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Cryptocurrency: Whither Bitcoin?
by grarpamp 16 Apr '22

16 Apr '22

https://bitcoinmagazine.com/markets/whither-bitcoin-monetary-restructuring Whither Bitcoin? by Eric Yakes The world stands on the precipice of a monetary restructuring, with bitcoin seemingly the most likely to be adopted... albeit slowly. https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.622.6336&rep=rep1… INTRODUCTION The world is reorganizing. People are attempting to comprehend the implications of recent events across a variety of dimensions: politically, geopolitically, economically, financially and socially. A feeling of uncertainty has eclipsed global affairs and individuals are developing an increased reliance on the thoughts of those bold enough to attempt comprehension. Experts are everywhere, but the expert is nowhere. I am not claiming to be an expert on anything, either. I read, write and do my best to piece together an understanding of vague and complex concepts. I’ve spent some time reading and thinking through various concepts and believe we are witnessing an inflection point of global trust. My goal is to explain the framework that led me to this conclusion. I’ll generally avoid discussing geopolitics and focus on the monetary and financial implications of this shift we are witnessing. The best place to start is understanding trust. THE WORLD RUNS ON TRUST We are witnessing a shift in global trust, setting the table for a new global monetary order. Consider Antal Fekete’s introduction from his seminal work Whither Gold?: “The year 1971 was a milestone in the history of money and credit. Previously, in the world's most developed countries, money (and hence credit) was tied to a positive value: the value of a well-defined quantity of a good of well-defined quality. In 1971 this tie was cut. Ever since, money has been tied not to positive but to negative values -- the value of debt instruments.” Debt instruments (credit) are built on trust — the most fundamental construct of organization. Organization allowed humanity to genetically eclipse its ancestors. Relationships, whether between individuals or groups, hinge on trust. Societies developed technologies and social structures to reduce the need for trust through reputations, security and money. Reputations reduce the need to trust because they represent an individual’s pattern of behavior: You trust some people more than others because of how they’ve acted in the past. Security reduces the need to trust that others will not hurt you in some form. You build a fence because you don’t trust your neighbors. You lock your car because you don’t trust your community. Your government has a military because it doesn’t trust other governments. Security is the price you pay to avoid the costs of vulnerability. Money reduces the need to trust that an individual will return a favor to you in the future. When you provide an individual a good or service, rather than trusting that they will return it to you in the future, they can immediately trade money to you, eliminating the need to trust. Stated differently, money reduces the need to trust that positive outcomes will happen while reputations and security reduces the need to trust that negative outcomes won’t happen. When money became entirely unanchored from gold in 1971, the value of money became a function of reputations and security, requiring trust. Before then, money was tied to the commodity gold, which maintained value through its well-defined quality and well-defined quantity and therefore didn’t require trust. Trust at a global level appears to be shifting across reputations and security, and thus credit money: Reputations — countries are trusting each other’s reputations less. The U.S. government’s reputation throughout recent history has been a global pillar of political stability and standard of financial and economic prudency. This is changing. The rise of U.S. populism has hindered its reputation as a politically stable country that allies depend on and rivals fear. Unprecedented economic and financial policy measures (e.g., bailouts, deficit spending, monetary inflation, debt issuance, etc.) are causing international powers to question the stability of the U.S. financial system. A hindrance to the reputation of the U.S. is a hindrance on the value of its money, to be discussed below. Security — countries are witnessing a contraction in global military order. The U.S. has been reducing its military presence and the world is shifting from a unipolar to a multipolar structure of order. The U.S.’ withdrawal of its military presence abroad has reduced its role as the monitor of international order and given rise to the military presence of rival nations. Reducing the assurance of its military presence internationally reduces the value of the dollar. Money — countries are losing trust in the international monetary order. Money has existed as either a commodity or credit (debt). Commodity money is not subject to trust through the reputations and security of governments while credit money is. Our modern system is entirely credit-based and the credit of the U.S. is the pillar upon which it exists. If the global reserve currency is based on credit, then the reputation and security of the U.S. is paramount to maintaining international monetary order. Trust in political and financial stability impacts the value of the dollar as does its holders’ demand for liquidity and stability. However, it’s not just U.S. credit money that is losing trust; it’s all credit money. As political and financial stability decline, we are witnessing a shift away from credit money entirely, incentivizing the adoption of commodity money. U.S. DEBT IS NOT RISK FREE Most recently, the reputation of U.S. credit has declined in an unprecedented way. Foreign governments historically trusted that the U.S. government’s debt is risk free. When financial sanctions froze Russia’s foreign exchange reserves, the U.S. undermined this risk-free reputation, as even reserves are now subject to confiscation. The ability to freeze the reserve assets of another country removed a foreign government’s right to either repay its debts or spend those assets. Now, international observers are realizing that these debts are not risk free. As the debt of the U.S. government is what backs its currency, this is a significant cause for concern. When the U.S. government issues debt, and demand from domestic and foreign buyers of it isn’t strong enough, the Federal Reserve prints money to purchase it in the open market and generate demand. Thus, the more U.S. debt countries are willing to buy, the stronger the U.S. dollar becomes — requiring less money printing by the Fed to indirectly enable government spending. Trust in the U.S. government’s credit has now been damaged, and thus so has the credit of the dollar. Further, trust in credit is declining in general, leaving commodity money as the more trustless option. First, I will examine this shift in the U.S. which applies specifically to its reputation and security, and then discuss the shifts in global credit (money). U.S. Dollar Dominance Will foreign governments attempt to de-dollarize? This question is complex as it not only requires an understanding of the global banking and payment systems but also maintains a geopolitical background. Countries around the world, both allies and rivals, have strong incentives to end global dollar hegemony. By utilizing the dollar a country is subject to the purview of the U.S. government and its financial institutions and infrastructure. To better understand this, let’s start by defining money: The above figure from my book shows the three functions of money as a store of value, medium of exchange and unit of account, as well as the supporting monetary properties of each below them. Each function plays a role in international financial markets: Store of Value — fulfilling this function drives reserve currency status. U.S. currency and debt is ~60% of global foreign reserves. A country will denominate its foreign exchange reserve assets in the most creditworthy assets — defined by their stability and liquidity. Medium of Exchange — this function is closely tied to being a unit of account. The dollar is the dominant invoicing currency in international trade and the euro is a close second, both of which fluctuate around ~40% of total. The dollar is also 64% of foreign currency debt issuance, meaning countries mostly denominate their debt in dollars. This creates demand for the dollar and is important. Since the U.S. issues more debt than domestic and foreign buyers are naturally willing to buy, they must print dollars to buy it in the market, which is inflationary (all else equal). The more foreign demand they can create for these newly printed dollars, the lower the inflationary impact from printing new dollars. This foreign demand becomes entrenched as countries denominate their contracts in the dollar, allowing the U.S. to monetize their debt. Unit of Account — Oil and other commodity contracts are often denominated in U.S. dollars (e.g., the petrodollar system). This creates artificial demand for the dollar, supporting its value while the U.S. government continually issues debt beyond amounts domestic and foreign buyers would be willing to purchase without the Fed creating demand for it. The petrodollar system was created by Nixon in response to a multi-year depreciation of the dollar after its fixed convertibility into gold was removed in 1971. In 1973, Nixon struck a deal with Saudi Arabia in which every barrel of oil purchased from the Saudis would be denominated in the U.S. dollar and in exchange, the U.S. would offer them military protection. By 1975, all OPEC nations agreed to price their own oil supplies in dollars in exchange for military protection. This system spurred artificial demand for the dollar and its value was now tied to demand for energy (oil). This effectively entrenched the U.S. dollar as a global unit of account, allowing it more leeway in its practices of money printing to generate demand for its debt. For example, you may not like that the U.S. is continually increasing its deficit spending (hindering its store of value function), but your trade contracts require you to use the dollar (supporting its medium of exchange and unit of account function), so you have to use dollars anyway. Put simply, if foreign governments won’t buy U.S. debt, then the U.S. government will print money to buy it from itself and contracts require foreign governments to use that newly printed money. In this sense, when the U.S. government’s creditworthiness (reputation) falls short, its military capabilities (security) pick up the slack. The U.S. trades military protection for increased foreign dollar demand, enabling it to continuously run a deficit. Let’s summarize. Since its establishment, the dollar has served the functions of money best at an international level because it can be easily traded in global markets (i.e., it’s liquid), and contracts are denominated in it (e.g., trade and debt contracts). As U.S. capital markets are the broadest, most liquid and maintain a track record of secure property rights (i.e., strong reputation), it makes sense that countries would utilize it because there is a relatively lower risk of significant upheaval in U.S. capital markets. Contrast this idea with the Chinese renminbi which has struggled to gain dominance as a global store of value, medium of exchange and unit of account due to the political uncertainty of its government (i.e., poor reputation) which maintains capital controls on foreign exchange markets and frequently intervenes to manipulate its price. U.S. foreign intervention is rare. Further, having a strong military presence enforces dollar demand for commodity trade per agreements with foreign countries. Countries that denominate contracts in dollars would need to be comfortable trading away military security from the U.S. to buck this trend. With belligerent Eastern leaders increasing their expanse, this security need is considerable. Let’s look at how the functions of money are enabled by a country’s reputation and security: Reputation: primarily enables the store of value function of its currency. Specifically, countries that maintain political and economic stability, and relatively free capital markets, develop a reputation for safety that backs their currency. This safety can also be thought of as creditworthiness. Security: primarily enables the medium of exchange and unit of account functions of its currency. Widespread contract denomination and deep liquidity of a currency entrench its demand in global markets. Military power is what entrenches this demand in the first place. If the reputation of the U.S. declines and its military power withdraws, demand for its currency decreases as well. With the shifts in these two variables in front of mind, let’s consider how demand for the dollar could be affected. OVERVIEW OF THE GLOBAL MONETARY SYSTEM Global liquidity and contract denomination can be measured by analyzing foreign reserves, foreign debt issuance, and foreign transactions/volume. Dollar foreign exchange reserves gradually declined from 71% to 60% since the year 2000. Three percent of the decline is accounted for in the euro, 2% from the pound, 2% from the renminbi and the remaining 4% from other currencies. More than half of the 11 percentage point decline has come from China and other economies (e.g., Australian dollars, Canadian dollars, Swiss francs, et al.). While the U.S. dollar decline in dominance is material, it obviously remains dominant. The primary takeaway is that most of the decline in dollar dominance is being captured by smaller currencies, indicating that global reserves are gradually becoming more dispersed. Note that this data should be interpreted with caution as the fall in dollar dominance since 2016 occurred when previous non-reporting countries (e.g., China) began gradually revealing their FX reserves to the IMF. Further, governments don’t have to be honest about the numbers they report — the politically sensitive nature of this information makes it ripe for manipulation. Source: IMF Foreign debt issuance in USD (other countries borrowing in contracts denominated in dollars) has also gradually declined by ~9% since 2000, while the euro has gained ~10%. Debt issuance of the remaining economies was relatively flat over this period so most of the change in dollar debt issued can be attributed to the euro. Source: Federal Reserve The currency composition of foreign transactions is interesting. Historically, globalization has increased the demand for cross-border payments primarily due to: Manufacturers expanding supply chains across borders. Cross-border asset management. International trade. International remittances (e.g., migrants sending money home). This poses a problem for smaller economies: the more intermediaries that are involved in cross-border transactions, the slower and more expensive these payments become. High-volume currencies, such as the dollar, have a shorter chain of intermediaries while lower-volume currencies (e.g., emerging markets) have a longer chain of intermediaries. This is important because it is these emerging markets that stand to lose the most from international payments and for this reason alternative systems are attractive to them. Source: Bank of England If we look at the trend in composition of foreign payments it’s evident that the dollar's share of invoicing is materially greater than its share of exports, illuminating its outsized role of invoicing in proportion to trade. The euro has been competing with the dollar in terms of invoicing share, but this is driven by its usage for export trade among EU countries. For the rest of the world, export share has been, on average, greater than 50% while invoicing share has remained less than 20% on average. Source: Journal of International Economics Lastly, let’s discuss the volume of trade. A currency with high volume of trade means that it is relatively more liquid and thus, more attractive as a trade vehicle. The chart below shows the proportions of volume traded by currency. The dollar has remained dominant and constant since 2000, expressing its desirability as a liquid global currency. What’s important is that the volume of all major global reserve currencies have declined slightly while the volume of “other” smaller world currencies has increased from 15% to 22% in proportion. Source: BIS Triennial Survey; (Note: typically these numbers are shown on a 200% scale — e.g., for 2019 USD would be 88.4% out of 200% — because there are two legs to every foreign exchange trade. I’ve condensed this to a 100% scale for ease of interpretation of the proportions). The dollar is dominant across every metric, although it has been gradually declining. Most notably, economies that are not major world reserves are: Gaining dominance as reserves and thus world FX reserves are becoming more dispersed. Utilizing the dollar for foreign transactions in significantly greater proportions than their exports and limited by a long chain of intermediaries when attempting to use their domestic currencies. Hurt the most by long chains of global intermediaries for their transactions and thus stand to gain the most from alternative systems. Increasing their share of foreign exchange volume (liquidity) while all the major reserve currencies are declining. There exists a trend whereby the smaller and less dominant currencies of the world are expanding but are still limited by dollar dominance. Pair this trend with the global political fragmentation occurring and their continued expansion becomes more plausible. As the U.S. withdraws its military power globally, which backs the dollar’s functions as a medium of exchange and unit of account, it decreases demand for its currency to serve these functions. Further, the dollar’s creditworthiness has declined since implementing the Russian sanctions. The trends of declining U.S. military presence and creditworthiness, as well as increased global fragmentation, indicate that the global monetary regime could experience drastic change in the near term. THE GLOBAL MONETARY SYSTEM IS SHIFTING Russia invaded Ukraine on Feb. 24, 2022, and the U.S. subsequently implemented a swath of economic and financial sanctions. I believe history will look back on this event as the initial catalyst of change towards a new era of global monetary order. Three global realizations subsequently occurred: Realization #1: Economic sanctions placed on Russia signaled to the world that US sovereign assets are not risk free. U.S. control over the global monetary system subjects all participating nations to the authority of the U.S. Effectively, ~$300 billion of Russia’s ~$640 billion in foreign exchange reserves were “frozen” (no longer spendable) and it was partially banned (energy still allowed) from the SWIFT international payments system. However, Russia had been de-dollarizing and building up alternative reserves as protection from sanctions throughout previous years. Now Russia is looking for alternatives, China being the obvious partner, but India, Brazil and Argentina are also discussing cooperation. Economic sanctions of this magnitude by the West are unprecedented. This has signaled to countries around the world the risk they run through dependence on the dollar. This doesn’t mean that these countries will begin cooperating as they are all subject to constraints under an international spiderweb of trade and financial relationships. For example, Marko Papic explains in “Geopolitical Alpha” how China is heavily constrained by the satisfaction of its growing middle class (the majority of its population) and fearful that they could fall into the middle-income trap (GDP per capita stalling within the $1,000-12,000 range). Their debt cycle has peaked and economically they are in a vulnerable position. Chinese leaders understand that the middle-income trap has historically brought the death of communist regimes. This is where the U.S. has leverage over China. Economic and financial sanctions targeting this demographic can prevent growth in productivity and that is what China is most afraid of. Just because China wants to partner with Russia and achieve “world domination” does not mean that they will do so since they are subject to constraints. The most important aspect of this realization is that U.S. dollar assets are not risk free: they maintain a risk of appropriation by the U.S. government. Countries with plans to act out of accordance with U.S. interests will likely start de-dollarizing before doing so. However, as much as countries would prefer to opt out of this dollar dependency, they are constrained in doing so as well. Realization #2: It’s not just the U.S. that has economic power over reserves, it’s fiat reserve nations in general. Owning fiat currencies and assets in reserves creates uncertain political risks, increasing the desirability of commodities as reserve assets. Let’s talk about commodity money vs. debt (fiat) money. In his recent paper, Zoltan Pozsar describes how the death of the dollar system has arrived. Russia is a major global commodity exporter and the sanctions have bifurcated the value of their commodities. Similar to subprime mortgages in the 2008 financial crisis, Russian commodities have become “subprime” commodities. They’ve subsequently declined materially in value as much of the world is no longer buying them. Non-Russian commodities are increasing in value as anti-Russia countries are now all purchasing them while the global supply has shrunk materially. This has created volatility in commodity markets, markets that have been (apparently) neglected by financial system risk monitors. Commodity traders often borrow money from exchanges to place their trades, with the underlying commodities as collateral. If the price of the underlying commodity moves too much in the wrong direction, the exchanges tell them that they need to pay more collateral to back their borrowed money (trader get margin-called). Now, traders take both sides in these markets (they bet the price will go up or that it will go down) and therefore, regardless of which direction the price moves, somebody is getting margin-called. This means that as price volatility is introduced to the system, traders need to pay more money to the exchange as collateral. What if the traders don’t have more money to give as collateral? Then the exchange has to cover it. What if the exchanges can’t cover it? Then we have a major credit contraction in the commodity markets on our hands as people start pulling money out of the system. This could lead to large bankruptcies within a core segment of the global financial system. In the fiat world, credit contractions are always backstopped — such as the Fed printing money to bail out the financial system in 2008. What is unique to this situation is that the “subprime” collateral of Russian commodities is what Western central banks would need to step in and buy — but they can’t because their governments are the ones who prevented buying it in the first place. So, who is going to buy it? China. China could print money and effectively bail out the Russian commodity market. If so, China would strengthen its balance sheet with commodities which would strengthen its monetary position as a store of value, all else equal. The Chinese renminbi (also called the “yuan”) would also begin spreading more widely as a global medium of exchange as countries that want to participate in this discounted commodity trade utilize the yuan in doing so. People are referring to this as the growth of the “petroyuan” or “euroyuan” (like the petrodollar and eurodollar, just the yuan). China is also in discussions with Saudi Arabia to denominate oil sales in the yuan. As China is the largest importer of Saudi oil, it makes sense that the Saudis would consider denominating trade in its currency. Further, the lack of U.S. military support for the Saudis in Yemen is all the more reason to switch to dollar alternatives. However, the more the Saudis denominate oil in contracts other than the dollar, the more they risk losing U.S. military protection and would likely become subject to the military influence of China. If the yuan spreads wide enough, it could grow as a unit of account, as trade contracts become denominated in it. This structure of incentives implies two expectations: Alternatives to the U.S. global monetary system will strengthen. Demand for commodity money will strengthen relative to debt-based fiat money. However, the renminbi is only 2.4% of global reserves and has a long way to go towards international monetary dominance. Countries are much less comfortable utilizing the yuan over the dollar for trade due to its political uncertainty risks, control over the capital account and the risk of dependence on Chinese military security. A common expectation is that either the West or the East is going to be dominant once the dust settles. What’s more likely is that the system will continue splitting and we’ll have multiple monetary systems emerge around the globe as countries attempt to de-dollarize — referred to as a multipolar system. Multipolarity will be driven by political and economic self-interest among countries and the removal of trust from the system. The point about trust is key. As countries trust fiat money less, they will choose commodity-based money that requires less trust in an institution to measure its risk. Whether or not China becomes the buyer of last resort for Russian commodities, global leaders are realizing the value of commodities as reserve assets. Commodities are real and credit is trust. Bitcoin is commodity-like money, the scarcest in the world that resides on trustless and disintermediated payment infrastructure. Prior to the invasion of Ukraine, Russia had restricted crypto assets within its economy. Since then, Russia’s position has changed drastically. In 2020, Russia gave crypto assets legal status but banned their use for payments. As recently as January 2022, Russia’s central bank proposed banning the use and mining of crypto assets, citing threats to financial stability and monetary sovereignty. This was in contrast to Russia’s ministry of finance, which had proposed regulating it rather than outright banning it. By February, Russia chose to regulate crypto assets, due to the fear that it would emerge as a black market regardless. By March, a Russian government official announced it would consider accepting bitcoin for energy exports. Russia’s change of heart can be attributed to the desire for commodity money as well as the disintermediated payment infrastructure that Bitcoin can be transferred upon — leading to the third realization. Realization #3: Crypto asset infrastructure is more efficient than traditional financial infrastructure. Because it is disintermediated, it offers a method of possession and transfer of assets that is simply not possible with intermediated traditional financial infrastructure. Donations in support of Ukraine via crypto assets (amounting to nearly $100 million as of this writing) demonstrated to the world the rapidness and efficiency of transferring value via just an internet connection, without relying on financial institutions. It further demonstrated the ability to maintain possession of assets without reliance on financial institutions. These are critical features to have as a war refugee. Emerging economies are paying attention as this is particularly valuable to them. Bitcoin has been used to donate roughly $30 million to Ukraine since the start of the war. Subsequently, a Russian official stated that it will consider accepting bitcoin, which I believe is because they are aware that bitcoin is the only digital asset that can be used in a purely trustless manner. Bitcoin’s role on both sides of the conflict demonstrated that it is apolitical while the freezing of fiat reserves demonstrated that their value is highly political. Let’s tie this all together. Right now, countries are rethinking the type of money they are using and the payment systems they are transferring it on. They will become more avoidant of fiat money (credit), as it is easily frozen, and they are realizing the disintermediated nature of digital payment infrastructure. Consider these motivations alongside the trend of an increasingly fragmented system of global currencies. We’re witnessing a shift towards commodity money among a more fragmented system of currencies moving across disintermediated payment infrastructure. Emerging economies, particularly those removed from global politics, are postured as the first movers towards this shift. While I don’t expect that the dollar will lose primacy anytime soon, its creditworthiness and military backing is being called into question. Consequently, the growth and fragmentation of non-dollar reserves and denominations opens the market of foreign exchange to consider alternatives. For their reserves, countries will trust fiat less and commodities more. There is a shift emerging towards trustless money and desire for trustless payment systems. ALTERNATIVES TO THE GLOBAL MONETARY SYSTEM We are witnessing a decline in global trust with the realization that the age of digital money is upon us. Understand that I am referring to incremental adoption of digital money and not full-scale dominance — incremental adoption will likely be the path of least resistance. I expect countries to increasingly adopt trustless commodity assets on disintermediated payment infrastructure, which is what Bitcoin provides. The primary limiting factor to this adoption of bitcoin will be its stability and liquidity. As bitcoin matures into adolescence, I expect this growth to increase rapidly. Countries that want a digital store of value will prefer bitcoin for its sound monetary properties. The countries most interested and least restrained in adopting digital assets will be among the fragmented developing world as they stand to gain the most for the least amount of political cost. While these incremental shifts will be occurring in tandem, I expect the first major shift will be towards commodity reserves. Official reserve managers prioritize safety, liquidity and yield when choosing their reserve assets. Gold is valuable in these respects and will play a dominant role. However, bitcoin’s trustless nature will not be overlooked, and countries will consider it as a reserve despite its tradeoffs with gold, to be discussed below. Let’s walk through what bitcoin adoption could look like: Source: World Gold Council; Advanced reserve economies includes the BIS, BOE, BOJ, ECB (and its national member banks), Federal Reserve, IMF and SNB. Since 2000, gold as a percentage of total reserves has been declining for advanced economies and growing for China, Russia and the other smaller economies. So, the trend towards commodity reserves is already in place. Over this same period gold reserves have fluctuated between nine and 14% of total reserves. Today, total reserves (both gold and FX reserves) amount to $16 trillion, 13% of which ($2.2 trillion) is gold reserves. We can see in the below chart that gold as a percentage of reserves has been rising since 2015, the same year the U.S. froze Iran’s reserves (this was ~$2 billion, a much smaller amount than the Russia sanctions). Source: World Gold Council. Reserves have been growing rapidly in China, Russia and smaller economies as a whole. The chart below shows that non-advanced economies have increased their total reserves by 9.4x and gold reserves by 10x, while advanced economies have increased total reserves by only 4x. China, Russia and the smaller economies command $12.5 trillion in total reserves and $700 billion of those are in gold. Source: World Gold Council. The growth and size of smaller economy reserves is important when considering bitcoin adoption among them as a reserve asset. Smaller countries will ideally want an asset that is liquid, stable, grows in value, disintermediated and trustless. The below illustrative comparison stack ranks broad reserve asset categories by these qualities on a scale of 1-5 (obviously, this is not a science but an illustrative visualization to facilitate discussion): Countries adopt different reserve assets for different reasons, which is why they diversify their holdings. This assessment focuses on the interests of emerging economies for bitcoin adoption considerations. Bitcoin is liquid, although not nearly as liquid as fiat assets and gold. Bitcoin isn’t stable. Standard reserve assets, including gold, are much more stable. Bitcoin will likely offer a much higher capital appreciation than fiat assets and gold over the long run. Bitcoin is the most disintermediated as it has a truly trustless network — this is its primary value proposition. Storing bitcoin doesn’t require trusted intermediaries and thus can be stored without the risk of appropriation — a risk for fiat assets. This point is important because gold does not maintain this quality as it is expensive to move, store and verify. Thus, bitcoin’s primary advantage over gold is its disintermediated infrastructure which allows for trustless movement and storage. With these considerations in mind, I believe the smaller emerging economies that are largely removed from political influence will spearhead the adoption of bitcoin as a reserve asset gradually. The world is growing increasingly multipolar. As the U.S. withdraws its international security and fiat continues to lose creditworthiness, emerging economies will be considering bitcoin adoption. While the reputation of the U.S. is in decline, China’s reputation is far worse. This line of reasoning will make bitcoin attractive. Its primary value-add will be its disintermediated infrastructure which enables trustless payments and storage. As bitcoin continues to mature, its attractiveness will continue to increase. If you think the sovereign fear of limiting its domestic monetary control is a strong incentive to prevent bitcoin adoption, consider what happened in Russia. If you think countries won’t adopt bitcoin for fear of losing monetary control, consider what happened in Russia. While Russia’s central bank wanted to ban bitcoin, the finance ministry opted to regulate it. After Russia was sanctioned, it has been considering accepting bitcoin for energy exports. I think Russia’s behavior shows that even totalitarian regimes will allow bitcoin adoption for the sake of international sovereignty. Countries that demand less control over their economies will be even more willing to accept this tradeoff. There are many reasons that countries would want to prevent bitcoin adoption, but on net the positive incentives of its adoption are strong enough to outweigh the negative. Let’s apply this to the shifts in global reputations and security: Reputations: political and economic stability is becoming increasingly riskier for fiat, credit-based assets. Bitcoin is a safe haven from these risks, as it is fundamentally apolitical. Bitcoin’s reputation is one of high stability, due to its immutability, which is insulated from global politics. No matter what happens, Bitcoin will keep producing blocks and its supply schedule remains the same. Bitcoin is a commodity that requires no trust in the credit of an institution. Security: because Bitcoin cannot trade military support for its usage, it will likely be hindered as a global medium of exchange for some time. Its lack of price stability further limits this form of adoption. Networks such as the Lightning Network enable transactions in fiat assets, like the dollar, over Bitcoin’s network. Although the Lightning Network is still in its infancy, I anticipate this will draw increased demand to Bitcoin as a settlement network — increasing the store of value function of its native currency. It’s important to understand that fiat assets will be used as a medium of exchange for some time due to their stability and liquidity, but the payment infrastructure of bitcoin can bridge the gap in this adoption. Hopefully, as more countries adopt the Bitcoin standard the need for military security will decline. Until then, a multipolar world of fiat assets will be utilized in exchange for military security, with a preference for disintermediated payment infrastructure. CONCLUSION Trust is diminishing among global reputations as countries implement economic and geopolitical warfare, causing a reduction in globalization and shift towards a multipolar monetary system. U.S. military withdrawal and economic sanctions have illuminated the lack of security within credit-based fiat money, which incentivizes a shift towards commodity money. Moreover, economic sanctions are forcing some countries, and signaling to others, that alternative financial infrastructure to the U.S. dollar system is necessary. These shifts in the global zeitgeist are demonstrating to the world the value of commodity money on a disintermediated settlement network. Bitcoin is postured as the primary reserve asset for adoption in this category. I expect bitcoin to benefit in a material way from this global contraction in trust. However, there are strong limitations to full-scale adoption of such a system. The dollar isn’t going away anytime soon, and significant growth and infrastructure is required for emerging economies to utilize bitcoin at scale. Adoption will be gradual, and that is a good thing. Growth in fiat assets over Bitcoin settlement infrastructure will benefit bitcoin. Enabling a permissionless money with the strongest monetary properties will spawn an era of personal freedom and wealth creation for individuals, instead of the incumbent institutions. Despite the state of the world, I’m excited for the future. Whither Bitcoin?

