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Treasury Dept. blacklists crypto platform used in money laundering.

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The Treasury Department on Monday prohibited Americans from using the cryptocurrency platform Tornado Cash, saying the service has helped criminals launder more than $7 billion of virtual currencies.

The crackdown was the U.S. government’s latest effort to rein in the crypto industry, as lawmakers and regulators grow increasingly concerned over the volatility of virtual currencies and their role in facilitating hacking and other crimes. Calling the platform a “threat to U.S. national security,” the Treasury Department placed Tornado Cash on a blacklist of sanctioned entities, making it illegal for Americans to send or receive money using the service.

“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors,” Brian Nelson, the under secretary for terrorism and financial intelligence, said in a statement.

Criminals have long used virtual currencies to transact anonymously, exchanging digital coins for drugs or other illicit wares. But the anonymity of crypto doesn’t provide blanket security: Crypto transactions are recorded on publicly viewable ledgers called blockchains, allowing law enforcement officials to follow the money.

Platforms like Tornado Cash are designed to make that kind of tracking harder. These crypto “mixers” receive multiple streams of transactions, then combine them to obscure the origin and destination of the funds. According to the Treasury Department, Tornado Cash was used to launder more than $455 million in crypto stolen this year by North Korean-backed hackers called the Lazarus Group.

A message to Tornado Cash’s official Twitter account was not returned. Roman Semenov, one of the company’s three founders, did not respond to a request for comment.

Since its launch in 2019, Tornado Cash has risen to prominence largely because blockchain records show that hackers have used it to move stolen cryptocurrencies. In interviews, Mr. Semenov has defended the service, saying the software protects the privacy of legitimate crypto traders who could be targeted by kidnappers or thieves.

In a statement, the crypto advocacy group Coin Center criticized the Treasury Department’s announcement, arguing that Tornado Cash was a neutral platform “that can be put to good or bad uses like any other technology.”

“It is not any specific bad actor who is being sanctioned,” the statement said. “Instead it is all Americans who may wish to use this automated tool in order to protect their own privacy while transacting online.”

As the market for digital currencies has grown, the federal government has increasingly cracked down on crypto companies, which are lightly regulated. Tether, a stablecoin company, was fined last year by the Commodity Futures Trading Commission for misstatements about its reserves, while the Justice Department brought insider-trading charges last month against a former employee of Coinbase, the largest U.S. crypto exchange.

The cryptocurrency exchange Kraken is also under investigation by the Treasury Department for possible violations of U.S. sanctions.

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Tuesday’s top tech news: Elon squares off against Apple

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Oh Elon. It was pretty obvious something was up when Twitter’s new CEO tweeted out of the blue that “Apple has mostly stopped advertising on Twitter,” and asked whether “they hate free speech in America?” Following a question from my colleague Jake Kastrenakes, Musk confirmed that the iPhone maker was threatening Twitter’s presence in the App Store and/or making moderation demands. Welcome to hell, Elon.

Away from the chaos at Twitter there was more bad news in the crypto sector with the news that finance firm BlockFi has filed for bankruptcy amidst the continued FTX fallout, while crypto exchange Kraken has agreed to pay hundreds of millions of dollars in fines over possible Iran sanction violations. Thank god we’ve got another trailer for The Super Mario Bros. Movie to look forward to later today.

For now, here’s a silly tweet:

Stay tuned, as we continue to update this list with the most important news of today: Tuesday, November 29th, 2022.



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‘No Cooperation’: How Sam Bankman-Fried Tried to Cling to FTX

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“Sam this is an excellent pick and I wholeheartedly hope you sign this tonight,” Mr. Dexter wrote in an email on the evening of Nov. 10. “The faster John is in place, the faster the company can resolve issues that require urgent progress.”

A flurry of emails followed. In a message at 3:38 a.m. on Nov. 11, Mr. Miller asked for an update on Mr. Bankman-Fried’s decision. “I am chatting with Sam,” responded Ken Ziman, a lawyer at the firm Paul Weiss who was representing Mr. Bankman-Fried.

Ten minutes later, Mr. Ziman confirmed that Mr. Bankman-Fried had signed the document, authorizing Mr. Ray to take over FTX. The company filed for bankruptcy a few hours later.

The filing was hardly the end of the chaos. The court submission listed more than 130 corporate entities tied to FTX, including its U.S. arm and Alameda, the hedge fund. But the filing was inaccurate: Some of the entities were not owned by the exchange. They belonged to AZA Finance, a separate company that had recently become partners with FTX to promote crypto in Africa.

FTX later acknowledged the error. But in a Nov. 11 Slack message to Mr. Miller and other officials, Elizabeth Rossiello, the chief executive of AZA Finance, called the mistakes in the bankruptcy filing “a storm of wild irresponsibility.”

“This is hurting 9 years of work we have done to create this platform!!” she wrote.

Mr. Miller responded defensively. “We had no cooperation of the founders in preparing this week,” he said. “It was unfortunate.”

Mr. Bankman-Fried was also frustrated. Despite giving up control of FTX, he continued contacting possible investors about new funding for the exchange. In a letter to former colleagues last week, he said he regretted filing for bankruptcy, claiming that “potential interest in billions of dollars of funding came in roughly eight minutes after I signed the Chapter 11 docs.”

He presented no evidence for that claim, and in any case, FTX was no longer his company to run. On the morning of Nov. 11, Mr. Miller moved quickly to make that clear, requesting the deletion of information about the firm’s old leadership from its website.



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The best Cyber Monday deals available now

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Below, we’ve rounded up the best Cyber Monday deals you can currently get, whether you’re in the market for a 4K OLED, a gaming laptop, or another piece of big-ticket tech that would normally require you to shell out your entire paycheck. We’ve included a number of budget-friendly items, too, just in case you’re looking for chargers, a cheap(er) pair of earbuds, or other essential gadgets to round out your arsenal.

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