Putin’s bluster | CNN Business

    Russia’s economy is hurting despite Putin’s bluster | CNN Business


    London
    CNN
     — 

    When Russia launched its full-scale invasion of Ukraine one year ago, Western countries hit back with unprecedented sanctions to punish Moscow and pile pressure on President Vladimir Putin. The aim: to deal an economic blow so severe that Putin would reconsider his brutal war.

    Russia’s economy did weaken as a result. But it also showed surprising resilience. As demand for Russian oil fell in Europe, Moscow redirected its barrels to Asia. The country’s central bank staved off a currency crisis with aggressive capital controls and interest rate hikes. Military expenditure supported the industrial sector, while the scramble to replace Western equipment and technology lifted investment.

    “The Russian economy and system of government have turned out to be much stronger than the West believed,” Putin said in a speech to Russia’s parliament Tuesday.

    Yet cracks are starting to show and they will widen over the next 12 months. The European Union — which spent more than $100 billion on Russian fossil fuels in 2021 — has made huge strides in phasing out purchases. The bloc, which dramatically reduced its dependence on Russian natural gas last year, officially banned most imports of Russian crude oil by sea in December. It enacted a similar block on refined oil products this month.

    Those measures are already straining Russia’s finances as it struggles to find replacement customers. The government reported a budget deficit of about 1,761 billion rubles ($23.5 billion) for January. Expenditure jumped 59% year-over-year, while revenue plunged 35%. Deputy Prime Minister Alexander Novak announced that Russia would cut oil production by about 5% starting in March.

    “The era of windfall profits from the oil and gas market for Russia is over,” Janis Kluge, an expert on Russia’s economy at the German Institute for International and Security Affairs, told CNN.

    Meanwhile, the ruble has slumped to its weakest level against the US dollar since last April. The currency’s weakness has contributed to high inflation. And most businesses say they can’t conceive of growing right now given high levels of economic uncertainty, according to a recent survey by a Russian think tank.

    These dynamics place the country’s economy on a trajectory of decline. And they will force Putin to choose between ramping up military spending and investing in social goods like housing and education — a decision that could have consequences both for the war and the Russian public’s support of it.

    “This year could really be the key test,” said Timothy Ash, an associate fellow in the Russia and Eurasia program at Chatham House, a think tank.

    In a bid to bring Russia to heel for its aggression, Western countries have used their sway over the global financial system, unveiling more than 11,300 sanctions since the invasion and freezing some $300 billion of the country’s foreign reserves. At the same time, more than 1,000 companies, ranging from BP

    (BP)     to McDonald’s

    (MCD)     and Starbucks

    (SBUX)    , have exited or curtailed operations in the country, citing opposition to the war and new logistical challenges.

    Russia’s economic output duly contracted by 2.1% last year, according to a preliminary estimate from the government. But the hit was more limited than forecasters initially expected. When sanctions were first imposed, some economists predicted a contraction of 10% or 15%.

    One reason for Russia’s unexpected pluck was its push toward self-sufficiency following Putin’s annexation of Crimea from Ukraine in 2014. Through a policy known as “Fortress Russia,” the government boosted domestic food production and policymakers forced banks to build up their reserves. That created a degree of “durability,” said Ash at Chatham House.

    The swift intervention of Russia’s central bank, which jacked up interest rates to 20% after the invasion and implemented currency controls to buttress the ruble, was also a stabilizing force. So was the need for factories to increase production of military goods and replace items that had been imported from the West.

    But the greatest support came from high energy prices and the world’s continued thirst for oil and other commodities.

    Russia, the world’s second-largest exporter of crude, was able to send barrels that would have gone to Europe to countries like China and India. The European Union, which imported an average of 3.3 million barrels of Russian crude and oil products per day in 2021, was also still buying 2.3 million barrels per day as of November, according to the International Energy Agency (IEA).

    “It’s a question of natural resources,” Sergey Aleksashenko, Russia’s former deputy minister of finance, said at an event last month hosted by the Center for Strategic and International Studies, a think tank. That meant the economy experienced a decline, but “not a collapse,” he added.

    In fact, Russia’s average monthly oil export revenues rose by 24% last year to $18.1 billion, according to the IEA. Yet a repeat performance is unlikely, presaging increasingly tough decisions for Putin.

    The price of a barrel of Urals crude, Russia’s main blend, fell to an average of $49.50 in January after Europe’s oil embargo — as well as a Group of Seven price cap — took effect. By comparison, the global benchmark stood around $82. That suggests that customers like India and China, seeing a smaller pool of interested buyers, are negotiating greater discounts. Russia’s 2023 budget is based on a Urals price of more than $70 per barrel.

    Finding new buyers for processed oil products, which are also subject to new embargoes and price caps, won’t be easy either. China and India have their own network of refineries and prefer to buy crude, noted Ben McWilliams, an energy consultant at Bruegel.

    Meanwhile, gas exports to Europe have plunged since Russia shut its Nord Stream 1 pipeline.

    A motorcyclist rides past an oil depot in New Delhi, India, on Sunday, June 12, 2022.

    Russia’s government relied on the oil and gas sector for 45% of its budget in 2021. As it plans to maximize defense spending, lower revenues inevitably mean trade-offs. Spending plans for 2023 finalized in December involved a decrease in expenditure on housing and health care, as well as a category that includes public infrastructure.