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Interrogating Leaky Spies: The Lie Behind Lie Detectors, and...
by grarpamp 16 Apr '22

16 Apr '22

https://brianclegg.blogspot.com/2022/04/review-tremors-in-blood.html Fascinating true crime account of the origins of the polygraph (lie detector), featuring its unlikely inventors and its role in some terrifying 1930s crimes. Emphasises this is as scientific as astrology. https://antipolygraph.org/lie-behind-the-lie-detector.pdf If you face an upcoming polygraph "test" and need to learn what to expect as quickly as possible, you may wish to proceed directly to Chapters 3 and 4 and come back to Chapters 1, 2 and 5 later. Polygraph abuse was rampant in the American workplace dur-ing the late 1970s and early 1980s. The Lie Behind the Lie Detector 5th edition by George W. Maschke and Gino J. Scalabrini AntiPolygraph.org http://www.innercitypress.com/sdnylive88schultefurman041322.html https://backdrifting.net/post/057_what_is_ddosecrets https://archive.ph/1rTBJ Twitter suspends @BarrettB for pointing out Anonymous and DDoS's connections to the intel community.

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Cryptocurrency: NymTech and Mixnet and Privacy, Consider SpyTraps
by grarpamp 16 Apr '22

16 Apr '22

In a world of spy vs spy, can cryptos that have a lot of sponsors and influencer hype be good cryptos, or traps... https://www.youtube.com/watch?v=pdwOXWmAs8Y @nymproject Listen in on the discussion on Bitcoin Privacy and Mixnet from @BitcoinMagazine with our CEO @harryhalpin and @adam3us https://blog.nymtech.net/nym-wallet-version-1-0-2-is-out-2432ef47fe0c https://www.youtube.com/watch?v=yxltn2gE_go a16z dcg nymtech.net t.me/nymchan

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Cryptocurrency: Fiat's Continual Fail Validates Gold Silver Crypto and more
by grarpamp 16 Apr '22

16 Apr '22

The Failure Of Fiat Currencies & The Implications For Gold & Silver https://www.goldmoney.com/research/goldmoney-insights/the-failure-of-fiat-c… by Alasdair Macleod This is the background text of my Keynote Speech given yesterday to European Gold Forum yesterday, 13 April. To explain why fiat currencies are failing I started by defining money. I then described the relationship between fiat money and its purchasing power, the role of bank credit, and the interests of central banks. Undoubtedly, the recent sanctions over Russia will have a catastrophic effect for financialised currencies, possibly leading to the end of fifty-one years of the dollar regime. Russia and China plan to escape this fate for the rouble and yuan by tying their currencies to commodities and production instead of collapsing financial assets. The only way for those of us in the West to protect ourselves is with physical gold, which over time is tied to commodity and energy prices. What is money? To understand why all fiat currency systems fail, we must start by understanding what money is, and how it differs from other forms of currency and credit. These are long-standing relationships which transcend our times and have their origin in Roman law and the practice of medieval merchants who evolved a lex mercatoria, which extended money’s legal status to instruments that evolved out of money, such as bills of exchange, cheques, and other securities for money. And while as circulating media, historically currencies have been almost indistinguishable from money proper, in the last century issuers of currencies split them off from money so that they have become pure fiat. At the end of the day, what constitutes money has always been determined by its users as the means of exchanging their production for consumption in an economy based on the division of labour. Money is the bridge between the two, and while over the millennia different media of exchange have come and gone, only metallic money has survived to be trusted. These are principally gold, silver, and copper. Today the term usually refers to gold, which is still in government reserves, as the only asset with no counterparty risk. Silver, which as a monetary asset declined in importance as money after Germany moved to a gold standard following the Franco-Prussian war, remains a monetary metal, though with a gold to silver ratio currently over 70 times, it is not priced as such. For historical reasons, the world’s monetary system evolved based on English law. Britain, or more accurately England and Wales, still respects Roman, or natural law with respect to money. To this day, gold sovereign coins are legal tender. Strictly speaking, metallic gold and silver are themselves credit, representing yet-to-be-spent production. But uniquely, they are no one’s liability, unlike banknotes and bank deposits. Metallic money therefore has this exceptional status, and that fact alone means that it tends not to circulate, in accordance with Gresham’s Law, so long as lesser forms of credit are available. Money shares with its currency and credit substitutes a unique position in criminal law. If a thief steals money, he can be apprehended and charged with theft along with any accomplices. But if he passes the money on to another party who receives it in good faith and is not aware that it is stolen, the original owner has no recourse against the innocent receiver, or against anyone else who subsequently comes into possession of the money. It is quite unlike any other form of property, which despite passing into innocent hands, remains the property of the original owner. In law, cryptocurrencies and the mooted central bank digital currencies are not money, money-substitutes, or currencies. Given that a previous owner of stolen bitcoin sold on to a buyer unaware it was criminally obtained can subsequently claim it, there is no clear title without full provenance. In accordance with property law, the United States has ruled that cryptocurrencies are property, reclaimable as stolen items, differentiating cryptocurrencies from money and currency proper. And we can expect similar rulings in other jurisdictions to exclude cryptocurrencies from the legal status as money, whereas the position of CBDCs in this regard has yet to be clarified. We can therefore nail to the floor any claims that bitcoin or any other cryptocurrency can possibly have the legal status required of money. Under a proper gold standard, currency in the form of banknotes in public circulation was freely exchangeable for gold coin. So long as they were freely exchangeable, banknotes took on the exchange value of gold, allowing for the credit standing of the issuer. One of the issues Sir Isaac Newton considered as Master of the Royal Mint was to what degree of backing a currency required to retain credibility as a gold substitute. He concluded that that level should be 40%, though Ludwig von Mises, the Austrian economist who was as sound a sound money economist as it was possible to be appeared to be less prescriptive on the subject. The effect of a working gold standard is to ensure that money of the people’s choice is properly represented in the monetary system. Both currency and credit become bound to its virtues. The general level of prices will fluctuate influenced by changes in the quantity of currency and credit in circulation, but the discipline of the limits of credit and currency creation brings prices back to a norm. This discipline is disliked by governments who believe that money is the responsibility of a government acting in the interests of the people, and not of the people themselves. This was expressed in Georg Knapp’s State Theory of Money, published in 1905 and became Germany’s justification for paying for armaments by inflationary means ahead of the First World War, and continuing to use currency debasement as the principal means of government finance until the paper mark collapsed in 1923. Through an evolutionary process, modern governments first eroded then took away from the public for itself the determination of what constitutes money. The removal of all discipline of the gold standard has allowed governments to inflate the quantities of currency and credit as a means of transferring the public wealth to itself. As a broad representation of this dilution, Figure 1 shows the growth of broad dollar currency since the last vestige of a gold standard under the Bretton Woods Agreement was suspended by President Nixon in August 1971. >From that date, currency and bank credit have increased from $685 billion to $21.84 trillion, that is thirty-two times. And this excludes an unknown increase in the quantity of dollars not in the US financial system, commonly referred to as Eurodollars, which perhaps account for several trillion more. Gold priced in fiat dollars has risen from $35 when Bretton Woods was suspended, to $1970 currently. A better way of expressing this debasement of the dollar is to say that priced in gold, the dollar has lost 98.3% of its purchasing power (see Figure 4 later in this article). While it is a mistake to think of the relationship between the quantity of currency and credit in circulation and the purchasing power of the dollar as linear (as monetarists claim), not only has the rate of debasement accelerated in recent years, but it has become impossible for the destruction of purchasing power to be stopped. That would require governments reneging on mandated welfare commitments and for them to stand back from economic intervention. It would require them to accept that the economy is not the government’s business, but that of those who produce goods and services for the benefit of others. The state’s economic role would have to be minimised. This is not just a capitalistic plea. It has been confirmed as true countless times through history. Capitalistic nations always do better at creating personal wealth than socialistic ones. This is why the Berlin Wall was demolished by angry crowds, finally driven to do so by the failure of communism relative to capitalism just a stone’s throw away. The relative performance of Hong Kong compared with China when Mao Zedong was starving his masses on some sort of revolutionary whim, also showed how the same ethnicity performed under socialism compared with free markets. The relationship between fiat currency and its purchasing power One can see from the increase in the quantity of US dollar M3 currency and credit and the fall in the purchasing power measured against gold that the government’s monetary statistic does not square with the market. Part of the reason is that government statistics do not capture all the credit in an economy (only bank credit issued by licenced banks is recorded), dollars created outside the system such as Eurodollars are additional, and market prices fluctuate. Monetarists make little or no allowance for these factors, claiming that the purchasing power of a currency is inversely proportional to its quantity. While there is much truth in this statement, it is only suited for a proper gold-backed currency, when one community’s relative valuations between currency and goods are brought into line with the those of its neighbours through arbitrage, neutralising any subjectivity of valuation. The classical representation of the monetary theory of prices does not apply in conditions whereby faith in an unbacked currency is paramount in deciding its utility. A population which loses faith in its government’s currency can reject it entirely despite changes in its circulating quantity. This is what wipes out all fiat currencies eventually, ensuring that if a currency is to survive it must eventually return to a credible gold exchange standard. The weakness of a fiat currency was famously demonstrated in Europe in the 1920s when the Austrian crown and German paper mark were destroyed. Following the Second World War, the Japanese military yen suffered the same fate in Hong Kong, and Germany’s mark for a second time in the mid 1940s. More recently, the Zimbabwean dollar and Venezuelan bolivar have sunk to their value as wastepaper — and they are not the only ones. Ultimately it is the public which always determines the use value of a circulating medium. Figure 2 below, of the oil price measured in goldgrams, dollars, pounds, and euros shows that between 1950 and 1974 a gold standard even in the incomplete form that existed under the Bretton Woods Agreement coincided with price stability. It took just a few years from the ending of Bretton Woods for the consequences of the loss of a gold anchor to materialise. Until then, oil suppliers, principally Saudi Arabia and other OPEC members, had faith in the dollar and other currencies. It was only when they realised the implications of being paid in pure fiat that they insisted on compensation for currency debasement. That they were free to raise oil prices was the condition upon which the Saudis and the rest of OPEC accepted payment solely in US dollars. In the post-war years between 1950 and 1970, US broad money grew by 167%, yet the dollar price of oil was unchanged for all that time. Similar price stability was shown in other commodities, clearly demonstrating that the quantity of currency and credit in circulation was not the sole determinant of the dollar’s purchasing power. The role of bank credit While the relationship between bank credit and the sum of the quantity of currency and bank reserves varies, the larger quantity by far is the quantity of bank credit. The behaviour of the banking cohort therefore has the largest impact on the overall quantity of credit in the economy. Under the British gold standard of the nineteenth century, the fluctuations in the willingness of banks to lend resulted in periodic booms and slumps, so it is worthwhile examining this phenomenon, which has become the excuse for state intervention in financial markets and ultimately the abandonment of gold standards entirely. Banks are dealers in credit, lending at a higher rate of interest than they pay to depositors. They do not deploy their own money, except in a general balance sheet sense. A bank’s own capital is the basis upon which a bank can expand its credit. The process of credit creation is widely misunderstood but is essentially simple. If a bank agrees to lend money to a borrowing customer, the loan appears as an asset on the bank’s balance sheet. Through the process of double entry bookkeeping, this loan must immediately have a balancing entry, crediting the borrower’s current account. The customer is informed that the loan is agreed, and he can draw down the funds credited to his current account from that moment. No other bank, nor any other source of funding is involved. With merely two ledger entries the bank’s balance sheet has expanded by the amount of the loan. For a banker, the ability to create bank credit in this way is, so long as the lending is prudent, an extremely profitable business. The amount of credit outstanding can be many multiples of the bank’s own capital. So, if a bank’s ratio of balance sheet assets to equity is eight times, and the gross margin between lending and deposits is 3%, then that becomes a gross return of 24% on the bank’s own equity. The restriction on a bank’s balance sheet leverage comes from two considerations. There is lending risk itself, which will vary with economic conditions, and depositor risk, which is the depositors’ collective faith in the bank’s financial condition. Depositor risk, which can lead to depositors withdrawing their credit in the bank in favour of currency or a deposit with another bank, can in turn originate from a bank offering an interest rate below that of other banks, or alternatively depositors concerned about the soundness of the bank itself. It is the combination of lending and depositor risk that determines a banker’s view on the maximum level of profits that can be safely earned by dealing in credit. An expansion in the quantity of credit in an economy stimulates economic activity because businesses are tricked into thinking that the extra money available is due to improved trading conditions. Furthermore, the apparent improvement in trading conditions encourages bankers to increase lending even further. A virtuous cycle of lending and apparent economic improvement gets under way as the banking cohort takes its average balance sheet assets to equity ratio from, say, five to eight times, to perhaps ten or twelve. Competition for credit business then persuades banks to cut their margins to attract new business customers. Customers end up borrowing for borrowing’s sake, initiating investment projects which would not normally be profitable. Even under a gold standard lending exuberance begins to drive up prices. Businesses find that their costs begin to rise, eating into their profits. Keeping a close eye on lending risk, bankers are acutely aware of deteriorating profit prospects for their borrowers and therefore of an increasing lending risk. They then try to reduce their asset to equity ratios. As a cohort whose members are driven by the same considerations, banks begin to withdraw credit from the economy, reversing the earlier stimulus and the economy enters a slump. This is a simplistic description of a regular cycle of fluctuating bank credit, which historically varied approximately every ten years or so, but could fluctuate between seven and twelve. Figure 3 illustrates how these fluctuations were reflected in the inflation rate in nineteenth century Britain following the introduction of the sovereign gold coin until just before the First World War. Besides illustrating the regularity of the consequences of a cycle of bank credit expansion and contraction marked by the inflationary consequences, Figure 3 shows there is no correlation between the rate of price inflation and wholesale borrowing costs. In other words, modern central bank monetary policies which use interest rates to control inflation are misconstrued. The effect was known and named Gibson’s paradox by Keynes. But because there was no explanation for it in Keynesian economics, it has been ignored ever since. Believing that Gibson’s paradox could be ignored is central to central bank policies aimed at taming the cycle of price inflation. The interests of central banks Notionally, central banks’ primary interest is to intervene in the economy to promote maximum employment consistent with moderate price inflation, targeted at 2% measured by the consumer price index. It is a policy aimed at stimulating the economy but not overstimulating it. We shall return to the fallacies involved in a moment. In the second half of the nineteenth century, central bank intervention started with the Bank of England assuming for itself the role of lender of last resort in the interests of ensuring economically destabilising bank crises were prevented. Intervention in the form of buying commercial bank credit stopped there, with no further interest rate manipulation or economic intervention. The last true slump in America was in 1920-21. As it had always done in the past the government ignored it in the sense that no intervention or economic stimulus were provided, and the recovery was rapid. It was following that slump that the problems started in the form of a new federal banking system led by Benjamin Strong who firmly believed in monetary stimulation. The Roaring Twenties followed on a sea of expanding credit, which led to a stock market boom — a financial bubble. But it was little more than an exaggerated cycle of bank credit expansion, which when it ended collapsed Wall Street with stock prices falling 89% measured by the Dow Jones Industrial Index. Coupled with the boom in agricultural production exaggerated by mechanisation, the depression that followed was particularly hard on the large agricultural sector, undermining agriculture prices worldwide until the Second World War. It is a fact ignored by inflationists that first President Herbert Hoover, and then Franklin Roosevelt extended the depression to the longest on record by trying to stop it. They supported prices, which meant products went unsold. And at the very beginning, by enacting the Smoot Hawley Tariff Act they collapsed not only domestic demand but all domestic production that relied on imported raw materials and semi-manufactured products. These disastrous policies were supported by a new breed of economist epitomised by Keynes, who believed that capitalism was flawed and required government intervention. But proto-Keynesian attempts to stimulate the American economy out of the depression continually failed. As late as 1940, eleven years after the Wall Street Crash, US unemployment was still as high as 15%. What the economists in the Keynesian camp ignored was the true cause of the Wall Street crash and the subsequent depression, rooted in the credit inflation which drove the Roaring Twenties. As we saw in Figure 3, it was no more than the turning of the long-established repeating cycle of bank credit, this time fuelled additionally by Benjamin Strong’s inflationary credit expansion as Chairman of the new Fed. The cause of the depression was not private enterprise, but government intervention. It is still misread by the establishment to this day, with universities pushing Keynesianism to the exclusion of classic economics and common sense. Additionally, the statistics which have become a religion for policymakers and everyone else are corrupted by state interests. Soon after wages and pensions were indexed in 1980, government statisticians at the Bureau of Labor Statistics began working on how to reduce the impact on consumer prices. An independent estimate of US consumer inflation put it at well over 15% recently, when the official rate was 8%. Particularly egregious is the state’s insistence that a target of 2% inflation for consumer prices stimulates demand, when the transfer of wealth suffered by savers, the low paid and pensioners deprived of their inflation compensation at the hands of the BLS is glossed over. So is the benefit to the government, the banks, and their favoured borrowers from this wealth transfer. The problem we now face in this fiat money environment is not only that monetary policy has become corrupted by the state’s self-interest, but that no one in charge of it appears to understand money and credit. Technically, they may be very well qualified. But it is now over fifty years since money was suspended from the monetary system. Not only have policymakers ignored indicators such as Gibson’s paradox. Not only do they believe their own statistics. And not only do they think that debasing the currency is a good thing, but we find that monetary policy committees would have us believe that money has nothing to do with rising prices. All this is facilitated by presenting inflation as rising prices, when in fact it is declining purchasing power. Figure 4 shows how purchasing power of currencies should be read. Only now, it seems, we are aware that inflation of prices is not transient. Referring to Figure 1, the M3 broad money supply measure has almost tripled since Lehman failed, so there’s plenty of fuel driving a lower purchasing power for the dollar yet. And as discussed above, it is not just quantities of currency and credit we should be watching, but changes in consumer behaviour and whether consumers tend to dispose of currency liquidity in favour of goods. The indications are that this is likely to happen, accelerated by sanctions against Russia, and the threat that they will bring in a new currency era, undermining the dollar’s global status. Alerted to higher prices in the coming months, there is no doubt that there is an increased level of consumer stockpiling, which put another way is the disposal of personal liquidity before it buys less. So far, the phases of currency evolution have been marked by the end of the Bretton Woods Agreement in 1971. The start of the petrodollar era in 1973 led to a second phase, the financialisation of the global economy. And finally, from now the return to a commodity standard brought about by sanctions against Russia is driving prices in the Western alliance’s currencies higher, which means their purchasing power is falling anew. The faux pas over Russia With respect to the evolution of money and credit, this brings us up to date with current events. Before Russia invaded Ukraine and the Western alliance imposed sanctions on Russia, we were already seeing prices soaring, fuelled by the expansion of currency and credit in recent years. Monetary planners blamed supply chain problems and covid dislocations, both of which they believed would right themselves over time. But the extent of these price rises had already exceeded their expectations, and the sanctions against Russia have made the situation even worse. While America might feel some comfort that the security of its energy supplies is unaffected, that is not the case for Europe. In recent years Europe has been closing its fossil fuel production and Germany’s zeal to go green has even extended to decommissioning nuclear plants. It seems that going fossil-free is only within national borders, increasing reliance on imported oil, gas, and coal. In Europe’s case, the largest source of these imports by far is Russia. Russia has responded by the Russian central bank announcing that it is prepared to buy gold from domestic credit institutions, first at a fixed price or 5,000 roubles per gramme, and then when the rouble unexpectedly strengthened at a price to be agreed on a case-by-case basis. The signal is clear: the Russian central bank understands that gold plays an important role in price stability. At the same time, the Kremlin announced that it would only sell oil and gas to unfriendly nations (i.e. those imposing sanctions) in return for payments in roubles. The latter announcement was targeted primarily at EU nations and amounts to an offer at reasonable prices in roubles, or for them to bid up for supplies in euros or dollars from elsewhere. While the price of oil shot up and has since retreated by a third, natural gas prices are still close to their all-time highs. Despite the northern hemisphere emerging from spring the cost of energy seems set to continue to rise. The effect on the Eurozone economies is little short of catastrophic. While the rouble has now recovered all the fall following the sanctions announcement, the euro is becoming a disaster. The ECB still has a negative deposit rate and enormous losses on its extensive bond portfolio from rapidly rising yields. The national central banks, which are its shareholders also have losses which in nearly all cases wipes out their equity (balance sheet equity being defined as the difference between a bank’s assets and its liabilities — a difference which should always be positive). Furthermore, these central banks as the NCB’s shareholders make a recapitalisation of the whole euro system a complex event, likely to question faith in the euro system. As if that was not enough, the large commercial banks are extremely highly leveraged, averaging over 20 times with Credit Agricole about 30 times. The whole system is riddled with bad and doubtful debts, many of which are concealed within the TARGET2 cross-border settlement system. We cannot believe any banking statistics. Unlike the US, Eurozone banks have used the repo markets as a source of zero cost liquidity, driving the market size to over €10 trillion. The sheer size of this market, plus the reliance on bond investment for a significant proportion of commercial bank assets means that an increase in interest rates into positive territory risks destabilising the whole system. The ECB is sitting on interest rates to stop them rising and stands ready to buy yet more members’ government bonds to stop yields rising even more. But even Germany, which is the most conservative of the member states, faces enormous price pressures, with producer prices of industrial products officially increasing by 25.9% in the year to March, 68% for energy, and 21% for intermediate goods. There can be no doubt that markets will apply increasing pressure for substantial rises in Eurozone bond yields, made significantly worse by US sanctions policies against Russia. As an importer of commodities and raw materials Japan is similarly afflicted. Both currencies are illustrated in Figure 5. The yen appears to be in the most immediate danger with its collapse accelerating in recent weeks, but as both the Bank of Japan and the ECB continue to resist rising bond yields, their currencies will suffer even more. The Bank of Japan has been indulging in quantitative easing since 2000 and has accumulated substantial quantities of government and corporate bonds and even equities in ETFs. Already, the BOJ is in negative equity due to falling bond prices. To prevent its balance sheet from deteriorating even further, it has drawn a line in the sand: the yield on the 10-year JGB will not be permitted to rise above 0.25%. With commodity and energy prices soaring, it appears to be only a matter of time before the BOJ is forced to give way, triggering a banking crisis in its highly leveraged commercial banking sector which like the Eurozone has asset to equity ratios exceeding 20 times. It would appear therefore that the emerging order of events with respect to currency crises is the yen collapses followed in short order by the euro. The shock to the US banking system must be obvious. That the US banks are considerably less geared than their Japanese and euro system counterparts will not save them from global systemic risk contamination. Furthermore, with its large holdings of US Treasuries and agency debt, current plans to run them off simply exposes the Fed to losses, which will almost certainly require its recapitalisation. The yield on the US 10-year Treasury Bond is soaring and given the consequences of sanctions on global commodity prices, it has much further to go. The end of the financial regime for currencies >From London’s big bang in the mid-eighties, the major currencies, particularly the US dollar and sterling became increasingly financialised. It occurred at a time when production of consumer goods migrated to Asia, particularly China. The entire focus of bank lending and loan collateral moved towards financial assets and away from production. And as interest rates declined, in general terms these assets improved in value, offering greater security to lenders, and reinforcing the trend. This is now changing, with interest rates set to rise significantly, bursting a financial bubble which has been inflating for decades. While bond yields have started to rise, there is further for them to go, undermining not just the collateral position, but government finances as well. And further rises in bond yields will turn equity markets into bear markets, potentially rivalling the 1929-1932 performance of the Dow Jones Industrial Index. That being the case, the collapse already underway in the yen and the euro will begin to undermine the dollar, not on the foreign exchanges, but in terms of its purchasing power. We can be reasonably certain that the Fed’s mandate will give preference to supporting asset prices over stabilising the currency, until it is too late. China and Russia appear to be deliberately isolating themselves from this fate for their own currencies by increasing the importance of commodities. It was noticeable how China began to aggressively accumulate commodities, including grain stocks, almost immediately after the Fed cut its funds rate to zero and instituted QE at $120 billion per month in March 2020. This sent a signal that the Chinese leadership were and still are fully aware of the inflationary implications of US monetary policy. Today China has stockpiled well over half the world’s maize, rice, wheat and soybean stocks, securing basics foodstuffs for 20% of the world’s population. As a subsequent development, the war in Ukraine has ensured that global grain supplies this year will be short, and sanctions against Russia have effectively cut off her exports from the unfriendly nations. Together with fertiliser shortages for the same reasons, not only will the world’s crop yields fall below last year’s, but grain prices are sure to be bid up against the poorer nations. Russia has effectively tied the rouble to energy prices by insisting roubles are used for payment, principally by the EU. Russia’s other two large markets are China and India, from which she is accepting yuan and rupees respectively. Putting sales to India to one side, Russia is not only commoditising the rouble, but her largest trading partner not just for energy but for all her other commodity exports is China. And China is following similar monetary policies. There are good reasons for it. The Western alliance is undermining their own currencies, of that there can be no question. Financial asset values will collapse as interest rates rise. Contrastingly, not only is Russia’s trade surplus increasing, but the central bank has begun to ease interest rates and exchange controls and will continue to liberate her economy against a background of a strong currency. The era of the commodity backed currency is arriving to replace the financialised. And lastly, we should refer to Figure 2, of the price of oil in goldgrams. The link to commodity prices is gold. It is time to abandon financial assets for their supposed investment returns and take a stake in the new commoditised currencies. Gold is the link. Business of all sorts, not just mining enterprises which accumulate cash surpluses, would be well advised to question whether they should retain deposits in the banks, or alternatively, gain the protection of possessing some gold bullion vaulted independently from the banking system.

