Tag Archives: Crime & Justice

Binance founder Changpeng Zhao steps down as CEO, will plead guilty to federal charges

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Binance CEO Changpeng Zhao is set to plead guilty to federal money laundering charges and step down from his position at the company he founded. Zhao and the cryptocurrency exchange have reached a plea deal with the government, which conducted a multi-year investigation into the company, CNBC reports. As part of the settlement, Binance will forfeit $2.5 billion and pay a $1.8 billion fine. Zhao is slated to personally pay $50 million.

Zhao will be prohibited from having any involvement with Binance for three years. As part of the plea deal, Zhao will plead guilty later on Tuesday to violating and causing a financial institution to violate the Bank Secrecy Act, according to Reuters.

Binance, Zhao and others were accused of failing to institute an effective anti-money laundering program. According to the Justice Department, they willfully violated economic sanctions “in a deliberate and calculated effort to profit from the US market without implementing controls required by US law." Court documents state that the lack of anti-money laundering measures led to Binance facilitating almost $900 million in financial transactions in violation of sanctions against Iran between 2018 and 2022.

In a statement, Zhao confirmed he is stepping down as CEO, with the company's former global head of regional markets Richard Teng taking over the top job. "Today, I stepped down as CEO of Binance," Zhao wrote on X. "Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself." 

Zhao now plans to take a break before perhaps getting more involved in investing. However, "I can’t see myself being a CEO driving a startup again. I am content being an one-shot (lucky) entrepreneur."

The settlement resolves criminal charges related to breaching sanctions regulations, conspiracy and conducting an unlicensed money transmitter business. Meanwhile, former compliance chief Samuel Lim will reportedly face charges as part of the deal.

This is a major settlement between the company and agencies such as the Commodity Futures Trading Commission (CFTC) and the Treasury Department. The CFTC charged Binance, Zhao and Lim with violating its rules, as well as the Commodity Exchange Act, earlier this year.

“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” Treasury Secretary Janet Yellen said in a statement. “Today’s historic penalties and monitorship to ensure compliance with US law and regulations mark a milestone for the virtual currency industry. Any institution, wherever located, that wants to reap the benefits of the US financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime, or face the consequences.”

Binance will remain in operation, albeit under stricter rules. It will need to ensure it abides by anti-money laundering regulations by beefing up its compliance program. The company will also have to appoint an independent compliance monitor.

In June, the Securities and Exchange Commission sued Binance and Zhao, alleging that they helped US traders bypass restrictions and violated securities laws by, among other things, mishandling funds. The SEC also claimed that (in similar allegations to those laid against rival exchange FTX) Binance commingled billions of dollars of customer money with the company's own funds. The SEC charges were not resolved in this settlement.

This article originally appeared on Engadget at https://www.engadget.com/binance-founder-changpeng-zhao-steps-down-as-ceo-will-plead-guilty-to-federal-charges-210627469.html?src=rss

US Senator calls for the public release of AT&T ‘Hemisphere’ surveillance records

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US Senator Ron Wyden wants the public to know about the details surrounding the long-running Hemisphere phone surveillance program. Wyden has written US Attorney General Merrick Garland a letter (PDF), asking him to release additional information about the project that apparently gives law enforcement agencies access to trillions of domestic phone records. In addition, he said that federal, state, local and Tribal law enforcement agencies have the ability to request "often-warrantless searches" from the project's phone records that AT&T has been collecting since 1987. 

The Hemisphere project first came to light in 2013 when The New York Times reported that the White House Office of National Drug Control Policy (ONDCP) was paying AT&T to mine and keep records of its customers' phone calls. Four billion new records are getting added to its database every day, and a federal or state law enforcement agency can request a query with a subpoena that they can issue themselves. Any law enforcement officer can send in a request to a single AT&T analyst based in Atlanta, Georgia, Wyden's letter says, even if they're seeking information that's not related to any drug case. And apparently, they can use Hemisphere not just to identify a specific number, but to identify the target's alternate numbers, to obtain location data and to look up the phone records of everyone who's been in communication with the target. 

The project has been defunded and refunded by the government several times over the past decade and was even, at one point, receiving federal funding under the name "Data Analytical Services (DAS)." Usually, projects funded by federal agencies would be subject to a mandatory Privacy Impact Assessment conducted by the Department of Justice, which means their records would be made public. 