    “Whatever energy resources are obtained, they’ll be spent on military needs,” said Gulnaz Sharafutdinova, acting director of the Russia Institute at King’s College London.

    The International Monetary Fund still expects Russia’s economy to expand by 0.3% this year and 2.1% the next. Yet any outlook is contingent on what happens in Ukraine.

    “Whether the economy shrinks or expands in 2023 will be determined by developments in the war,” Tatiana Orlova, an economist at Oxford Economics, wrote in a note to clients on Tuesday. Shortages of workers tied to military conscription and emigration pose a key risk, she noted.

    The impact of Western sanctions is poised to develop into a crisis over time. Bloomberg Economics estimates that Putin’s war in Ukraine will slash $190 billion off Russia’s gross domestic product by 2026 compared with the country’s prewar path.

    Sectors that rely on imports have been particularly vulnerable. Domestic car makers such as Avtovaz, which manufactures the iconic Ladas, have struggled with shortages of key components and materials.

    A man talks on his phone near a closed H&M store on December 15, 2022 in Moscow, Russia.

    Russia’s auto industry was already weakened after companies such as Volkswagen

    (VLKAF)    , Renault

    (RNLSY)    , Ford

    (F)     and Nissan

    (NSANF)     halted production and began to sell their local assets last year. Chinese firms have stepped up their presence, part of a broader trend. Even so, sales of new cars dropped 63% year-over-year in January, according to the Association of European Businesses.

    Across sectors, firms are struggling to plan for the future. A survey of more than 1,000 Russian businesses by the Stolypin Institute of Economic Growth in November found that almost half plan to maintain production over the next one to two years and aren’t thinking about growth. The group said this contributed to a high risk of “long-term stagnation of the Russian economy.”

    Given Putin’s ideological commitment to subsuming Ukraine, he’s unlikely to back down, according to Sharafutdinova at King’s College London. But his war chest “is likely, inevitably, to diminish,” she added.

    Prioritizing military spending will also come at a social cost, with a “slow and creeping” erosion of living standards, she added.

    “In normal times, we might have said that the population would protest against that,” Sharafutdinova said. “But of course, these are not normal times.”

    — Clare Sebastian and Olesya Dmitracova contributed reporting.

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  • Judge orders Sam Bankman-Fried back to court after learning how he accessed the internet remotely | CNN Business

    Judge orders Sam Bankman-Fried back to court after learning how he accessed the internet remotely | CNN Business


    New York
    CNN
     — 

    A federal judge ordered Sam Bankman-Fried back to court this week after learning that the founder of crypto trading platform FTX accessed the internet in a way the government can’t track.

    Judge Lewis Kaplan set a hearing for Thursday after he was notified by prosecutors and attorneys for Bankman-Fried that the former so-called Crypto King used a virtual private network, or VPN, twice in the past month, including days after the judge expressed concern about the use of encrypted messaging apps.

    Bankman-Fried’s lawyers said in a letter to the judge that Bankman-Fried used the VPN to access an NFL Game Pass international subscription that he used when he lived in the Bahamas to watch NFL playoff and Super Bowl games while out on bail in the US.

    Bankman-Fried is currently under house arrest at his parents’ home in Palo Alto, Calif. He is released on a $250 million bond while awaiting trial on fraud and conspiracy charges. He pleaded not guilty.

    The judge noted that Bankman-Fried used the VPN at least once after he was ordered to refrain from using encrypted messaging apps, adding, “The defendant’s use of a VPN presents many of the same risks associated with his use of an encrypted messaging or call application.” The judge said Bankman-Fried could not use VPNs until the outcome of the hearing.

    Overnight Prosecutors alerted the judge to Bankman-Fried’s use of a VPN in late January and early February.

    “The use of a VPN raises several potential concerns. First, a VPN is a mechanism of encryption, hiding online activities from third parties, including the Government. Second, it is a means to disguise a user’s whereabouts because a VPN server essentially acts as a proxy on the internet,” prosecutors wrote in a letter to the judge. “It is well known that some individuals use VPNs to disguise the fact that they are accessing international cryptocurrency exchanges that use IPs to block U.S. users,” they wrote.

    Prosecutors and Bankman-Fried’s lawyers asked the judge for more time to work out new bail terms, but the judge rejected that, calling them back to court for the second time in a week.

    The judge previously expressed concern over Bankman-Fried’s use of encryption and whether the government could track what he was doing while out on bail.

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  • Isolated Iran finds ally China reluctant to extend it a lifeline | CNN

    Isolated Iran finds ally China reluctant to extend it a lifeline | CNN

    Editor’s Note: A version of this story appears in today’s Meanwhile in the Middle East newsletter, CNN’s three-times-a-week look inside the region’s biggest stories. Sign up here.


    Abu Dhabi, UAE
    CNN
     — 

    Shortly before leaving for his first state visit to China on Tuesday, Iranian President Ebrahim Raisi issued a thinly veiled criticism of his powerful ally, saying the two countries’ relationship has not lived up to expectations.

    The first Iranian president to arrive in China on a state visit in two decades, Raisi was keen to tell Beijing that it has not given enough support to Tehran, especially economically.