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Re: Ukraine Opens Russian Drone, Finds Canon DSLR Inside | PetaPixel
by enlight 16 Apr '22

16 Apr '22

"Punk-BatSoup-Stasi 2.0" <punks(a)tfwno.gf> wrote: | It would be so amazing if the russians used their rudimentary nukes on worthless scumbags like jim bell...and all the rest of US jewnazi cunts. I wonder if the word "JewNazi" can really be used together unless you speak on the behalf of russian government. JewNazi is nowhere mentioned in english dictionary and you using this shows you are spreading the same russian's propaganda here. you are a troll no one expect to see. kindly civilize your words before speaking, this is your last warning. Next time you shall receive a total ban from here. regards, Ministry Of State Security

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Cryptocurrency: Myth of Anonymity, Darknet Busts
by grarpamp 15 Apr '22

15 Apr '22

https://www.wired.com/story/tracers-in-the-dark-welcome-to-video-crypto-ano… Inside the Bitcoin Bust That Took Down the Web’s Biggest Child Abuse Site They thought their payments were untraceable. They couldn’t have been more wrong. The untold story of the case that shredded the myth of Bitcoin’s anonymity. An eye mischievously peeks through a Bitcoin B next to the words THE CRYPTO TRAP. ILLUSTRATION: MIKE McQUADE Content Warning: The story told here includes references to suicide and child abuse, though the abuse is not graphically described. Early one fall morning in 2017, in a middle-class suburb on the outskirts of Atlanta, Chris Janczewski stood alone inside the doorway of a home he had not been invited to enter. Moments earlier, armed Homeland Security Investigations agents in ballistic vests had taken up positions around the tidy two-story brick house, banged on the front door, and when a member of the family living there opened it, swarmed inside. Janczewski, an Internal Revenue Service criminal investigator, followed quietly behind. Now he found himself in the entryway, in the eye of a storm of activity, watching the agents search the premises and seize electronic devices. This story is excerpted from the book Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency, available November 15, 2022, from Doubleday. Buy this book at: Amazon Bookshop.org Books-A-Million Walmart Apple Books If you buy something using links in our stories, we may earn a commission. This helps support our journalism. Learn more. They separated the family, putting the father, an assistant principal at the local high school and the target of their investigation, in one room; his wife in another; the two kids into a third. An agent switched on a TV and put on Mickey Mouse Clubhouse in an attempt to distract the children from the invasion of their home and the interrogation of their parents. Janczewski had come along on this raid only as an observer, a visitor flown in from Washington, DC, to watch and advise the local Homeland Security team as it executed its warrant. But it had been Janczewski’s investigation that brought the agents here, to this average-looking house with its well-kept yard among all the average-looking houses they could have been searching, anywhere in America. He had led them there based on a strange, nascent form of evidence. Janczewski had followed the links of Bitcoin’s blockchain, pulling on that chain until it connected this ordinary home to an extraordinarily cruel place on the internet—and then connected that place to hundreds more men around the world. All complicit in the same massive network of unspeakable abuse. All now on Janczewski’s long list of targets. Over the previous few years, Janczewski, his partner Tigran Gambaryan, and a small group of investigators at a growing roster of three-letter American agencies had used this newfound technique, tracing a cryptocurrency that once seemed untraceable, to crack one criminal case after another on an unprecedented, epic scale. But those methods had never led them to a case quite like this one, in which the fate of so many people, victims and perpetrators alike, seemed to hang on the findings of this novel form of forensics. That morning’s search in the suburb near Atlanta was the first moment when those stakes became real for Janczewski. It was, as he would later put it, “a proof of concept.” >From where Janczewski was positioned at the front of the house, he could hear the Homeland Security agents speaking to the father, who responded in a broken, resigned voice. In another room, he overheard the agents questioning the man’s wife; she was answering that, yes, she’d found certain images on her husband’s computer, but he’d told her he had downloaded them by accident when he was pirating music. And in the third room he could hear the two grade-school-age children—kids about as old as Janczewski’s own—watching TV. They asked for a snack, seemingly oblivious to the tragedy unfolding for their family. Janczewski remembers the gravity of the moment hitting him: This was a high school administrator, a husband and a father of two. Whether he was guilty or innocent, the accusations this team of law enforcement agents were leveling against him—their mere presence in his home—would almost certainly ruin his life. Janczewski thought again of the investigative method that had brought them there like a digital divining rod, revealing a hidden layer of illicit connections underlying the visible world. He hoped, not for the last time, that it hadn’t led him astray. on a summer’s day in London a few months earlier, a South Africa-born tech entrepreneur named Jonathan Levin had walked into the unassuming brick headquarters of the UK’s National Crime Agency—Britain’s equivalent to the FBI—on the south bank of the Thames. A friendly agent led him to the building’s second floor and through the office kitchen, offering him a cup of tea. Levin accepted, as he always did on visits to the NCA, leaving the tea bag in. The two men sat, cups in hand, at the agent’s desk in a collection of cubicles. Levin was there on a routine customer visit, to learn how the agent and his colleagues were using the software built by the company he’d cofounded. That company, Chainalysis, was the world’s first tech firm to focus solely on a task that a few years earlier might have sounded like an oxymoron: tracing cryptocurrency. The NCA was one of dozens of law enforcement agencies around the world that had learned to use Chainalysis’ software to turn the digital underworld’s preferred means of exchange into its Achilles’ heel. When Bitcoin first appeared in 2008, one fundamental promise of the cryptocurrency was that it revealed only which coins reside at which Bitcoin addresses—long, unique strings of letters and numbers—without any identifying information about those coins’ owners. This layer of obfuscation created the impression among many early adherents that Bitcoin might be the fully anonymous internet cash long awaited by libertarian cypherpunks and crypto-anarchists: a new financial netherworld where digital briefcases full of unmarked bills could change hands across the globe in an instant. monero The DOJ’s $3.6B Seizure Shows How Hard It Is to Launder Crypto Andy Greenberg lazarus North Korean Hackers Stole Nearly $400M in Crypto Last Year Andy Greenberg cryptocurrency The Feds Seized $1 Billion in Stolen Silk Road Bitcoins Andy Greenberg Satoshi Nakamoto, the mysterious inventor of Bitcoin, had gone so far as to write that “participants can be anonymous” in an early email describing the cryptocurrency. And thousands of users of dark-web black markets like Silk Road had embraced Bitcoin as their central payment mechanism. But the counterintuitive truth about Bitcoin, the one upon which Chainalysis had built its business, was this: Every Bitcoin payment is captured in its blockchain, a permanent, unchangeable, and entirely public record of every transaction in the Bitcoin network. The blockchain ensures that coins can’t be forged or spent more than once. But it does so by making everyone in the Bitcoin economy a witness to every transaction. Every criminal payment is, in some sense, a smoking gun in broad daylight. Within a few years of Bitcoin’s arrival, academic security researchers—and then companies like Chainalysis—began to tear gaping holes in the masks separating Bitcoin users’ addresses and their real-world identities. They could follow bitcoins on the blockchain as they moved from address to address until they reached one that could be tied to a known identity. In some cases, an investigator could learn someone’s Bitcoin addresses by transacting with them, the way an undercover narcotics agent might conduct a buy-and-bust. In other cases, they could trace a target’s coins to an account at a cryptocurrency exchange where financial regulations required users to prove their identity. A quick subpoena to the exchange from one of Chainalysis’ customers in law enforcement was then enough to strip away any illusion of Bitcoin’s anonymity. Chainalysis had combined these techniques for de-anonymizing Bitcoin users with methods that allowed it to “cluster” addresses, showing that anywhere from dozens to millions of addresses sometimes belonged to a single person or organization. When coins from two or more addresses were spent in a single transaction, for instance, it revealed that whoever created that “multi-input” transaction must have control of both spender addresses, allowing Chainalysis to lump them into a single identity. In other cases, Chainalysis and its users could follow a “peel chain”—a process analogous to tracking a single wad of cash as a user repeatedly pulled it out, peeled off a few bills, and put it back in a different pocket. In those peel chains, bitcoins would be moved out of one address as a fraction was paid to a recipient and then the remainder returned to the spender at a “change” address. Distinguishing those change addresses could allow an investigator to follow a sum of money as it hopped from one address to the next, charting its path through the noise of Bitcoin’s blockchain. Thanks to tricks like these, Bitcoin had turned out to be practically the opposite of untraceable: a kind of honeypot for crypto criminals that had, for years, dutifully and unerasably recorded evidence of their dirty deals. By 2017, agencies like the FBI, the Drug Enforcement Agency, and the IRS’s Criminal Investigation division (or IRS-CI) had traced Bitcoin transactions to carry out one investigative coup after another, very often with the help of Chainalysis. The cases had started small and then gained a furious momentum. Investigators had traced the transactions of two corrupt federal agents to show that, before the 2013 takedown of Silk Road, one had stolen bitcoins from that dark-web market and another had sold law enforcement intel to its creator, Ross Ulbricht. Next they tracked down half a billion dollars of bitcoins stolen from the Mt. Gox exchange and showed that the proceeds had been laundered by the Russian administrator of another crypto exchange, BTC-e, eventually locating the exchange’s servers in New Jersey. And finally, they followed bitcoin trails to nail down the identity of the founder of AlphaBay, a dark-web market that had grown to 10 times the size of Silk Road. (In fact, even as Levin was sitting in London talking to the NCA agent, a coalition of half a dozen law enforcement agencies was converging in Bangkok to arrest AlphaBay’s creator.) Levin was, as always, on the lookout for Chainalysis’ next big investigation. After running through a few open cases with him, the NCA agent mentioned an ominous site on the dark web that had recently come onto the agency’s radar. It was called Welcome to Video. He was taken aback by what he saw: An entire network of criminal payments, all intended to be secret, was laid bare before him. The NCA had stumbled across the site in the midst of a horrific case involving an offender named Matthew Falder. An academic based in Manchester, England, Falder would pose as a female artist and solicit nude photos from strangers on the internet, then threaten to share those images with family or friends unless the victims recorded themselves carrying out increasingly demeaning and depraved acts. Ultimately he’d force his victims to commit self-harm and even sexually abuse others on camera. By the time he was arrested, he had targeted 50 people, at least three of whom had attempted suicide. On Falder’s computers, the NCA had found he was a registered user of Welcome to Video, a criminal enterprise that, by its sheer scale, put even Falder’s atrocities in the shade. This evidentiary lead had then wended its way from the NCA’s child exploitation investigations team to the computer crime team, including the cryptocurrency-focused agent at whose desk Levin now sat. Welcome to Video, it seemed, was among the rare sites that sold access to clips of child sexual abuse in exchange for bitcoin. It was clear at a glance that its library of images and videos was uncommonly large, and it was being accessed—and frequently refreshed with brand-new material—by a sprawling user base around the globe. Sometimes known as “child pornography,” the class of imagery that was trafficked on Welcome to Video has increasingly come to be called “child sexual abuse material” by child advocates and law enforcement, so as to strip away any doubt that it involves acts of violence against kids. CSAM, as it is usually abbreviated, had for years represented a massive undercurrent of the dark web, the collection of thousands of websites protected by anonymity software like Tor and I2P. Those anonymity tools, used by millions of people around the world seeking to avoid online surveillance, had also come to serve as the shadow infrastructure for an abhorrent network of abuse, which very often foiled law enforcement’s attempts to identify CSAM sites’ visitors or administrators. The NCA agent showed Levin a Bitcoin address that the agency had determined was part of Welcome to Video’s financial network. Levin suggested they load it in Chainalysis’ crypto-tracing software tool, known as Reactor. He set down his cup of tea, pulled his chair up to the agent’s laptop, and began charting out the site’s collection of addresses on the Bitcoin blockchain, representing the wallets where Welcome to Video had received payments from thousands of customers. He was taken aback by what he saw: Many of this child abuse site’s users—and, by all appearances, its administrators—had done almost nothing to obscure their cryptocurrency trails. An entire network of criminal payments, all intended to be secret, was laid bare before him. Over the years, Levin had watched as some dark-web operators wised up to certain of his firm’s crypto-tracing tricks. They would push their money through numerous intermediary addresses or “mixer” services designed to throw off investigators, or use the cryptocurrency Monero, designed to be far harder to track. But looking at the Welcome to Video cluster in the NCA office that day, Levin could immediately see that its users were far more naive. Many had simply purchased bitcoins from cryptocurrency exchanges and then sent them directly from their own wallets into Welcome to Video’s. The contents of the website’s wallets, in turn, had been liquidated at just a few exchanges—Bithumb and Coinone in South Korea, Huobi in China—where they were converted back into traditional currency. Someone seemed to be continually using large, multi-input transactions to gather up the site’s funds and then cash them out. That made it easy work for Reactor to instantly and automatically cluster thousands of addresses, determining that they all belonged to a single service—which Levin could now label in the software as Welcome to Video. What’s more, Levin could see that the constellation of exchanges surrounding and connected to that cluster likely held the data necessary to identify a broad swath of the site’s anonymous users—not simply who was cashing out bitcoins from the site, but who was buying bitcoins to put into it. The blockchain links between Welcome to Video and its customers were some of the most clearly incriminating connections that Levin had ever witnessed. These child sexual abuse consumers seemed to be wholly unprepared for the modern state of financial forensics on the blockchain. By the standards of the cat-and-mouse game Levin had played for years, Welcome to Video was like a hapless rodent that had never encountered a predator. As he sat in front of the NCA agent’s laptop, it dawned on Levin, perhaps more clearly than ever before, that he was living in a “golden age” of cryptocurrency tracing—that blockchain investigators like those at Chainalysis had gained a significant lead over those they were targeting. “We’ve created something extremely powerful, and we’re a step ahead of these types of operators,” he remembers thinking. “You’ve got a heinous crime, a terrible thing happening in the world, and in an instant our technology has broken through and revealed in very clear logic who’s behind it.” Seeing that someone was cashing out the majority of Welcome to Video’s revenues through the two exchanges in South Korea, Levin could already guess that the administrator was very likely located there. Many of the site’s users seemed to be paying the site directly from the addresses where they’d purchased the coins, on exchanges like Coinbase and Circle, based in the United States. Taking down this global child abuse network might only require getting another law enforcement agency in either the US or Korea involved, one that could demand identifying details from those exchanges. And Levin had just the agency in mind. “I have some people who would be interested,” he told his NCA host. But first, as he prepared to leave, Levin silently memorized the first five characters of the Welcome to Video address the agent had shown him. Chainalysis’ Reactor software included a feature that could autocomplete Bitcoin addresses based on their first few unique numbers or letters. Five would be enough—a single short password to unlock the living map of a global criminal conspiracy. it was evening in Thailand when Levin spoke with Chris Janczewski and Tigran Gambaryan. That night in early July 2017, the two IRS Criminal Investigation special agents were sitting in Bangkok’s Suvarnabhumi Airport, stewing over the frustration of being sidelined from the biggest dark-web market takedown in history. The IRS, by 2017, had come to possess some of the most adept cryptocurrency tracers in the US government. It was Gambaryan, in fact, who had traced the bitcoins of the two corrupt agents in the Silk Road investigations and then cracked the BTC-e money laundering case. Working with Levin, Gambaryan had even tracked down the AlphaBay server, locating it at a data center in Lithuania. Yet when Gambaryan and Janczewski had come to Bangkok for the arrest of AlphaBay’s administrator, the French-Canadian Alexandre Cazes, they had been largely excluded from the inner circle of DEA and FBI agents who ran the operation. They hadn’t been invited to the scene of Cazes’ arrest, or even to the office where other agents and prosecutors watched a video livestream of the takedown. For Gambaryan and Janczewski, the story was utterly typical. IRS-CI agents did shoe-leather detective work, carried guns, and made arrests, just like their FBI and DEA counterparts. But because of the IRS’s dowdy public image, they often found that fellow agents treated them like accountants. “Don’t audit me,” their peers from other law enforcement branches would joke when they were introduced in meetings. Most IRS-CI agents had heard the line enough times that it warranted an instant eye roll. At loose ends in Bangkok, Gambaryan and Janczewski spent much of their time idly contemplating what their next case should be, browsing through Chainalysis’ blockchain-tracing software Reactor to brainstorm ideas. Dark-web markets like AlphaBay seemed to have been reduced to a shambles by the Thailand operation, and they’d take months or even years to recover. The agents considered taking on a dark-web gambling site. But illegal online casinos hardly seemed worth their attention. On the day of their departure from Thailand, Gambaryan and Janczewski arrived at the airport only to find that their flight to DC was badly delayed. Stuck in the terminal with hours to kill, they sat half-awake and bored, literally staring at the wall. To pass the hours, Gambaryan decided to try calling Chainalysis’ Levin to discuss next cases. When Levin picked up the phone, he had news to share. He’d been looking into a website that didn’t fit among the IRS’s usual targets but that he hoped they’d be willing to check out: Welcome to Video. Child sexual exploitation cases had traditionally been the focus of the FBI and Homeland Security Investigations, certainly not the IRS. In part, that was because child sexual abuse images and videos were most often shared without money changing hands, in what investigators described as a “baseball card trading” system—which put them outside the IRS’s domain. Welcome to Video was different. It had a money trail, and it seemed to be a very clear one. Soon after they arrived back in DC, Gambaryan and Janczewski enlisted a technical analyst named Aaron Bice from a contract technology firm called Excygent, with whom they’d investigated the crypto exchange BTC-e. Together, they charted out Welcome to Video in Reactor and saw what Levin had recognized right away: how glaringly it presented itself as a target. Its entire financial anatomy was laid before them, thousands of clustered bitcoin addresses, many with barely concealed pay-ins and cash-outs at exchanges they knew they could squeeze for identifying information. It did indeed look, as Levin said, like “a slam dunk.” In short order, Janczewski brought the case to Zia Faruqui, a federal prosecutor, who was instantly sold on the idea of taking on Welcome to Video and formally opened an investigation. Gambaryan, Janczewski, Bice, and Faruqui made an unlikely team to focus on busting a massive child exploitation network. Janczewski was a tall Midwestern agent with a square jaw, like a hybrid of Sam