However, Hemisphere's funding passes through a middleman, so it's not required to go through mandatory assessment. To be specific, ONDCP funds the program through the Houston High Intensity Drug Trafficking Area, which is a regional funding organization that distributes federal anti-drug law grants and is governed by a board made up of federal, state and local law enforcement officials. The DOJ had provided Wyden's office with "dozens of pages of material" related to the project in 2019, but they had been labeled "Law Enforcement Sensitive" and cannot be released to the public. 

"I have serious concerns about the legality of this surveillance program, and the materials provided by the DOJ contain troubling information that would justifiably outrage many Americans and other members of Congress," Wyden wrote in his letter. "While I have long defended the government’s need to protect classified sources and methods, this surveillance program is not classified and its existence has already been acknowledged by the DOJ in federal court. The public interest in an informed debate about government surveillance far outweighs the need to keep this information secret."

This article originally appeared on Engadget at https://www.engadget.com/us-senator-calls-for-the-public-release-of-att-hemisphere-surveillance-records-083627787.html?src=rss

Omegle shuts down after 14 years of random chats

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Omegle, a chat service that pairs users with a random person so they can talk via text or video, is shutting down. Leif K-Brooks, who launched the service when he was 18 years old, announced its closure and talked about its humble beginnings, as well as how it grew organically because "meeting new people [is] a basic human need." While he didn't delve into the specific reasons for Omegle's shutdown, he admitted that "some people misused [the service], including to commit unspeakably heinous crimes."

Critics have raised concerns about the website's safety over the past years, with some even calling it a "magnet for pedophiles." In 2021, an American woman sued the website for pairing her with a person who coerced her into sending explicit images for three years, starting when she was just 11 years old. Her legal team said that the way the platform works allows it to become a "hunting ground for predators." Last year, two men in the US were sentenced to federal prison for exploiting children they met on apps, including Omegle, forcing them to perform sexual acts and to send them explicit photos and videos. A BBC investigation also revealed a rise in cases of users exposing themselves on Omegle chat. These users included minors, because while the website is technically meant for use by people 18 and older, it has no age verification in place. 

In his farewell note, K-Brooks said he worked with law enforcement agencies, as well as "the National Center for Missing and Exploited Children, to help put evildoers in prison where they belong." His website, he said proactively collected evidence against these people and tipped authorities to put them in jail. However, he said the fight against crime is "a never-ending battle" and that the "world has become more ornery" in recent years. He also said that there's been "a constant barrage of attacks on communication services... based on the behavior of a malicious subset of users."

In the end, he found the "existing stress and expense of operating Omegle, and fighting its misuse" to no longer be sustainable, both financially and psychologically. "Frankly, I don’t want to have a heart attack in my 30s," he added. 

This article originally appeared on Engadget at https://www.engadget.com/omegle-shuts-down-after-14-years-of-random-chats-125007355.html?src=rss

FTX founder Sam Bankman-Fried found guilty of fraud, faces up to 110 years in prison

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A federal jury has found FTX founder Sam Bankman-Fried guilty on all seven counts of fraud and conspiracy, which he was charged with following the downfall of his cryptocurrency exchange. According to The New York Times, he faces a maximum sentence of 110 years in federal prison. SBF, as he's now infamously known, was arrested in the Bahamas back in December 2022 after the Department of Justice took a close look at his role in the rapid collapse of FTX. The agency examined whether he transferred hundreds of millions of dollars when the exchange filed for bankruptcy. (The company claimed it was hacked after around $600 million disappeared from its funds.) The DoJ also investigated whether FTX broke the law when it moved funds to its sister company, Alameda Research.

During SBF's trial, which took place over the past month, prosecutors argued that he used FTX funds to keep Alameda Research running. The fallen entrepreneur also founded the cryptocurrency hedge fund, which was ran by his girlfriend Caroline Ellison, who was aware that he used FTX customers' money to help Alameda meet its liabilities. Bankman-Fried previously denied that he deliberately misused FTX's funds. 

The Times says his lawyers tried to portray him as a math nerd who had to grapple with "forces largely outside of his control," but the jury clearly disagreed after the prosecution called Ellison and three of Bankman-Fried's former top advisers to the witness stand. Ellison and all of those advisers had pleaded guilty, with the Alameda Research chief admitting that she committed fraud at Bankman-Fried's direction. The FTX founder himself took the stand and said that he "deeply regret not taking a deeper look into" the $8 billion his hedge fund had borrowed from the cryptocurrency exchange. 

Bankman-Fried was charged with committing wire fraud against FTX customers; wire fraud on Alameda Research lenders; conspiracy to commit wire fraud against both; conspiracy to commit securities and commodities fraud on FTX customers; as well as conspiracy to commit money laundering. He is scheduled to be sentenced on March 28, 2024 by US District Judge Lewis A. Kaplan, who also presided over the FTX trial. 