    “Unfortunately, I must say that we have seriously fallen behind in these relations,” he said, referring to trade and economic ties. Part of his mission, he said, was to implement the China-Iran Strategic Partnership Plan (CISPP), a pact that would see Beijing invest up to $400 billion in Iran’s economy over a 25-year period in exchange for a steady supply of Iranian oil.

    Raisi said that economic ties had regressed, and that the two nations needed to compensate for that.

    The public criticism on the eve of the landmark trip demonstrated the heavily-sanctioned Islamic Republic’s disappointment with an ally that has in many ways become one of its few economic lifelines.

    The speech was likely “a reflection of Tehran’s frustration with China’s hesitancies about deepening its economic ties with Iran,” Henry Rome, senior fellow at the Washington Institute for Near East Policy, told CNN. “The same issues that have constrained China-Iran relations for years appear to remain.”

    Analysts said Raisi’s speech was a clear call for China to live up to its end of the relationship, seeking economic guarantees from the Asian power so he can have something to show at home amid a wave of anti-government protests and increasing global isolation.

    “The mileage Raisi will get for having a visit is going to be very limited if that visit doesn’t produce anything,” said Trita Parsi, vice-president of the Quincy Institute in Washington, DC. “The Iranians are not in a position right now in which a visit in and of itself is sufficiently good for them…They need more.”

    Whether Iran is satisfied with what China offered it, however, is yet to be seen.

    “Though more substance may be achieved following the visit, the reality is that Raisi needs both the substance and the announcement of concrete agreements,” said Parsi. He added that China, on the other hand, appears to be inclined to “play matters down” as it balances the partnership with its ties with Gulf Arab states at odds with Iran, as well as its own fraught relations with the US.

    In a joint statement, both China and Iran said they are “willing to work together to implement” the CISPP and “continue to deepen cooperation in trade, agriculture, industry, renewable energy, infrastructure and other fields.”

    On Wednesday, Iranian Foreign Minister Hossein Amirabdollahian, who accompanied Raisi to China, said that the two countries agreed to remove obstacles in the way of implementing the CISPP, adding that Iran was “optimistic at the results of the negotiations,” according to state news agency IRNA.

    Chinese President Xi Jinping also accepted an invitation to visit Iran on a future date.

    Raisi’s trip comes as Beijing strengthens its ties with Iran’s foe Saudi Arabia, and as cheap Russian oil potentially threatens Iran’s crude exports to China.

    Less than two years after he took power, Raisi’s term has witnessed growing isolation from the West – especially after Iran supplied Russia with drones to use in its war on Ukraine – and failed efforts to revive a 2015 nuclear deal that removed some barriers to international trade with the Islamic Republic.

    As Western sanctions cripple its economy, Beijing has helped keep Tehran afloat economically. China is Iran’s biggest oil customer, buying sanctioned but cheap barrels that other nations would not touch.

    Tehran’s other ally, Russia, has however been biting into its Asian oil market as China buys more Russian barrels – also sanctioned by the West – for cheap, threatening one of Iran’s last economic lifelines.

    The visit is therefore a strategic one, analysts say, and an attempt by Iran pull itself back up from domestic instability and worsened isolation from the West.

    “(It) is an opportunity for Raisi to try to draw a line under the past five months of domestic unrest and project a sense of normalcy at home and abroad,” said Rome.

    But Jacopo Scita, a policy fellow at the Bourse & Bazaar Foundation in London, said he did not expect the visit to result in much more than a recognition of China’s partnership with Iran.

    “Raisi will hardly get much from the economic perspective, except for a new series of memoranda of understanding and some minor deals,” he told CNN.

    Iran has also been reminding its people that looking eastward is the right path toward economic revival as prospects of returning to nuclear agreement fade, said Parsi. The government has been keen to show that it has “an eastern option” that is supportive and lucrative, he said.

    Scita said that China is unlikely to live up to Iran’s expectations, however.

    “I don’t believe that Beijing can offer guarantees to Tehran except a pledge to continue importing a minimum amount of crude regardless of the global market situation and China’s domestic demand,” he told CNN.

    How Raisi’s visit will be received back at home remains unclear. If the trip yields no concrete results in the coming days, then Iran’s move eastward could prove to be “a huge strategic mistake that the Raisi government has really rushed into,” said Parsi.

    Additional reporting by Adam Pourahmadi and Simone McCarthy

    Turkey’s earthquake left 84,000 buildings either destroyed or in need of demolition after sustaining heavy damage, Turkish Urban Affairs and Environment Minister Murat Kurum said Friday, according to state media.

    The deadly earthquake – which sent shockwaves across the region – has so far killed more than 43,000 across both Turkey and Syria.

    At least 38,000 people died in Turkey, according to Turkey’s governmental disaster management agency, AFAD. The death toll in Syria remains at least 5,841, according to the latest numbers reported Tuesday by the United Nations Office for the Coordination of Humanitarian Affairs (OCHA).