Rockwell and Chris Evans, who wore horn-rimmed glasses when looking at a computer screen. He’d been recruited to the DC computer crimes team from the IRS office in Indiana after proving his mettle in a grab bag of counterterrorism, drug trafficking, government corruption, and tax evasion cases. Bice was an expert in data analysis and was, as Janczewski described his computer skills, “part robot.” Faruqui was a seasoned assistant US attorney with a long history of national security and money laundering prosecutions. He had an almost manic focus and intensity, spoke in a comically rapid patter, and, it seemed to his colleagues, barely slept. And then there was Gambaryan, an agent with buzzed hair and a trim beard who by 2017 had made a name for himself as the IRS’s cryptocurrency whisperer and dark-web specialist. Faruqui called him “Bitcoin Jesus.” The team began to realize that, as simple as this “slam dunk” case had seemed, it was actually overwhelming in its complexity. Yet none of the four had ever worked a child sexual exploitation case. They had no training in handling images and videos of child abuse, whose mere possession, in the hands of normal Americans, represented a felony. They had never even seen these sorts of radioactively disturbing materials, and they had no emotional or psychological preparation for the graphic nature of what they were about to be exposed to. Still, when the two agents showed Faruqui what they saw in the blockchain, the prosecutor was undeterred by their collective inexperience in the realm of child exploitation. As an attorney who focused on money-laundering cases, he saw no reason why, with the evidence of criminal payments Janczewski and Gambaryan had handed him, they couldn’t approach Welcome to Video as, fundamentally, a financial investigation. “We’re going to treat this case like we would any other,” he said. “We are going to investigate this by following the money.” Janczewski remembers the blank shock he felt at the parade of thumbnails alone, the way his brain almost refused to accept what it was seeing. Illustration: Party of One Studio when Janczewski and Gambaryan first copied the unwieldy web address, mt3plrzdiyqf6jim.onion, into their Tor browsers, they were greeted by a bare-bones site with only the words “Welcome to video” and a login prompt, a minimalism Janczewski compared to the Google homepage. They each registered a username and password and entered. Past that first greeting page, the site displayed a vast, seemingly endless collection of video titles and thumbnails, arrayed in squares of four stills per video, apparently chosen automatically from the files’ frames. Those small images were a catalog of horrors: scene after scene of children being sexually abused and raped. The agents had steeled themselves to see these images, but they were still unprepared for the reality. Janczewski remembers the blank shock he felt at the parade of thumbnails alone, the way his brain almost refused to accept what it was seeing. He found that the site had a search page with the misspelled words “Serach videos” written at the top of it. Below the search field, it listed popular keywords users had entered. The most popular was an abbreviation for “one-year-old.” The second most popular was an abbreviation for “two-year-old.” Janczewski at first thought he must have misunderstood. He had expected to see recordings of the sexual abuse of young teenagers, or perhaps preteens. But as he scrolled, he found, with mounting revulsion and sadness, that the site was heavily populated with videos of abuse of toddlers and even infants. “This is a thing, really? No,” Janczewski says, numbly recounting his reactions as he first browsed the site. “Oh, there’s this many videos on here? No. This can’t be real.” The two agents knew that, at some point, they would have to actually watch at least some of the advertised videos. But, mercifully, on their first visits to the site they couldn’t access them; to do so, they’d have to pay bitcoins to an address the site provided to each registered user, where they could purchase “points” that could then be traded for downloads. And since they weren’t undercover agents, they didn’t have the authorization to buy those points—nor were they particularly eager to. At the bottom of several pages of the site was a copyright date: March 13, 2015. Welcome to Video had already been online for more than two years. Even at a glance, it was clear that it had grown into one of the biggest repositories of child sexual abuse videos that law enforcement had ever encountered. “You cannot let a child be raped while you go and try to take down a server in South Korea.” Simply pulling the site offline couldn’t be their first priority. As Janczewski and Gambaryan analyzed the site’s mechanics, they saw that users could obtain points not just by purchasing them but also by uploading videos. The more those videos were subsequently downloaded by other users, the more points they would earn. “Do not upload adult porn,” the upload page instructed, the last two words highlighted in red for emphasis. The page also warned that uploaded videos would be checked for uniqueness; only new material would be accepted—a feature that, to the agents, seemed expressly designed to encourage more abuse of children. The element of the site that Gambaryan found most unnerving of all, though, was a chat page, where users could post comments and reactions. It was filled with posts in all languages, offering a hint at the international reach of the site’s network. Much of the discussion struck Gambaryan as chillingly banal—the kind of casual commentary one might find on an ordinary YouTube channel. Gambaryan had hunted criminals of all stripes for years now, from small-time fraudsters to corrupt federal law enforcement colleagues to cybercriminal kingpins. He usually felt he could fundamentally understand his targets. Sometimes, he’d even felt sympathy for them. “I’ve known drug dealers who are probably better human beings than some white-collar tax evaders,” he mused. “I could relate to some of these criminals. Their motivation is just greed.” But now he’d entered a world where people were committing atrocities that he didn’t understand, driven by motivations that were entirely inaccessible to him. After a childhood in war-torn Armenia and post-Soviet Russia and a career delving into the criminal underworld, he considered himself to be familiar with the worst that people were capable of. Now he felt he had been naive: His first look at Welcome to Video exposed and destroyed a hidden remnant of his idealism about humanity. “It killed a little bit of me,” Gambaryan says. as soon as they had seen firsthand what Welcome to Video truly represented, Gambaryan and Janczewski understood that the case warranted an urgency that went beyond that of even a normal dark-web investigation. Every day the site spent online, it enabled more child abuse. Gambaryan and Janczewski knew their best leads still lay in the blockchain. Crucially, the site didn’t seem to have any mechanism for its customers to pull money out of their accounts. There was only an address to which they could pay for credits on the site; there didn’t even seem to be a moderator to ask for a refund. That meant that all the money they could see flowing out of the site—more than $300,000 worth of bitcoins at the time of the transactions—would almost certainly belong to the site’s administrators. Gambaryan began reaching out to his contacts in the Bitcoin community, looking for staff at exchanges who might know executives at the two Korean exchanges, Bithumb and Coinone, into which most of Welcome to Video’s money had been cashed out, as well as one US exchange that had received a small fraction of the funds. He found that the mere mention of child exploitation seemed to evaporate the cryptocurrency industry’s usual resistance to government intervention. “As libertarian as you want to be,” Gambaryan says, “this is where everybody kind of drew the line.” Even before he sent a formal legal request or subpoena, staff at all three exchanges were ready to help. They promised to get him account details for the addresses he had pulled from Reactor as soon as they could. Gambaryan couldn’t help it: Sitting in front of his computer screen in his DC cubicle, staring at the flaw he’d discovered, the agent started to laugh. In the meantime, Gambaryan continued to investigate the Welcome to Video site itself. After registering an account on the site, he thought to try a certain basic check of its security—a long shot, he figured, but it wouldn’t cost anything. He right-clicked on the page and chose “View page source” from the resulting menu. This would give him a look at the site’s raw HTML before it was rendered by the Tor Browser into a graphical web page. Looking at a massive block of code, anyway, certainly beat staring at an infinite scroll of abject human depravity. He spotted what he was looking for almost instantly: an IP address. In fact, to Gambaryan’s surprise, every thumbnail image on the site seemed to display, within the site’s HTML, the IP address of the server where it was physically hosted: 121.185.153.64. He copied those 11 digits into his computer’s command line and ran a basic traceroute function, following its path across the internet back to the location of that server. Incredibly, the results showed that this computer wasn’t obscured by Tor’s anonymizing network at all; Gambaryan was looking at the actual, unprotected address of a Welcome to Video server. Confirming Levin’s initial hunch, the site was hosted on a residential connection of an internet service provider in South Korea, outside of Seoul. Welcome to Video’s administrator seemed to have made a rookie mistake. The site itself was hosted on Tor, but the thumbnail images it assembled on its home-page appeared to be pulled from the same computer without routing the connection through Tor, perhaps in a misguided attempt to make the page load faster. Gambaryan couldn’t help it: Sitting in front of his computer screen in his DC cubicle, staring at the revealed location of a website administrator whose arrest he could feel drawing closer, the agent started to laugh. Janczewski was at a firing range in Maryland, waiting his turn in a marksmanship exercise, when he got an email from the American cryptocurrency exchange his team had subpoenaed. It contained identifying information on the suspected Welcome to Video administrator who had cashed out the site’s earnings there. The email’s attachments showed a middle-aged Korean man with an address outside of Seoul—exactly corroborating the IP address Gambaryan had found. The documents even included a photo of the man holding up his ID, apparently to prove his identity to the American exchange. For a moment, Janczewski felt as though he were looking at Welcome to Video’s administrator face-to-face. But he remembers thinking that something was off: The man in the picture had noticeably dirty hands, with soil under his fingernails. He looked more like a farm worker than the hands-on-keyboard type he’d expected to be running a site on the dark web. Over the next days, as the other exchanges fulfilled their subpoenas, the answer began to come into focus. One Korean exchange and then the other sent Gambaryan documents on the men who controlled Welcome to Video’s cash-out addresses. They named not just that one middle-aged man but also a much younger male, 21 years old, named Son Jong-woo. The two men listed the same address and shared the same family name. Were they father and son? The agents believed they were closing in on the site’s administrators. But they had come to understand that merely taking down the site or arresting its admins would hardly serve the interests of justice. The constellation of Bitcoin addresses that Welcome to Video had generated on the blockchain laid out a vast, bustling nexus of both consumers and—far more importantly—producers of child sexual abuse materials. By this point, Faruqui had brought on a team of other prosecutors to help, including Lindsay Suttenberg, an assistant US attorney with expertise in child exploitation cases. She pointed out that even taking the site offline shouldn’t necessarily be their first priority. “You cannot let a child be raped while you go and try to take down a server in South Korea,” as Faruqui summed up her argument. The team began to realize that, as simple as this “slam dunk” case had seemed at first, after the easy identification of the site’s admins, it was actually overwhelming in its complexity. They would need to follow the money not to just one or two web administrators in Korea, but also from that central point to hundreds of potential suspects—both active abusers and their complicit audience of enablers—around the entire globe. Gambaryan’s right-click discovery of the site’s IP address and the quick cooperation from crypto exchanges had been lucky breaks. The real work still lay ahead. just two weeks after Levin passed along his tip, the team of IRS-CI agents and prosecutors knew almost exactly where Welcome to Video was hosted. But they also knew they’d need help to go further. They had neither connections to the Korean National Police Agency—which had a reputation for formality and impenetrable bureaucracy—nor the resources to arrest what could be hundreds of the site’s users, an operation that would require far more personnel than the IRS could muster. Faruqui suggested they bring Homeland Security Investigations in on the case, partnering with a certain field office across the country, in Colorado Springs. He’d chosen that agency and its far-flung outpost because of a specific agent there whom he’d worked with in the past, an investigator named Thomas Tamsi. Faruqui and Tamsi had together unraveled a North Korean arms trading operation a year earlier, one that had sought to smuggle weapon components through South Korea and China. In the course of that investigation, they’d flown to Seoul to meet with the Korean National Police, where, after some introductions by an HSI liaison there, they spent an evening with Korean officers drinking and singing karaoke. Others on the team couldn’t stand to hear Suttenberg describe the videos. “They would ask me to stop talking, to put it in writing,” she remembers, “and then they’d tell me that was even worse.” At a particularly memorable point in the night, the Korean agents had been ribbing the US team for their alleged hot-dog-and-hamburger diets. One agent mentioned sannakji, a kind of small octopus that some Koreans eat not merely raw but alive and writhing. Tamsi had gamely responded that he’d try it. A few minutes later, a couple of the Korean agents had brought to the table a fist-sized, living octopus wrapped around a chopstick. Tamsi put the entire squirming cephalopod in his mouth, chewed, and swallowed, even as its tentacles wriggled between his lips and black ink dripped from his face onto the table. “It was absolutely horrible,” Tamsi says. The Koreans found this hilarious. Tamsi gained near-legendary status within certain circles of the Korean National Police, where he was thereafter referred to as “Octopus Guy.” Like most of their group, Tamsi had no experience in child exploitation cases. He had never even worked on a cryptocurrency investigation. But Faruqui insisted that to make inroads in Korea, they needed Octopus Guy. not long afterward, Tamsi and a fellow HSI agent authorized for undercover operations flew to Washington, DC. They rented a conference room in a hotel, and as Janczewski watched, the undercover agent logged on to Welcome to Video, paid a sum of bitcoins, and began downloading gigabytes of videos. The strange choice of location—a hotel rather than a government office—was designed to better mask the agent’s identity, in case Welcome to Video could somehow track its users despite Tor’s protection, and also so that, when it came time to prosecute, the DC attorney’s office would be given jurisdiction. (The HSI agent did, at least, use a Wi-Fi hot spot for his downloading, to avoid siphoning the web’s most toxic content over the hotel’s network.) As soon as the undercover agent’s work was complete, they shared the files with Janczewski, who, along with Lindsay Suttenberg, would spend the following weeks watching the videos, cataloging any clues they could find to the identities of the people involved while also saturating their minds with enough images of child abuse to fill anyone’s nightmares for the rest of their lives. Suttenberg’s years as a child exploitation prosecutor had left her somewhat desensitized; she would find that other attorneys on the team couldn’t stand to even hear her describe the contents of the videos, much less watch them. “They would ask me to stop talking, to put it in writing,” she remembers, “and then they’d tell me that was even worse.” Janczewski, as lead agent on the case, was tasked with putting together an affidavit that would be used in whatever charging document they might eventually bring to court. That meant watching dozens of videos, looking for ones that would represent the most egregious material on the site, and then writing technical descriptions of them for a jury or judge. He compares the experience to a scene from A Clockwork Orange: an unending montage from which he constantly wanted to avert his gaze but was required not to. He says watching those videos altered him, though in ways he could only describe in the abstract—ways even he’s not sure he fully understands. “There’s no going back,” Janczewski says, vaguely. “Once you know what you know, you can’t unknow it. And everything that you see in the future comes in through that prism of what you now know.” in the first weeks of fall 2017, the team investigating the Welcome to Video network began the painstaking process of tracing every possible user of the site on the blockchain and sending out hundreds of legal requests to exchanges around the world. To help analyze every tendril of Welcome to Video’s cluster of Bitcoin addresses in Reactor, they brought on a Chainalysis staffer named Aron Akbiyikian, an Armenian-American former police officer from Fresno whom Gambaryan knew from childhood and had recommended to Levin. Akbiyikian’s job was to perform what he called a “cluster audit”—squeezing every possible investigative clue out of the site’s cryptocurrency trails. That meant manually tracing payments back from one prior address to another, until he found the exchange where a Welcome to Video customer had bought their bitcoins—and the identifying information that the exchange likely possessed. Plenty of Welcome to Video’s users had made his job easy. “It was a beautiful clustering in Reactor,” Akbiyikian says. “It was just so clear.” In some cases, he would trace back chains of payments through several hops before the money arrived at an exchange. But for hundreds of users, he says, he could see wallet addresses receive money from exchanges and then put the funds directly into Welcome to Video’s cluster, transactions that had created, as Akbiyikian put it, “leads as clean as you could want.” As responses from exchanges with those users’ identity information began to pour in, the team started the process of assembling more complete profiles of their targets. They began to collect the names, faces, and photos of hundreds of men—they were almost all men—from all walks of life, everywhere in the world. Their descriptions crossed boundaries of race, age, class, and nationality. All these individuals seemed to have in common was their gender and their financial connection to a worldwide, hidden haven of child abuse. By this time, the team felt they’d pinned down the site’s Korean administrator with confidence. They’d gotten a search warrant for Son Jong-woo’s Gmail accounts and many of his exchange records, and they could see that he alone seemed to be receiving the cashed-out proceeds from the site—not his father, who increasingly seemed to the investigators like an unwitting participant, a man whose son had hijacked his identity to create crypto-currency accounts. In Son Jong-woo’s emails, they found photos of the younger man for the first time—selfies he’d taken to show friends where he’d chipped a tooth in a car accident, for instance. He was a thin, unremarkable-looking young Korean man with wide-set eyes and a Beatles-esque mop-top of black hair. * For several reasons, we’ve chosen not to identify the defendants in the Welcome to Video case by name, with the exception of the site's administrator. In some instances, at the time of this writing, a defendant’s case had not been fully adjudicated. In other cases, we left out names at the request of prosecutors, to avoid providing information that might inadvertently identify victims. We applied the same standard to the rest, to avoid singling out some offenders while others went unnamed. But as their portrait of this administrator took shape, so too did the profiles of the hundreds of other men who had used the site.