This article originally appeared on Engadget at https://www.engadget.com/ftx-founder-sam-bankman-fried-found-guilty-on-seven-charges-of-fraud-and-conspiracy-012316105.html?src=rss

Fugees rapper Pras accuses his lawyer of using AI in closing arguments

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Rapper “Pras” Michel, one-third of the legendary hip-hop group The Fugees, accused his lawyer from a recent federal criminal case of using AI in his closing arguments. Ars Technica reports that the “Ghetto Supastar” artist claims his one-time attorney, David Kenner, used an AI program with which the lawyer potentially had a financial interest. Pras, whose legal name is Prakazrel Samuel Michel, was found guilty in April of 10 counts of conspiring and acting as an unregistered foreign government agent and faces up to 20 years in prison. The rapper is seeking a new trial.

Pras’ motion for a new trial says Kenner “used an experimental artificial intelligence (AI) program to draft the closing argument, ignoring the best arguments and conflating the charged schemes, and he then publicly boasted that the AI program ‘turned hours or days of legal work into seconds.’” That quote was pulled from a promotional article for EyeLevel.AI, “litigation assistance technology” that lists an entity called CaseFile Connect as a launch partner. The motion says CaseFile Connect’s principal address is the same as Kenner’s law firm.

“It is now apparent that Kenner and his co-counsel appear to have had an undisclosed financial stake in the AI program, and they experimented with it during Michel’s trial so they could issue a press release afterward promoting the program—a clear conflict of interest,” Pras’ motion alleges.

WASHINGTON, DC - MARCH 31: David Kenner, the lawyer for Pras Michel, a member of the 1990's hip-hop group the Fugees, arrives at U.S. District Court on March 31, 2023 in Washington, DC. Michel is on trial for his alleged participation in a campaign finance conspiracy. (Photo by Kevin Dietsch/Getty Images)
Attorney David Kenner
Kevin Dietsch via Getty Images

The Fugee claims Kenner’s use of the AI tool led him to make embarrassing musical misattributions in his closing arguments. It accuses the lawyer of attributing the lyrics “Every single day, every time I pray, I will be missing you” to Pras’ group, The Fugees. (That line was from Puff Daddy and Faith Evans’s 1997 Biggie Smalls tribute “I’ll Be Missing You.”) The motion also alleges Kenner credited Michel’s 1998 solo hit “Ghetto Supastar (That Is What You Are)” to The Fugees.

In addition to the AI accusations, the motion alleges that Kenner was “ineffective” and that his actions “severely prejudiced the defense.” It says the attorney “failed to familiarize himself with the charged statutes, causing him to overlook critical weaknesses in the Government’s case.” In addition, it accuses Kenner of failing to understand the facts or allegations while outsourcing trial prep and strategy to contract attorneys at a friend’s e-discovery company (among other allegations).

Pras was found guilty in April of funneling money from Malaysian financier Low Taek Jho to Barack Obama's 2012 reelection campaign. Prosecutors insisted Pras donated the money for Low, while the rapper argued he was only trying to help the businessman take a photo with Obama. Pras then allegedly tried to quash a DOJ investigation and influence an extradition case.

If Pras’ complaint sounds familiar, it parallels the “ChatGPT lawyer” Steven Schwartz, who cited fictional cases as an erroneous precedent in a legal document. Schwartz, his associate Peter LoDuca and their law firm Levidow, Levidow and Oberman were fined $5,000 for having “abandoned their responsibilities” in the case. Schwartz claimed he used the chatbot to “supplement” his research while insisting he was “unaware of the possibility that [ChatGPT’s] content could be false.”

This article originally appeared on Engadget at https://www.engadget.com/fugees-rapper-pras-accuses-his-lawyer-of-using-ai-in-closing-arguments-185311864.html?src=rss

Fugees rapper Pras accuses his lawyer of using AI in closing arguments

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Rapper “Pras” Michel, one-third of the legendary hip-hop group The Fugees, accused his lawyer from a recent federal criminal case of using AI in his closing arguments. Ars Technica reports that the “Ghetto Supastar” artist claims his one-time attorney, David Kenner, used an AI program with which the lawyer potentially had a financial interest. Pras, whose legal name is Prakazrel Samuel Michel, was found guilty in April of 10 counts of conspiring and acting as an unregistered foreign government agent and faces up to 20 years in prison. The rapper is seeking a new trial.