    Here’s the latest:

    • Since the February 6 earthquake, a total of 143 trucks loaded with aid provided by six UN agencies have crossed from Turkey to northwest Syria through two border crossings, a OCHA statement said Friday.
    • Two men were rescued in Hatay ten days after the earthquake struck, said Turkey’s Health Minister Fahrettin Friday. And late on Thursday, a 12-year-old boy was rescued from rubble in southern Hatay 260 hours after the earthquake hit, according to CNN Turk, which reported live from the scene.
    • World Health Organization Director-General Tedros Adhanom Ghebreyesus said upon returning from Syria on Tuesday that more than a decade of war in the region has left towns destroyed, with the health system unable to cope with this scale of emergency. “Survivors are now facing freezing conditions without adequate shelter, heating, food, clean water or medical care,” he said.
    • Turkey added Elazig as the 11th province in the list of those impacted by the quake, the ruling party spokesman said.
    • A Turkish family was reunited with the ‘miracle baby’ that was found in the rubble of the quake after they had given up hope.
    • A confused woman asked her rescuers “What day is it?” when pulled alive from the rubble of last week’s earthquake after 228 hours.
    • After attending the Munich Security Conference in Germany, US Secretary of State Antony Blinken will travel on to Turkey and Greece on Sunday to see US efforts to assist with the earthquake and to meet with Turkish and Greek officials, the State Department said Wednesday.

    Palestinian activist beaten by Israeli soldier says he is scared for his life

    Palestinian activist Issa Amro, who was filmed being assaulted by an Israeli soldier on Monday, told CNN Thursday that he is physically and psychologically affected by the attack and fears for his life.

    • Background: Lawrence Wright, a writer for the New Yorker magazine, posted video of the assault on Twitter. It showed two IDF soldiers manhandling well-known activist Amro, throwing him onto the ground, and one soldier kicking him, before that soldier is pushed away by other troops. The Israeli soldier who was filmed assaulting Amro in Hebron was sentenced to 10 days in military jail. In response to CNN’s interview with Amro, Israel Defense Forces international spokesman Lt. Col. Richard Hecht said there was “no justification” for the soldier’s behavior, but suggested Amro had provoked the incident.
    • Why it matters: Amro said he is afraid for his life and for the lives of the people in the area, but added that, “unfortunately what happened to me is happening almost every day.” He said he filed many complaints to the Israeli police about soldier and settler violence, but had gotten no accountability. Amro also said he wants the Biden administration to reopen the Palestinian consulate in East Jerusalem.

    Protesters set fire to ATMs as Lebanese lira hits 80,000 against the dollar in new record low

    Lebanon’s national currency has hit a new record low of 80,000 Lebanese lira against the US dollar, according to values sold on the black market on Thursday. On Thursday, protesters blocked roads across Beirut and set fires to ATMs and bank branches, according to videos posted on social media by the organizers, United for Lebanon and the Depositors Outcry Association, who are both advocating for the release of depositor savings.

    • Background: The lira has been on an exponential fall since January 20 when the Lebanese central bank (BDL) adjusted the official exchange rate for the first time in decades, from LL1,500 to LL15,000. Lebanese banks have been closed since Tuesday due to a strike announced by the Association of Banks in Lebanon. Prime Minister Najib Mikati said in a statement Thursday that “efforts are continuing to address the financial situation.”
    • Why it matters: Lebanon has been in a deepening financial crisis since 2019. The country moved toward securing an International Monetary Fund (IMF) bailout in April 2022, but the deal is yet to be finalized.

    Iran denies links to new al-Qaeda leader, calls US claim ‘Iranophobia’

    Iranian Foreign Minister Hossein Amir Abdollahian on Thursday denied claims by the US that al-Qaeda’s new leader, Seif al-Adel, is living in his country. “I advise White House to stop the failed Iranophobia game,” wrote Abdollahian on Twitter. “Linking Al-Qaeda to Iran is patently absurd and baseless,” he said.

    • Background: US State Department spokesman Ned Price on Wednesday told reporters that the US backs a UN report linking al-Adel to Iran. “Our assessment aligns with that of the UN, the assessment that you (a reporter) referenced that Saif al-Adel is based in Iran,” said Price during a press briefing, adding that “offering safe haven to al-Qaeda is just another example of Iran’s wide-ranging support for terrorism, its destabilizing activities in the Middle East and beyond.”
    • Why it matters: Tensions between Iran and the US have only worsened in recent months, as the Islamic Republic supplies drones to Russia for use in its war on Ukraine and negotiations to revive a 2015 deal remain frozen. The US said it killed al-Qaeda’s former leader, Ayman al-Zawahiri, in a drone strike on Kabul, Afghanistan last year.

    A Roman-era lead sarcophagus was uncovered on Tuesday at the site of a 2000-year-old Roman necropolis in the Gaza Strip. The necropolis is along the Northern Gaza coast and 500 meters (0.3 miles) from the sea.

    The sarcophagus may have belonged to a prominent individual based on where it was found, the Palestinian Ministry of Tourism and Antiquities’ director of excavation and museums, Jehad Yasin, told CNN on Thursday.

    Yasin said the ancient Roman cemetery was discovered in 2022 “as excavations were carried out at the site in cooperation with Premiere Urgence Internationale and funded by the British Council.”

    Premiere Urgence Internationale, a French humanitarian organization, has collaborated on “Palestinian cultural heritage preservation” projects in Gaza under a program called INTIQAL.

    The coffin was exhumed from the site to perform archaeological analysis for bone identification, which will take around two months, according to Yasin.