* A few immediately stuck out to the investigative team: One suspect, to the dismay of Thomas Tamsi and his Homeland Security colleagues, was an HSI agent in Texas. Another, they saw with a different sort of dread, was the assistant principal of a high school in Georgia. The school administrator had posted videos of himself on social media singing duets, karaoke-style, with teenage girls from his school. The videos might otherwise have been seen as innocent. But given what they knew about the man’s Bitcoin payments, agents who had more experience with child exploitation warned Janczewski that they might reflect a form of grooming. These were men in privileged positions of power, with potential access to victims. The investigators could immediately see that, as they suspected, they would need to arrest some of Welcome to Video’s users as quickly as possible, even before they could arrange the takedown of the site. Child exploitation experts had cautioned them that some offenders had systems in place to warn others if law enforcement had arrested or compromised them—code words or dead man’s switches that sent out alerts if they were absent from their computer for a certain period of time. Still, the Welcome to Video investigation team felt they had little choice but to move quickly and take that risk. Another suspect, around the same time, came onto their radar for a different reason: He lived in Washington, DC. The man’s home, in fact, was just down the street from the US attorneys’ office, near the capital’s Gallery Place neighborhood. He happened to live in the very same apartment building that one of the prosecutors had only recently moved out of. That location, they realized, might be useful to them. Janczewski and Gambaryan could easily search the man’s home and his computers as a test case. If that proved the man was a Welcome to Video customer, they would be able to charge the entire case in DC’s judicial district, overcoming a key legal hurdle. As they dug deeper, though, they found that the man was a former congressional staffer and held a high-level job at a prestigious environmental organization. Would arresting or searching the home of a target with that sort of profile cause him to make a public outcry, sinking their case? Just as they trained their sights on this suspect in their midst, however, they found that he had gone strangely quiet on social media. Someone on the team had the idea to pull his travel records. They found that he had flown to the Philippines and was about to fly back to DC via Detroit. There were suitcases still not fully unpacked from the trip. The man had ordered a pizza the night before, and part of it remained uneaten on the table. This discovery led the agents and prosecutors to two thoughts: First, the Philippines was a notorious destination for sex tourism, often of the kind that preyed on children—the HSI office in Manila constantly had its hands full with child exploitation cases. Second, when the man flew back to the US, Customs and Border Protection could legally detain him and demand access to his devices to search for evidence—a bizarre and controversial carve-out in Americans’ constitutional protections that, in this case, might come in handy. Would their DC-based suspect sound the alarm and tear the lid off their investigation, just as it was getting started? “Yes, this all had the potential to blow up our case,” Janczewski says. “But we had to act.” in late October, Customs and Border Protection at the Detroit Metropolitan Airport stopped a man disembarking from a plane from the Philippines on his way back to Washington, DC, asking him to step aside and taking him into a secondary screening room. Despite his vehement protests, the border agents insisted on taking his computer and phone before allowing him to leave. A few days later, on October 25, the prosecutor who had lived in the same DC apartment block as the suspect saw an email from her old building’s management; she’d remained on the distribution list despite having moved out. The email noted that the parking garage ramp in an alley at the back of the tower would be closed that morning. An unnamed resident, it explained, had landed there after jumping to their death from the balcony of their apartment. The prosecutor put two and two together. The jumper was their Welcome to Video “test case.” Janczewski and Gambaryan immediately drove to the apartment tower and confirmed with management: The very first target of their investigation had just killed himself. Later that day the two IRS-CI agents returned to the scene of the man’s death with a search warrant. They rode the elevator up to the 11th floor with the building’s manager, who was deeply puzzled as to why the IRS was involved, but wordlessly unlocked the door for them. Inside they found an upscale, moderately messy apartment with high ceilings. There were suitcases still not fully unpacked from a trip. The man had ordered a pizza the night before, and part of it remained uneaten on the table. Janczewski remembers feeling the somber stillness of the man’s empty home as he imagined the desperate choice he had faced the night before. Looking down 11 floors from the balcony, the agent could see the spot in the alleyway below where the pavement had recently been hosed off. DC’s metropolitan police offered to show the agents a security cam video of the man falling to his death. They politely declined. The Customs and Border Protection office in Detroit, meanwhile, confirmed that they had searched the computer seized from the man at the airport—some of its storage was encrypted, but other parts were not—and found child exploitation videos, along with surreptitiously recorded videos of adult sex. Their decision to target the man had served its purpose: Their test case had come back positive. The prosecutors in DC paused their work briefly to meet and acknowledge the surreal shock of the man’s death—their investigation of a site hosted halfway around the world had already led someone to kill themselves, just blocks away. “It was just a reminder of how serious what we were investigating was,” Faruqui says. Still, the group agreed: They couldn’t let the suicide distract them from their work. “We’ve got to focus on the victims here,” Faruqui remembers them telling each other. “That provides clarity.” Janczewski says he would have much preferred that the man be arrested and charged. But he had, by this point, been forced to watch hour after hour of child sexual abuse videos. He had put aside his emotions early on in the case, and he had few sympathies to spare for an apparent customer of those materials. If he felt anything, he admits, it was relief, given the time that the suicide had saved him: They still had hundreds more Welcome to Video customers to pursue. Janczewski spotted something that gave him a jolt: At one point in the recording, the girl in the video had a red flannel shirt tied around her waist. Photograph: Tabitha Soren Next on their list was the high school assistant principal. Just days later, Janczewski flew down to Georgia and joined a tactical team of HSI agents as they carried out their search. For the first time, he came face-to-face with an alleged Welcome to Video client in his own home. In spite of his stoicism, this second test case affected Janczewski more than the DC target had. The tidy, well-kept brick two-story house. The parents questioned in separate rooms. The kids the same age as Janczewski’s own, watching Mickey Mouse Clubhouse. As he stood in the entryway of that house outside of Atlanta, the full toll of the investigation hit him—the fact that every name on their list was a person with human connections and, in many cases, a family. That even accusing suspects of such an unforgivable crime had an irreversible impact on their lives—that it was “a scarlet letter for someone that just cannot be undone,” as he put it. Janczewski and the HSI agents stayed at the home long enough to search it, to question the man, and to seize his devices for analysis. In addition to the evidence of the man’s payments for material on Welcome to Video, Faruqui says that the man also admitted to “inappropriately touching” students at his school. The man would later be charged with sexual assault of minors—though he would plead not guilty. For Janczewski, at least, any last doubts he had felt after his first confrontation with a suspect based on cryptocurrency tracing alone were dispelled in a matter of hours. “At the end of the day, I felt more confident,” he says. “We were correct.” The blockchain had not lied. the team was steadily working their way through their short list of high-priority Welcome to Video targets and test cases. But in December 2017, they came upon a different sort of lead—one that would scramble their priorities yet again. As they followed Welcome to Video’s financial trails, investigators had been careful to record the full contents of the site’s chat page, where users were still posting a steady stream of comments against a backdrop of spam and trolling typical of any anonymous web forum. The site seemed to be entirely unmoderated: There was not so much as an admin email or help contact visible anywhere. But Janczewski began to notice repeated messages from one account that seemed to offer the closest thing the site had to that missing help-desk contact: “Contact the admins,” the messages read, “if you want assistance in fixing error.” It included an address on Torbox, a privacy-focused Tor-based email service. Was this an actual moderator on the site? Or even the administrator himself—the owner of the site, who they now believed to be Son Jong-woo? As Janczewski tried to decipher who was behind those messages, he checked the username before the “@” in the Torbox address, a unique-looking string of six characters, to see if it matched a user on Welcome to Video. Sure enough, he found that someone with that same handle had uploaded more than a hundred videos. On the wall, Janczewski noticed a poster he’d seen in the videos. He momentarily felt as though he’d fallen through his own computer screen into the set of a horror film. Excygent’s Aaron Bice had the idea to run this Torbox email address against a database seized from BTC-e during IRS-CI’s probe of the crypto exchange, to search for clues in its treasure trove of criminal underworld user data. Bice found a match: One account on BTC-e had been registered with an email address that included that same unique string of six characters. It wasn’t the Torbox email address, but one from a different privacy-focused email service called Sigaint. Janczewski knew that Torbox and Sigaint, both dark-web services themselves, wouldn’t respond to legal requests for their users’ information. But the BTC-e data included IP addresses for 10 past logins on the exchange by the same user. In nine out of 10, the IP address was obscured with a VPN or Tor. But in one single visit to BTC-e, the user had slipped up: They had left their actual home IP address exposed. “That opened the whole door,” says Janczewski. A traceroute showed that the IP address led to a residential internet connection—not in Korea this time, but in Texas. Was there a second Welcome to Video admin, this one based in the US? Janczewski and Bice continued pulling the thread with increasing urgency, subpoenaing the user’s account information from their internet service provider. It was a Friday morning in early December, and Janczewski was drinking coffee at his desk in the IRS-CI office when he got back the results of that subpoena. He opened the email to find a name and a home address. The man was an American in his thirties who lived in a town outside of San Antonio—an unlikely collaborator for a 21-year-old Korean managing a child exploitation site from 15 time zones away. But the man’s employment, when Janczewski looked it up, was even more jarring: He was another Department of Homeland Security staffer—this time a Border Patrol agent. Janczewski quickly began to assemble public information about the agent from his social media accounts. He first found a Facebook page for the man’s wife, and later an account for the man himself, with his name written backwards to obscure it. Bice dug up his Amazon page, too, where he seemed to have left reviews on hundreds of products and put others on a “wish list”—including external storage devices that could hold terabytes of videos, hidden cameras, and other cameras designed to be snaked through small spaces, like holes drilled in a wall. Finally, with a creeping sense of dread, Janczewski saw that the Border Patrol agent’s wife had a young daughter—and that he had created a crowdfunding page on GoFundMe to raise money to legally adopt the girl as his stepdaughter. “Fuck,” Janczewski thought to himself. “Did he upload videos of the daughter?” Janczewski looked back at Welcome to Video and saw that some of the thumbnails of the videos uploaded by the person with this username showed the sexual assault of a young girl about the daughter’s age. He realized he now had a duty to separate this Border Patrol agent from his victim as swiftly as possible. For the next 10 days, Janczewski barely left his desk. He’d drive home, eat dinner quickly with his family in their small Arlington, Virginia, townhouse, then drive back to the office to work late, often calling Bice and Faruqui well into the night. “You are rarely in a situation where your time is zero-sum,” Faruqui says. “Every moment we were not working on that case, a little girl could be getting raped.” Janczewski asked their undercover HSI agent to download the videos that had been uploaded by the Texas agent, and he began the grueling process of watching them one by one. A few videos in, he spotted something that jolted the pattern-matching subroutines of his brain: At one point in the recording, the girl in the video had a red flannel shirt tied around her waist. He looked back at a photo of the girl posted to the GoFundMe page and saw it: She was wearing the same red flannel. Was this Border Patrol agent an admin on Welcome to Video? A moderator? It hardly mattered. Janczewski now believed he had found the identity of an active child rapist who lived with his victim and had been recording and sharing his crimes with thousands of other users. The Texas man had earned a place at the very top of their target list. two weeks before Christmas, on the 10th day after he’d identified the Border Patrol agent, Janczewski flew to southern Texas, along with HSI’s Thomas Tamsi and his team’s child-exploitation-focused prosecutor, Lindsay Suttenberg. On a cool, dry evening about a hundred miles from the Mexican border, Tamsi and a group of Texas State Police officers tailed their target as he drove home from work and pulled him over. Together with a group of FBI agents, they took the man to a nearby hotel for questioning. The team’s initial list of high-priority suspects was finally checked off. They could move on to their primary target: Son Jong-woo. Meanwhile Janczewski and a group of local Homeland Security investigators entered the man’s house and began to search for evidence. The two-story home was run-down and messy, Janczewski remembers—with the exception of the man’s well-organized home office on the second floor, where they found his computer. Down the hall from that office he came to the girl’s bedroom and immediately recognized it as the scene where the videos uploaded by the man had been filmed. On the wall he noticed a poster he’d seen in the recordings and momentarily felt as though he’d fallen through the screen of his own computer into the set of a horror film. The IRS agent and prosecutor had brought with them an FBI interviewer with child exploitation experience, who separated the girl from the agents searching her home and took her to a safer location. The girl eventually detailed to the interviewer the abuse she’d endured. Shortly after the search of the Border Patrol agent’s home, Janczewski arrived at the hotel room where other agents were questioning their suspect. He saw, for the first time, the target of his last week-and-a-half’s obsession. The man was tall and burly, still in his uniform, with thinning hair. He initially refused to talk about any physical abuse he might have committed, Janczewski says, but he eventually confessed to possessing, sharing, and—finally—making child sexual abuse videos. Janczewski was struck by the dispassionate, almost clinical way the man described his actions. He gave his interrogators the password to his home computer, and an agent still at the house began pulling evidence from the machine and sending it to Janczewski. It included detailed spreadsheets of every child sexual exploitation video the man had both amassed on his hard drives and, by all appearances, filmed in his own home. Another spreadsheet from the man’s computer contained a long list of other Welcome to Video users’ login credentials. Under questioning, the man explained his scheme: He would pose as an administrator in messages he posted to the site’s chat page, then ask users who took the bait to send him their usernames and passwords, which he’d use to log in to their accounts and access their videos. The Border Patrol agent had never been a Welcome to Video administrator or moderator at all, only a particularly devious visitor to the site, willing to scam his fellow users to support his own appetites. After an intense 10 days, they’d identified and arrested another alleged child abuser, even rescued his victim. But as he flew back to DC, Janczewski knew that Welcome to Video’s vastly larger network of abuse remained very much intact. And until they took the site itself down, it would continue to serve its videos—including the very ones the Border Patrol agent had uploaded from his Texas home office—to an anonymous throng of consumers just like him. In early January of 2018, the DC investigators got word from Thomas Tamsi that he and the team had arrested the other federal law enforcement customer of Welcome to Video, the HSI agent who’d shown up early in their blockchain tracing and subpoenas. Though seemingly unconnected to the Border Patrol agent case, this second agent had been based in Texas, too, less than an hour away from the home of the man they had just raided. Aside from that grim coincidence, the news of the HSI agent’s arrest also meant that the DC team’s initial list of high-priority suspects was finally checked off. They could move on to their primary target, Son Jong-woo—and the Welcome to Video server under his control. By February, that Korea-focused operation was coming together. Before the Texas arrests, Janczewski, Gambaryan, Faruqui, and Tamsi had flown to Seoul to meet the Korean National Police Agency. At a dinner set up by the local HSI attaché, the director of the KNPA himself told Tamsi—whose octopus-eating reputation preceded him—that the Americans would have the help of his “best team.” Soon they had Son Jong-woo under constant surveillance as he came and went from his home, an apartment two and a half hours south of Seoul in the province of South Chungcheong. Now, in the depths of winter on the Korean peninsula, just a week after Korea had hosted the Olympics in Pyeongchang, the American agents arrived in Seoul again. Gambaryan had to stay behind for a badly timed conference where the agency’s director had volunteered him to speak. But Janczewski and Faruqui brought with them Aaron Bice and Youli Lee, a Korean-American computer crime prosecutor on their team. By this point, too, a growing international force had assembled around the case. The UK’s National Crime Agency, which had launched its own investigation into Welcome to Video just after Levin’s London visit, sent two agents to Seoul, and the German Federal Police also joined the coalition. It turned out the Germans had been pursuing the site’s administrators independently, even before they’d learned about the IRS’s investigation, but they’d never been able to secure the cooperation of the Korean National Police. At one point Faruqui remembers a German official asking him, as they stood in the cold outside the Seoul hotel where they were staying, how the Americans had gotten the Koreans on board so quickly. “Oh, Octopus Guy,” Faruqui had explained. “You don’t have Octopus Guy. We have Octopus Guy.” for their first days in Seoul, the takedown team met repeatedly in the Korean National Police offices to talk through their plans. Their tracing of the IP address, based on Gambaryan’s fortuitous right-click, seemed to show that the site’s server was located, bizarrely, not in any web-hosting firm’s data center but in Son Jong-woo’s own apartment—the evidentiary hub of a massive child sexual abuse video network, sitting right in his home. That made things simple: They would arrest him, tear his site offline, and use that evidence to convict him. The team made a plan to grab him in his apartment early on a Monday morning. Then, on the Friday before, Janczewski got a cold. He spent much of the weekend with prosecutor Youli Lee, dazedly wandering between markets and stores in Seoul trying to pronounce gaseubgi, the Korean word for humidifier. On Sunday evening, he took a dose of what he hoped was a Korean equivalent of Nyquil—he couldn’t read the label—with the intention of getting some sleep and recovering in time to be at full strength for the arrest. That’s when the KNPA alerted the team that the plan had changed: Son had unexpectedly driven into Seoul for the weekend. Now the team following his whereabouts believed he had begun a late-night drive back to his home south of the city. If the police could drive down to Son’s home that night and stake it out, perhaps they could be there when he returned, ready to arrest him at his door. That way he couldn’t destroy evidence or—another looming concern after the death of their Washington, DC, target—commit suicide. “We had to scramble,” Janczewski says. That evening, Faruqui insisted the group put their hands in for a “Go team!” cheer in their hotel lobby. Then he and Lee went up to their rooms to go to bed. Janczewski—sick, half asleep from cold medication, and clutching a pillow from his hotel room—walked out into the pouring rain and got in a car with the HSI liaison to start the long night-drive south. The HSI agent had begged Janczewski to take the wheel of another car in the caravan, instead of an elderly Korean man on his team who was, the agent said, a notoriously bad driver. But Janczewski insisted he was far too medicated to navigate the dark, wet highways of a country 7,000 miles from his home. A few hours later, the team arrived in the parking lot of Son’s apartment—a 10-story tower with a few small buildings on one side and a vast, empty rural landscape on the other—to begin their long stakeout in the rain. It was well past midnight when they saw Son’s car finally pull into the parking garage of the complex. A group of Korean agents had been waiting there for him. One particularly imposing officer, whom the HSI agents referred to as “Smiley”—because he never smiled—led a team of plainclothes police, sidling into the elevator next to Son as he got inside. The agents silently rode the elevator up to Son’s floor with him and stepped out when he did. They arrested him, without resistance, just as he reached his front door. There were more than 250,000 videos on the