Pras’ motion for a new trial says Kenner “used an experimental artificial intelligence (AI) program to draft the closing argument, ignoring the best arguments and conflating the charged schemes, and he then publicly boasted that the AI program ‘turned hours or days of legal work into seconds.’” That quote was pulled from a promotional article for EyeLevel.AI, “litigation assistance technology” that lists an entity called CaseFile Connect as a launch partner. The motion says CaseFile Connect’s principal address is the same as Kenner’s law firm.

“It is now apparent that Kenner and his co-counsel appear to have had an undisclosed financial stake in the AI program, and they experimented with it during Michel’s trial so they could issue a press release afterward promoting the program—a clear conflict of interest,” Pras’ motion alleges.

WASHINGTON, DC - MARCH 31: David Kenner, the lawyer for Pras Michel, a member of the 1990's hip-hop group the Fugees, arrives at U.S. District Court on March 31, 2023 in Washington, DC. Michel is on trial for his alleged participation in a campaign finance conspiracy. (Photo by Kevin Dietsch/Getty Images)
Attorney David Kenner
Kevin Dietsch via Getty Images

The Fugee claims Kenner’s use of the AI tool led him to make embarrassing musical misattributions in his closing arguments. It accuses the lawyer of attributing the lyrics “Every single day, every time I pray, I will be missing you” to Pras’ group, The Fugees. (That line was from Puff Daddy and Faith Evans’s 1997 Biggie Smalls tribute “I’ll Be Missing You.”) The motion also alleges Kenner credited Michel’s 1998 solo hit “Ghetto Supastar (That Is What You Are)” to The Fugees.

In addition to the AI accusations, the motion alleges that Kenner was “ineffective” and that his actions “severely prejudiced the defense.” It says the attorney “failed to familiarize himself with the charged statutes, causing him to overlook critical weaknesses in the Government’s case.” In addition, it accuses Kenner of failing to understand the facts or allegations while outsourcing trial prep and strategy to contract attorneys at a friend’s e-discovery company (among other allegations).

Pras was found guilty in April of funneling money from Malaysian financier Low Taek Jho to Barack Obama's 2012 reelection campaign. Prosecutors insisted Pras donated the money for Low, while the rapper argued he was only trying to help the businessman take a photo with Obama. Pras then allegedly tried to quash a DOJ investigation and influence an extradition case.

If Pras’ complaint sounds familiar, it parallels the “ChatGPT lawyer” Steven Schwartz, who cited fictional cases as an erroneous precedent in a legal document. Schwartz, his associate Peter LoDuca and their law firm Levidow, Levidow and Oberman were fined $5,000 for having “abandoned their responsibilities” in the case. Schwartz claimed he used the chatbot to “supplement” his research while insisting he was “unaware of the possibility that [ChatGPT’s] content could be false.”

This article originally appeared on Engadget at https://www.engadget.com/fugees-rapper-pras-accuses-his-lawyer-of-using-ai-in-closing-arguments-185311864.html?src=rss

Five former Ubisoft execs arrested following sexual harassment investigation

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French police have arrested five former Ubisoft executives after an investigation into claims of abuse, harassment and discrimination at the company, according to the newspaper Libération. Ex-Chief Creative Officer Serge Hascoët and Tommy François, a former vice president of editorial and creative services, were among those taken into custody. Both men left Ubisoft in 2020 following accusations against them.

When asked about the arrests, Ubisoft told GamesIndustry.biz that it didn't have "knowledge of what has been shared and therefore can't comment."

In 2021, a French workers union and two ex-Ubisoft employees sued the publisher for allegedly enabling a culture of "institutional sexual harassment." Solidaires Informatiques claimed that, rather than addressing the issues head on, Ubisoft found it easier to tolerate alleged misconduct. Francois and Hascoët were among those named in the suit.

According to Libération, police spent more than a year investigating the case. They collected testimonies from approximately 50 staffers and former employees. A lawyer for the plaintiffs claimed (according to a translation) that "beyond simple individual behavior, [the case] reveals systemic sexual violence" in an environment where a "'schoolboy atmosphere' was tolerated."

Several senior employees resigned or were fired in 2020 after reports emerged of widespread misconduct at the company, including at Ubisoft studios in Montreal and Toronto. That summer, CEO Yves Guillemot laid out a plan to address such issues and clean up a culture of toxicity within the ranks.

This article originally appeared on Engadget at https://www.engadget.com/five-former-ubisoft-execs-arrested-following-sexual-harassment-investigation-135636454.html?src=rss

Trump’s Georgia election interference trial will be livestreamed on YouTube

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In an unprecedented decision, Fulton County Judge Scott McAfee announced on Thursday that he will allow not only a press pool, cameras and laptops to be present in the courtroom during the election interference trial of former President Donald Trump, but that the entire proceedings will be livestreamed on YouTube as well. That stream will be operated by the court.