    A team of experts in ancient funerary will unseal the coffin in the coming weeks.

    While Gaza is a site of frequent aerial bombardment and a land, air, and sea blockade imposed by Israeli and Egyptian officials, the sarcophagus remains intact.

    “The state of preservation of the sarcophagus is exceptional, as it remained sealed and closed,” read a press release from the Ministry of Tourism and Antiquities.

    French and Palestinian archaeologists have uncovered eighty-five individual and collective tombs in the 3,500-square-meter Roman acropolis since its discovery last year, while ten of them have been opened for excavation.

    Beyond the rubble of the coastal enclave lay dozens of artifacts and burial sites from the Roman, Byzantine and Canaanite eras.

    Last year a Palestinian farmer discovered the head of a 4,500-year-old statue of Canaanite goddess Anat while another Palestinian farmer discovered a Byzantine-era mosaic in his orchard.

    In 2022 the Ministry of Tourism and Antiquities released their first Arabic archaeological guide titled “Gaza, the Gateway to the Levant.” The guide charts 39 archaeological sites in Gaza, including churches, mosques and ancient houses that date back to 6,000 years.

    The ministry expects more archaeological findings at the necropolis.

    Further sarcophagi are likely to be uncovered in the following months, said Director Yasin.

    By Dalya Al Masri

    A man and woman walk along a damaged street at night in earthquake- stricken Hatay, Turkey on Thursday.

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  • US regulator orders crypto firm to stop minting Binance stablecoin | CNN Business

    US regulator orders crypto firm to stop minting Binance stablecoin | CNN Business


    Hong Kong
    CNN
     — 

    New York’s top financial regulator has ordered a crypto company to stop minting a major stablecoin, widening a clampdown on the embattled digital assets sector.

    Paxos, a blockchain company, announced Monday that it had been instructed by the New York State Department of Financial Services (NYDFS) to stop issuing BUSD, a Binance-branded stablecoin pegged to the US dollar.

    The firm said in a statement that it would stop issuing the token on February 21. The ones already circulating “have and always will be” backed one-to-one with US dollar reserves, it added.

    Paxos has told customers they will be able to redeem their BUSD through February 2024, with options to redeem funds in US dollars or to convert their tokens to Pax Dollar, another stablecoin issued by the company.

    Paxos also said it would “end its relationship” with Binance, the world’s largest crypto exchange. It did not give detail on why the regulator had ordered it to stop issuing BUSD.

    In a statement, the NYDFS told CNN the order was “a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance.”

    “The department is monitoring Paxos closely to verify that the company can facilitate redemptions in an orderly fashion subject to enhanced, risk-based, compliance protocols,” it said.

    BUSD is one of the world’s most popular stablecoins, with a circulation of 15.8 billion tokens, according to CoinMarketCap.

    Stablecoins are digital currencies that are designed to hold steady. They’re usually pegged to real-world assets such as gold or the US dollar.

    In a statement to CNN, Binance stressed that, although its name appeared on the coin, “BUSD is a stablecoin wholly owned and managed by Paxos.”

    “Binance licenses its brand to Paxos for use with BUSD, which is entirely owned by Paxos and regulated” by New York authorities, the exchange said.

    The BUSD news has unsettled investors. Binance suffered one of its worst-ever days in terms of withdrawals on Monday, with $873 million in net outflows, according to data provider Nansen.

    “Clearly there’s a number of traders and investors moving to take their funds off the exchange,” Andrew Thurman, Nansen’s content lead, told CNN.

    He noted that Binance had seen worse days. In December, a deluge of bad press caused investor jitters, sparking outflows of as much as $3 billion.

    This time, “investors are still trying to digest the news,” Thurman added.

    “We’re seeing some indecision from the market trying to decide if this is a case of agencies going after one bad instance of a stablecoin, or trying to shut stablecoins down entirely.”

    In its statement, Binance warned that the move to stop minting BUSD would hurt users and “only decrease” the token’s market capitalization over time.

    “Stablecoins are a critical safety net for investors seeking refuge from volatile markets, and limiting their access would directly harm millions of people across the globe,” the firm said.

    Martin Lee, a data journalist for Nansen, told CNN that Binance had few options to counter the ban.

    “Over time, the supply will drop as redemptions happen,” he said.

    But “in terms of confidence in the exchange as a whole,” Binance will likely retain users as long as customer deposits continue to be protected and users can still convert BUSD to other stablecoins, Lee added.

    Starting last year, the digital financial assets sector has been weathering a so-called “crypto winter,” sparked by the collapse of TerraUSD, an algorithmic stablecoin, in May.

    Then FTX, one of the world’s biggest crypto exchanges at the time, went bankrupt in November, deepening the crisis in the industry.

    As a result, digital asset companies are facing tighter regulatory scrutiny around the world.

    Last week, the US Securities and Exchange Commission said overseeing crypto assets was a key priority for 2023.

    The SEC also reached a $30 million settlement with cryptocurrency platform Kraken last Thursday. The agreement will force the company to unwind a program offering investment returns to US users who committed their digital assets to the company.

    That practice, known as “staking,” reflected an unregistered offer and sale of securities, the SEC alleged in a complaint.