server—more content by volume than in any child sexual abuse materials case in history. Throughout that arrest and the hours-long search of Son’s apartment that followed, Janczewski and the other foreigners remained stuck in their cars in the rain-drenched parking lot. Only the National Police had authorization to lay hands on Son or enter his home. When the Korean officers had the young Welcome to Video admin handcuffed, they asked him if he’d consent to letting Janczewski or any of the Americans come in as well. Son, unsurprisingly, said no. So Janczewski was limited to a tour via FaceTime of the small and unremarkable apartment that Son shared with his divorced father, the man with the soiled hands in the first photo they’d examined, as the Korean agents scoured it for evidence and seized his devices. The Korean agent showing Janczewski around eventually pointed the phone’s camera at a desktop computer on the floor of Son’s bedroom, a cheap-looking tower-style PC with its case open on one side. The computer’s guts revealed the hard drives that Son seemed to have added, one by one, as each drive had filled up with terabytes of child exploitation videos. This was the Welcome to Video server. “I was expecting some kind of glowing, ominous thing,” Janczewski remembers, “and it was just this dumpy computer. It was just so strange. This dumpy computer, that had caused so much havoc around the world, was sitting on this kid’s floor.” It was well past midnight when they saw Son’s car finally pull into the parking garage of the complex. ILLUSTRATION: Hokyoung Kim on the return trip, Janczewski learned exactly why the HSI liaison had wanted him to drive the other car. The elderly HSI staffer behind the wheel of the other vehicle in their caravan was somehow so disoriented after a sleepless night that he turned the wrong way down a highway exit ramp, narrowly avoiding a high-speed collision and terrifying his passenger, Aaron Bice. After barely averting that disaster, as the sun began to rise and the rain let up, the group pulled over at a truck stop along the highway to have a breakfast of gas-station instant ramen. Janczewski, still sick and utterly exhausted, was struck by how anticlimactic it all seemed. His team had located and extricated both the administrator and the machine at the epicenter of the malevolent global network they were investigating. He had been anticipating this moment for more than six months. But he felt no elation. There were no high fives, no celebrations. The agents got back in their cars to continue the long drive back to Seoul. the next day, after finally getting some sleep, Janczewski began to see past the dreariness of the previous night’s operation to understand just how lucky they had been. He learned from the forensic analysts who had examined Son Jong-woo’s computers that Son hadn’t encrypted his server. Everything was there: all of Welcome to Video’s content, its user database, and the wallets that had handled all of its Bitcoin transactions. The scale of the video collection, now that they could see it in its entirety, was staggering. There were more than 250,000 videos on the server, more content by volume than in any child sexual abuse materials case in history. When they later shared the collection with the National Center for Missing and Exploited Children (NCMEC), which helps to catalog, identify, and take down CSAM materials across the internet, NCMEC found that it had never seen 45 percent of the videos before. Welcome to Video’s uniqueness check and incentive system for fresh content appeared to have served its purpose, motivating countless new cases of recorded child abuse. The real prize for the investigators, however, was the site’s user information. The Korean National Police gave the US team a copy of Welcome to Video’s databases, and they got to work in a US Embassy building in Seoul, reconstructing those data collections on their own machine. Meanwhile, to avoid tipping off the site’s users to the takedown, they quickly set up a look-alike Welcome to Video homepage on their own server, using the private key pulled from the real server to take over its dark-web address. When users visited the site, it now displayed only a message that it was under construction and would be back soon with “upgrades,” complete with typos to mimic Son’s shoddy English spelling. Bice spent two days with his head down, rebuilding the site’s user data in a form they could easily query—with Janczewski and Faruqui standing behind him, pestering him to see if the system was ready yet. When Bice was finished, the US team had a full directory of the site’s pseudonymous users, listed by their Welcome to Video usernames. They could now link every Bitcoin payment they had initially mapped out on the blockchain with those usernames and look up exactly what content each of those users had uploaded or downloaded. By the time the Americans were ready to go home at the end of February, they had integrated the de-anonymized identities from their cryptocurrency exchange subpoenas into a searchable database. It mapped out the entire Welcome to Video network, complete with users’ real-world names, photos, and—for those who had paid into the site—the record of those payments and the exact child abuse videos those customers had bought access to. “You could see the whole picture,” Janczewski says. “It was like a dictionary, thesaurus, and Wikipedia all put together.” They had, arrayed before them, the fully revealed structure of Welcome to Video’s global child exploitation ring—hundreds of exquisitely detailed profiles of consumers, collectors, sharers, producers, and hands-on abusers alike. Now the final phase of the case could begin. over the weeks that followed, Thomas Tamsi’s team in Colorado began sending their Welcome to Video dossiers to HSI agents, local police, and foreign police agencies around the world. These “targeting packages” included descriptions of the suspects, the record of their transactions, any other evidence they’d assembled about them, and—given that they were being sent out to law enforcement agents who had in some cases never been involved in a cryptocurrency-related investigation—short primers on how Bitcoin and its blockchain worked. There would be no coordinated, global takedown, no attempt to create shock and awe with simultaneous arrests. The case’s defendants were far too distributed and international for that kind of synchronized operation. Instead, searches, arrests, and interviews began to roll out across the globe—prioritized by those they’d learned might be active abusers, then uploaders, and finally downloaders. Slowly, as Welcome to Video’s users were confronted, one by one, the DC team began to hear back about the results of their work—with harrowing, sometimes gratifying, often tragic outcomes. If not for cryptocurrency, and the years-long trap set by its purported untraceability, most of the 337 pedophiles arrested in the case—and their rescued victims—likely never would have been found. A Kansas IT worker—whose arrest they’d prioritized when they found that his wife ran an at-home daycare for infants and toddlers—had deleted all of his child abuse videos from his computer before the agents arrived. Prosecutors say he later confessed when remnants of the files in the computer’s storage matched their records from the Welcome to Video server. When the agents came for a twentysomething man in New York, his father blocked the door of their apartment, thinking at first that it was a break-in. But when agents explained what their warrant was for, he turned on his son and let them in. The son, it later turned out, had sexually assaulted the daughter of a family friend and surreptitiously recorded another young girl through her webcam, according to prosecutors. A repeat offender in Washington, DC, tried to commit suicide when the HSI team entered his home; he hid in his bathroom and slit his own throat. One of the arresting agents happened to have training as an Army medic. He managed to slow the bleeding and keep the man alive. They later found 450,000 hours of child abuse videos on his computers—including recordings of the girl in Texas that had been uploaded by the Border Patrol agent. As months passed, the stories continued to pile up, a mix of the sordid, sad, and appalling. An elderly man in his seventies who had uploaded more than 80 child abuse videos. A man in his early twenties with traumatic brain damage, whose medication had heightened his sexual appetites and reduced his impulse control, and who was deemed to have the same level of cognitive development as the preteens whose abuse he’d watched. A New Jersey man whose communications, when they were revealed through a search warrant, seemed to show his negotiations to purchase a child for his own sexual exploitation. Thomas Tamsi, as the lead HSI agent on the case, coordinated more Welcome to Video arrests than anyone else—more than 50, by his count—and was present for enough of them that they became a blur in which only the most jarring moments remain distinct in his mind. The mostly nude defendant he found in a basement. The suspect who told him he had been involved in the Boy Scouts and that “children had always been attracted” to him. Parents of victims who vehemently denied that a family friend could have done the things Tamsi described, and whose faces then went white as he slid printouts of redacted screenshots across the table. The cases spanned the globe, well beyond the US. Dozens of Welcome to Video users were arrested in the Czech Republic, Spain, Brazil, Ireland, France, and Canada. In England, where the entire case had started with an agent’s tip to Levin, the country’s National Crime Agency arrested one 26-year-old who had allegedly abused two children—one of whom they found naked on a bed in his home—and uploaded more than 6,000 files to the site. In another international case, a Hungarian ambassador to Peru who downloaded content from Welcome to Video was found to have more than 19,000 CSAM images on his computer. He was quietly removed from his South American post, taken to Hungary, and charged; he pleaded guilty. For the DC team, many of the international cases fell into a kind of black hole: One Saudi Arabian Welcome to Video user returned to his home country and was captured by that country’s own law enforcement. Faruqui and Janzewski say they never heard what happened to the man; he was left to the Saudis’ own justice system, which sentences some sex criminals to the Sharia-based punishments of whipping or even beheading. When agents searched the car of a Chinese national living near Seattle with a job at Amazon, they found a teddy bear, along with a map of playgrounds in the area, despite the man having no children of his own. The man subsequently fled to China and, as far as prosecutors know, was never located again. In each of the hundreds of intelligence packets that the team sent out, Chris Janczewski’s contact was listed as the number to call with any questions. Janczewski found himself explaining the blockchain and its central role in the case again and again, to HSI agents and local police officers around the US and the world, many of whom had never even heard of Bitcoin or the dark web. “You get this lead sent to you that says, ‘Here’s this website and this funny internet money,’” Janczewski says, imagining how those on the receiving end of the intelligence packets must have seen it, “and now you need to go arrest this guy because some nerd accountant says so.” In total, Janczewski traveled to six countries and spoke to more than 50 different people to help explain the case, often multiple times each—including one US prosecutor and agent team with whom he had more than 20 conversations. (“Some were a little more high maintenance, respectfully, than others,” he says.) Bice, who oversaw the reconstructed server data, says he spoke to even more agents and officers—well over a hundred, by his count. Ultimately, from the beginning of the case through the year and a half that followed the server seizure, global law enforcement would arrest no fewer than 337 people for their involvement with Welcome to Video. They also removed 23 children from sexually exploitative situations. Those 337 arrests still represented only a small fraction of Welcome to Video’s total registered users. When the US team examined their copy of the server data in Korea, they had found thousands of accounts on the site. But the vast majority of them had never paid any bitcoins into the site’s wallets. With no money to follow, the investigators’ trail usually went cold. If not for cryptocurrency, in other words, and the years-long trap set by its purported untraceability, the majority of the 337 pedophiles arrested in the Welcome to Video case—and their rescued victims—likely never would have been found. The IRS and the US attorneys’ office in DC had taken an unprecedented approach, treating a massive child sexual abuse materials case as a financial investigation, and it had succeeded. Amidst all their detective work, it had been Bitcoin’s blockchain that served as their true lodestar, leading them through a landmark case. Without crypto tracing, Faruqui argues, they would never have managed to map out and identify so many of the site’s users. “That was the only path through this darkness,” he says. “The darker the darknet gets, the way that you shine the light is following the money.” Throwing money-laundering investigators into the deep end of the internet’s CSAM cesspool, however, had taken its toll. Almost every member of the team had children of their own, and almost all of them say they became far more protective of those children as a result of their work, to the degree that their trust in the people around their family has been significantly damaged. Janczewski, who after the case moved from DC to Grand Rapids, Michigan, won’t let his children ride their bikes to school on their own, as he himself did as a child. Even seemingly innocent interactions—like another friendly parent who offers to watch his kids at the other end of a swimming pool—now trigger red alerts in his mind. Youli Lee says she won’t allow her 9- and 12-year-old children to go into public bathrooms by themselves. Nor will she allow them to play at a friend’s house unless the friend’s parents have top-secret security clearances—an admittedly arbitrary rule, but one she says ensures the parents have at least had a background check. Faruqui says the 15 or so videos he watched as part of the investigation remain “indelibly seared” into his brain and have permanently heightened his sense of the dangers the world presents to his children. He and his wife argue, he says, about his overprotective tendencies. “You always see the worst of humanity, and so you’ve lost perspective,” he quotes his wife telling him. “And I say, ‘You lack perspective, because you don’t know what’s out there.’” Gambaryan’s wife Yuki says the Welcome to Video case was the only time her hard-shelled, Soviet-born husband ever discussed a case with her and confessed that it had gotten to him—that he was struggling with it emotionally. Gambaryan says that it was, in particular, the sheer breadth of the cross-section of society that participated in the site’s abuse that still haunts him. “I saw that everybody’s capable of this: doctors, principals, law enforcement,” he reflected. “Whatever you want to call it, evil, or whatever it is: It’s in everybody—or it can be in anybody.” in early July of 2020, Son Jong-woo walked out of a Seoul penitentiary wearing a black long-sleeve T-shirt and carrying a green plastic bag of his belongings. He had spent, due to Korea’s lenient laws on child sexual abuse, just 18 months in prison. US prosecutors, including Faruqui, had argued that he should be extradited to the United States to face charges in the American justice system, but Korea had denied their request. Welcome to Video’s convicted creator and administrator was free. The DC-based team that worked the Welcome to Video case remains deeply dissatisfied with Son’s mystifyingly light sentence for running, by some measures, the biggest child sexual abuse materials website in history. But Janczewski says he’s comforted by the outcry in Korean society over the case. The country’s social media exploded in anger over Son’s quick release. More than 400,000 people signed a petition to prevent the judge in the case from being considered for a seat on the country’s supreme court. One Korean lawmaker put forward a bill to allow appeals to extradition judgments, and the country’s National Assembly introduced new legislation to strengthen punishments for sexual abuse online and downloading child sexual abuse materials. In the US, meanwhile, the ripple effects of the case continued for years. Janczewski, Bice, and Suttenberg say that they still get calls from law enforcement officials following the leads they assembled. On the computer of the DC investigators’ very first test case—the former congressional staffer who committed suicide—they found evidence in a cryptocurrency exchange account that he’d also paid into a different source of dark-web sexual materials. They followed those payments to a site called Dark Scandals, which turned out to be a smaller but equally disturbing dark-web repository of sexual abuse recordings. Janczewski, Gambaryan, and the same group of prosecutors pursued that Dark Scandals case in parallel with the tail end of the Welcome to Video investigation, similarly following blockchain leads to trace the site’s cash-outs. With the help of the Dutch national police, they arrested the site’s alleged administrator in the Netherlands, a man named Michael Rahim Mohammad, who went by the online handle “Mr. Dark.” He faces criminal charges in the US, and his case is ongoing. >From the perspective of Welcome to Video’s money-laundering-focused agents and prosecutors, perhaps the most interesting of the ripple effects of the case stemmed from the fate of the HSI agent they had arrested in Texas, just before their trip to carry out the site takedown in Korea. The Texan man had taken a rare approach to his legal defense: He’d pleaded guilty to possession of child sexual abuse materials, but he also appealed his conviction. He argued that his case should be thrown out because IRS agents had identified him by tracking his Bitcoin payments—without a warrant—which he claimed violated his Fourth Amendment right to privacy and represented an unconstitutional “search.” A panel of appellate judges considered the argument—and rejected it. In a nine-page opinion, they explained their ruling, setting down a precedent that spelled out in glaring terms exactly how far from private they determined Bitcoin’s transactions to be. “Every Bitcoin user has access to the public Bitcoin blockchain and can see every Bitcoin address and its respective transfers. Due to this publicity, it is possible to determine the identities of Bitcoin address owners by analyzing the blockchain,” the ruling read. “There is no intrusion into a constitutionally protected area because there is no constitutional privacy interest in the information on the blockchain.” A search only requires a warrant, the American judicial system has long held, if that search enters into a domain where the defendant has a “reasonable expectation of privacy.” The judges’ ruling argued that no such expectation should have existed here: The HSI agent wasn’t caught in the Welcome to Video dragnet because IRS agents had violated his privacy. He was caught, the judges concluded, because he had mistakenly believed his Bitcoin transactions to have ever been private in the first place. Levin thought again of the blockchain’s bounty of evidence: the countless cases left to crack, the millions of cryptocurrency transactions eternally preserved in amber, and the golden age of criminal forensics it presented to any investigator ready to excavate them. Photograph: Jooeun Bae chris Janczewski says the full impact of the Welcome to Video case didn’t hit him until the day in October 2019 when it was finally announced in public and a seizure notice was posted to the site’s home-page. That morning, Janczewski received an unexpected call from the IRS commissioner himself, Charles Rettig. Rettig told Janczewski that the case was “this generation’s Al Capone”—perhaps the highest compliment that can be bestowed within IRS-CI, where the story of Capone’s takedown for tax evasion holds almost mythical status. That same day, the Justice Department held a press conference to announce the investigation’s results. US attorney Jessie Liu gave a speech to a crowd of reporters about what the case represented—how following the money had allowed agents to score a victory against “one of the worst forms of evil imaginable.” Chainalysis’ Jonathan Levin sat in the audience. Afterward, an IRS official named Greg Monahan, who had supervised Gambaryan and Janczewski, came over to thank Levin for his role in the case. It had all started, after all, with Levin’s tip to two bored IRS agents in the Bangkok airport. Monahan told Levin that it was the most important investigation of his career, that he could now retire knowing he had worked on something truly worthwhile. Levin shook the IRS-CI supervisor’s hand. Neither he nor Monahan could know, at that time, of the cases still to come: that IRS-CI and Chainalysis would together go on to disrupt North Korean hackers, terrorism financing campaigns, and two of the largest bitcoin-laundering services in the world. Or that they would track down close to 70,000 bitcoins stolen from the Silk Road and another 120,000 stolen from the exchange Bitfinex, totaling to a value of more than $7.5 billion at today’s exchange rates, the largest financial seizures—crypto or otherwise—in the Department of Justice’s history. But as he answered Monahan, Levin thought again of the blockchain’s bounty of evidence: the countless cases left to crack, the millions of cryptocurrency transactions eternally preserved in amber, and the golden age of criminal forensics it presented to any investigator ready to excavate them. “There’s so much more to do,” Levin said. “We’re just getting started.”