    Hong Kong has also announced plans for new regulations. The city, which hopes to become a virtual assets hub, announced plans last month to adopt new rules for stablecoins, including licensing requirements for businesses.

    According to crypto advocates, the growing global clampdown could undermine the ecosystem for digital assets.

    — CNN’s Brian Fung contributed to this report.

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  • A twisted tale of celebrity promotion, opaque transactions and allegations of racist tropes | CNN Business

    A twisted tale of celebrity promotion, opaque transactions and allegations of racist tropes | CNN Business



    CNN
     — 

    Sitting across from Jimmy Fallon on “The Tonight Show,” Paris Hilton, wearing a sparkling neon green turtleneck dress and a high ponytail, looked at a picture of a glum cartoon ape and said it “reminds me of me.” The audience laughed. It did not look like her at all.

    Hilton and Fallon were chatting about their NFTs – non-fungible tokens, typically digital art bought with cryptocurrency – from the Bored Ape Yacht Club. The camera zoomed in on framed printouts of the ape cartoons. “We’re both apes,” Fallon said. Hilton, with her signature vocal fry, replied, “Love it.”

    “The Tonight Show” episode from January 2022 is a YouTube time capsule showing the temporary alliance between celebrity marketing and the crypto industry. Bored Ape Yacht Club was not the biggest crypto phenomenon, but it was one of the top beneficiaries of celebrity hype. That celebrity hype, in turn, helped draw new consumers to crypto — an industry rife with manipulation and fraud, and one that US regulators are now giving more scrutiny in the wake of the collapse of crypto exchange FTX. But for a time, when crypto’s prices seemed to have no limit, the money appeared too good for some to ask questions — questions like: Why are some of those apes wearing prison clothes?

    “That was a very significant moment, because the audience for that show is very different from the typical crypto person,” explained Molly White, a software engineer and a fellow at the Harvard Library Innovation Lab. The Bored Apes — a computer-generated collection of 10,000 cartoons — were being presented as a status symbol, membership in an exclusive club. Hilton, Fallon, and other celebrities had joined — and viewers could join, too, if they bought an NFT.

    A class action lawsuit, filed in December, alleges Hilton, Fallon, and other celebrities conspired in a “vast scheme” to artificially inflate the price of Bored Ape NFTs and enrich themselves, the crypto payments company they used to get the apes, MoonPay, and the company that made the Bored Apes, Yuga Labs.

    Hilton and Fallon did not respond to requests for comment.

    In April 2021, Yuga Labs released the Bored Ape Yacht Club collection of cartoon apes with a computer-generated combination of features and accessories, such as gold fur, a sailor hat, laser eyes, 3-D glasses, a cigarette, as well as “hip hop” clothes, a “pimp coat,” a prison jumpsuit, a pith helmet, and a “sushi chef” headband. The founders were anonymous, known only by their online screen names.

    That fall, Hollywood agent Guy Oseary reached out to Yuga Labs, eventually investing in the company and joining its board. Soon celebrities started posting their Bored Apes on social media — including Oseary’s client Madonna, along with Steph Curry, Lil Baby, DJ Khaled, Snoop Dogg, Gwyneth Paltrow, and more. Bored Apes started selling for hundreds of thousands of dollars. Justin Bieber bought an ape for $1.3 million. By March 2022, Yuga got a $450 million venture capital investment, and was valued at $4 billion.

    Guy Oseary and Madonna at a 2016 Billboard Women In Music event. Oseary said both bought NFTs from Bored Ape Yacht Club.

    The class action lawsuit claims, “this purported interest in” Bored Apes “by high-profile taste makers was entirely manufactured by Oseary at the behest of” Yuga Labs. “In order to make the promotion of, and subsequent interest in, the BAYC NFTs appear to be organic (as opposed to being solely the result of a paid promotion), the Company needed a way to discreetly pay their celebrity cohorts.” The suit alleges they did this through MoonPay.

    When Jimmy Fallon introduced his audience to crypto, he also presented a frictionless way to buy in: MoonPay, a payments company that allows customers to buy crypto through most major payment systems like with a credit card. In November 2021, Fallon said on “The Tonight Show” that he’d bought his first NFT through MoonPay. “MoonPay? MoonPay! I did my homework — Moonpay, which is like PayPal but for crypto,” Fallon said. The following January, when Hilton showed her ape on the show, she said, “You said you got it on MoonPay, so I went and I copied you.”

    A few months later, in April 2022, MoonPay announced more than 60 celebrities and influencers had invested in the firm. MoonPay spokesman Justin Hamilton told CNN that Hilton became an investor, but not until after she spoke with Fallon on “The Tonight Show.” The FTC generally requires an endorser to disclose when they have a financial interest in promoting a company.

    The celebrity hype and unbelievable prices generated enormous media interest. “Rolling Stone” minted NFTs of the magazine with Bored Apes on the cover. Guy Oseary was on the cover of “Variety” under the headline “NFT King.”

    Independent journalists, under the names of Coffeezilla and Dirty Bubble Media, noticed blockchain ledger records suggesting not everything was as it appeared. Cryptocurrency is traded on the blockchain, a permanent and public ledger of every transaction. That means it can reveal financial relationships, if you figure out the right questions to ask.