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USDP
by Gunnar Larson 15 Apr '22

15 Apr '22

Hello: Does anyone know what USDP means? Reason, Peter know what DP means? Or, I heard they DP in Florida too. Peter loves Florida, truth. Whatever the case may be, as a gay man myself, DP is not hard to piece together. Why USDP, Peter? I aim to take USDP away from Paxos. With the Moscow Exchange matter, USDP is not cute ... Unacceptable. Peter, how could you? Palintir Gotham may be next, Peter. Gunnar

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NATO :
by zeynepaydogan 15 Apr '22

15 Apr '22

https://twitter.com/cryptome_org/status/1515029885147881476?s=21&t=fh0gHZSp… The CIA accuses others of that which they themselves are doing.

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A new Arm-based CPU with 128 cores will send a shiver down spines at Intel and AMD
by jim bell 15 Apr '22

15 Apr '22

A new Arm-based CPU with 128 cores will send a shiver down spines at Intel and AMD https://technohoop.com/a-new-arm-based-cpu-with-128-cores-will-mail-a-shive… "April 14, 2022 by Krihar "Chinese bare metallic and server web hosting enterprise Alibaba Cloud is preparing to demo a new occasion form driven by tailor made Arm-based silicon. "The new Yitian 710 server processor, initial unveiled in Oct, will underpin Elastic Compute Service (ECS) scenarios powered by a varying amount of vCPUs, just about every of which will be tied to a physical main. "Underneath the preview program, which will past only two months and assist just 100 customers, a single configuration will be available, with 4 vCPUs, 16GB memory and 3Gbit/sec network bandwidth.

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Batshit-crazies, Aaron Maté and Max Blumenthal, are horseshoe left.
by professor rat 15 Apr '22

15 Apr '22

If a leftie is turned, is he/she a leftie anymore? Even of the horseshoe variety? Perhaps such a person has just become a RWNJ. https://www.emptywheel.net/2022/04/15/matryoshka-doll-the-aleksandr-babakov… RWNJ = Rightwing Nutjob. Like " Batshit Crazy ".

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