    Hours before Justin Bieber bought an ape for the equivalent of $1.3 million on January 29, 2022, Bieber received Ethereum worth about $2.5 million in his crypto wallet, the blockchain shows. A couple weeks before Post Malone released a music video in November 2021 in which he bought a Bored Ape through MoonPay, MoonPay transferred cryptocurrency then worth about $760,000 into the artist’s wallet, and sent two more payments, worth about $640,000, a couple weeks after. MoonPay admits it paid for the placement in Post Malone’s video but says other celebrities paid full price for their service in US dollars.

    Many celebrities who got apes thanked MoonPay on social media. Gwyneth Paltrow tweeted, “Joined @BoredApeYC ready for the reveal? Thanks @moonpay concierge.” The rapper Gunna posted on Instagram, “I Bought A @boredapeyachtclub NFT worth 300K No Cap ! His Name is BUTTA Thanks @moonpay !” Lil Baby mentioned MoonPay in his song “Top Priority.”

    The blockchain shows MoonPay paying high prices for the apes, and then transferring them to purported celebrity wallets for free. MoonPay explains this as a service that helps wealthy people buy NFTs without setting up their own crypto wallet.

    The company says the “white-glove” service was created because MoonPay’s CEO, Ivan Soto-Wright, had a lot of celebrity friends, and many of them asked how they could get an NFT. Jimmy Fallon, Lil Baby — they were Soto-Wright’s friends, Hamilton said.

    CNN spoke to several former MoonPay employees who said they were skeptical the celebrities paid for their NFTs, because there was no evidence on the blockchain.

    The company’s ape purchases have been significant. Since 2021, one of its wallets, “MoonPayHQ,” has spent at least $25 million on NFTs — 60% or about $15 million of that was spent on Bored Apes. The company told CNN they had 14 apes in a cold storage wallet, which offers more safety. It said that five of those NFTs were “purchased by concierge clients that are in the process of being transferred.” The last ape was purchased in April 2022, 10 months ago, according to blockchain records.

    One influencer has said he was approached about an ape. In a Twitter Spaces audio chat last year, celebrity jeweler Ben Baller said, “Real talk: not once, not twice, three times, I’ve been offered a Bored Ape through MoonPay. … The fact that some of these super top-tier all-star NBA players have them? And I was like, ‘Yo this is all cap [lies.]’ They didn’t buy this sh*t.” Baller did not respond to CNN’s request for comment. MoonPay’s spokesman said this didn’t happen.

    Oseary, the Hollywood agent and MoonPay/Yuga investor, texted CNN in response to a question: “NO ONE is paid to join the club and Yuga do NOT and have NOT given away any apes.” He said he paid full price for his Bored Ape, and so did Madonna.

    Yuga Labs declined an on-the-record interview with CNN. In a statement, the company said, “In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much.” Hamilton, MoonPay’s spokesman, said of the lawsuit, “We look forward to it being dismissed.”

    “The fine art market is a scam – that’s OK, at least there’s art going on,” said Max Gail, who’s been a blockchain developer since 2010, and founded Omakasea and Eth Gobblers.com. (Gail hosted the Twitter Space in which Baller discussed Bored Apes.) The NFT market, he said, “is like a parody of the fine art market. They took the same strategies that had been employed in the fine art market, but then distorted it with some strange crypto economics.”

    Anonymous buyers and sellers dealing in items whose values are difficult to calculate has made the fine art market susceptible to money laundering, a Senate investigation found in 2020. In 2022, an average of more than half of NFT trading volume on the Ethereum blockchain was “wash” trading, according to an analysis at Dune Analytics. (Most NFTs are on Ethereum.) Essentially, wash trades are a transaction in which the buyer and seller are the same person, or they’re working together. Wash trading has been illegal in traditional finance since the Great Depression, because it can distort the market by making people believe there is a high volume of interest in the investment. The ability to open many anonymous cryptocurrency wallets makes wash trading NFTs easier. A Chainalysis report found one “prolific NFT wash trader” made 830 sales to self-financed wallets in 2021.

    Though NFTs have been celebrated as the future of digital art, and a way for artists to earn royalties, many NFT collections operate more like securities — a financial instrument, like stocks or bonds, that hold some monetary value. “People will say that the technology itself has provided this whole new way of creating digital art,” Harvard’s Molly White said. “It’s not that unique. The unique part of it is the speculative bubble.”

    Mad Dog Jones' SHIFT// goes on view as part of 'Natively Digital: A Curated NFT Sale' at Sotheby's in June 2021. NFTs have been celebrated as the future of digital art.

    The NFT marketplace does not always make sense even to those who benefit from it. “Bored Apes have gone from $100 to $100,000 in a year. Nothing appreciates that fast,” a successful NFT artist said. The artist’s own works had gone from a couple hundred dollars to tens of thousands. One of the artist’s major collectors “treats me as a commodity and my art is a commodity and he’s always pumping and dumping it. … It’s being treated as a financial vehicle.”

    But there is pressure not to raise questions about the system. The NFT artist did not want to go on the record, saying it would be career suicide. “The big collectors watch for artists that FUD. And as soon as an artist FUDs, they get cancelled,” the artist said. FUD is “fear, uncertainty, and doubt,” or criticism of crypto.

    Beyond how the Bored Ape NFTs are traded, what they depict is at issue in yet another Yuga Labs legal battle.

    In the fall of 2021, accusations began swirling on social media that the Bored Ape Yacht Club contained visual references to racist memes from the troll site, 4chan. The artist Ryder Ripps — who’s worked with stars like Kanye West and Tame Impala — started tweeting about the claims of racist imagery. Ripps claims Guy Oseary, the Hollywood agent on Yuga’s board, called to pressure him to stop talking about the claims. (Oseary told CNN, “I can’t speak on active litigation.”)

    Ripps doubled down and made a website cataloging the claims. Then, in an act he says was meant to protest the alleged racism and comment on the idea you can’t copy an NFT, Ripps made copycat NFTs he sold as RR/BAYC. Yuga sued Ripps for trademark infringement, and argues that his maligning of the Yuga apes is nothing more than a profiteering tactic. Ripps says Yuga is trying to silence its critics, and has doubled down on his claims as part of his defense in the trademark suit.

    Yuga Labs called the accusations “the incoherent ramblings of a small group of for-profit conspiracy theorists.” However, the Yuga lawsuit against Ripps could affect the class action lawsuit against Yuga. Ripps’s lawyers have issued subpoenas to Paris Hilton and Jimmy Fallon.

    To assert its trademark rights, Yuga must show that consumers associate its logos with its products, and it did so in a legal filing, in part, by pointing to celebrity owners “including TV host Jimmy Fallon…”

    Ripps’s lawyer, Louis Tompros, asserts Yuga compensated celebrities for promoting its NFTs, and they did not disclose it. “And by doing that, in our view, they have gotten this public notoriety for their brand improperly,” Tompros told CNN. “And so having gotten it improperly, they now can’t go and assert that they have these rights.”

    This week Yuga co-founder Wylie Aronow published a 24-page letter explaining that he was stepping back from the company and addressing widespread rumors that the company and its products were connected to the alt-right.

    “I will soon call out this utter bullsh*t under oath,” he wrote.

    So what are the racist references alleged by Ripps and others? To start, there’s what’s right on the surface: some of the NFTs are pictures of apes in “hip hop” clothes, a “pimp coat,” a prison uniform, a bone necklace, gold and diamond grills. Record executive Dame Dash, a crypto enthusiast, pointed out on a podcast last year that monkeys and apes are old racist tropes.

    “Think if you were a racist, like ‘Guess what I’m gonna do? I’mma get Black people to love monkeys so much that they gonna buy them, wear them on their neck… go to something called ApeFest and they’re gonna like it!’ Wouldn’t that sound funny?” Dash said on the podcast. “That’s what’s happening.”

    Dash told CNN he hadn’t intended to target Yuga directly. But he’d started to wonder if he was being trolled, given the ubiquity of apes in crypto. “Racism is different these days — you can’t be so overt about it. You have to kind of troll,” Dash said.

    This week Yuga agreed to settle a lawsuit with a developer who worked with Ripps, with the developer agreeing to pay them $25,000 and saying he would reject all disparaging statements against Yuga Labs.

    Ryan Hickman, a software engineer who also worked with Ripps on RR/BAYC, is also being sued separately by Yuga. Hickman, who is Black, thought the Bored Apes looked like stereotypical portrayals of Black people as stupid or lazy. He said he thought this would be obvious to most people the second they saw an image of a Bored Ape. But, he said, “then somebody says, ‘Well, it’s worth $100,000.’ They say, ‘Okay well, tell me more.’”

    In a statement, Yuga said, “Our company and founders strongly condemn the spread of hate, in any form, against any group.” Hollywood agent Oseary said he’d never been on the troll site 4chan.

    The crypto community has adopted a lot of terms — rekt, frens, wagmi — that were popularized on 4chan, and it’s not always clear if the person using them understands where they came from. “I doubt that they were a massive alt-right troll campaign,” Harvard’s Molly White said. “I do think it’s likely that the creators of the project basically included some nods to 4chan.”

    “It’s not one thing that makes it racist. It’s everything together as a package,” programmer and 8chan founder Fredrick Brennan said, looking at comparisons between Pepe the Frog memes and Bored Apes. Brennan took an interest in the claims that Yuga referenced 4chan memes, because he’d seen them so often when he was running 8chan, a similar troll site. He quit 8chan in 2016, and in 2019 pushed for it to be taken down because it had become a hub for extremist violence. He began to suspect the Yuga founders were like the people he used to know.

    Take one of the apes’ characteristics, which Yuga calls a “sushi chef headband.” Brennan reads and speaks Japanese, and saw the headband actually said “kamikaze,” which has been used as a slur against Japanese people. A similar headband appeared on a Pepe meme. “That one was the most shocking,” he told CNN.

    In a legal filing connected to the Ripps case, Yuga said the apes reflected a combination of many traits, “not any person’s purported racism.”

    “I was hoping, in my eternal optimism,” Brennan said, “that people would become a lot more skeptical of tech bros. … And that liberal — so-called — celebrities in Hollywood would view these people with suspicion. Apparently not.”

    – CORRECTION: This story has been updated to clarify when Paris Hilton invested in MoonPay. Jimmy Fallon is not an investor, a company spokesman said.

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