Trump and 18 co-defendants are slated their trial on October 23rd. Tsplhey're facing multiple racketeering charges surrounding their efforts in the state of Georgia to subvert and overturn the results of the 2020 presidential election, what Fulton County DA Fani Willis describes as "a criminal enterprise" to unconstitutionally keep the disgraced politician in power. Trump has pled not guilty to all charges. 

While recording court proceedings can be an uncommon occurrence in some jurisdictions, the state of Georgia takes a far more lax approach in allowing the practice. 

“Georgia courts traditionally have allowed the media and the public in so that everyone can scrutinize how our process actually works,” Atlanta-based attorney Josh Schiffer, told Atlanta First News. “Unlike a lot of states with very strict rules, courts in Georgia are going to basically leave it up to the judges.”

For example, when Trump was arraigned in New York on alleged financial crimes, only still photography was allowed. For his Miami charges, photography wasn't allowed at all. This means that the public will not be privy to the in-court proceedings of Trump's federal election interference case, only the Georgia state prosecution.

This article originally appeared on Engadget at https://www.engadget.com/trumps-georgia-election-interference-trial-will-be-livestreamed-on-youtube-193146662.html?src=rss

Trump’s Georgia election interference trial will be livestreamed on YouTube

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In an unprecedented decision, Fulton County Judge Scott McAfee announced on Thursday that he will allow not only a press pool, cameras and laptops to be present in the courtroom during the election interference trial of former President Donald Trump, but that the entire proceedings will be livestreamed on YouTube as well. That stream will be operated by the court.

Trump and 18 co-defendants are slated their trial on October 23rd. Tsplhey're facing multiple racketeering charges surrounding their efforts in the state of Georgia to subvert and overturn the results of the 2020 presidential election, what Fulton County DA Fani Willis describes as "a criminal enterprise" to unconstitutionally keep the disgraced politician in power. Trump has pled not guilty to all charges. 

While recording court proceedings can be an uncommon occurrence in some jurisdictions, the state of Georgia takes a far more lax approach in allowing the practice. 

“Georgia courts traditionally have allowed the media and the public in so that everyone can scrutinize how our process actually works,” Atlanta-based attorney Josh Schiffer, told Atlanta First News. “Unlike a lot of states with very strict rules, courts in Georgia are going to basically leave it up to the judges.”

For example, when Trump was arraigned in New York on alleged financial crimes, only still photography was allowed. For his Miami charges, photography wasn't allowed at all. This means that the public will not be privy to the in-court proceedings of Trump's federal election interference case, only the Georgia state prosecution.

This article originally appeared on Engadget at https://www.engadget.com/trumps-georgia-election-interference-trial-will-be-livestreamed-on-youtube-193146662.html?src=rss

Tesla reportedly faces investigation over its mysterious glass house project

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At least two government agencies are looking into Tesla's secret glass house project dubbed "Project 42," according to The Wall Street Journal. Back in July, the publication reported that the automaker's board launched an investigation over concerns that its CEO, Elon Musk, was using company funds for the project. Now, the US Attorney's Office for the Southern District of New York has reportedly asked for information on how much Tesla spent on the project and on personal benefits Musk enjoys. Likewise, the Securities and Exchange Commission (SEC) has also opened a civil probe, the Journal said, and has sought the same information.

The plans for Project 42 involved building a glass structure that appeared to be a living space with bedrooms, bathrooms and a kitchen near Tesla's facilities in Austin, Texas. A couple of concepts envisioned it as a "twisted hexagon" or a glass cube similar to Apple's 5th Avenue store. The Journal previously said that the board launched an investigation after employees raised concerns regarding the special glass ordered for the project, which they believe would cost the company millions of dollars. It's unclear if that investigation is finished and if the company's order for the special glass pushed through.

As the publication notes, SEC requires transactions over $120,000 when an executive has a material interest in them. Any personal benefits paid to executives that amount to over $10,000 must also be disclosed to investors. Authorities have only just started looking into the initiative, however, and these probes might not lead to any formal charges. 

In addition to investigations regarding Project 42, Tesla is also reportedly facing inquiries from federal prosecutors over the driving range of its vehicles. The company is being questioned after Reuters reported last month that its EVs frequently don't meet their range estimates and that the company set up a team specifically to cancel service appointments related to driving range complaints. 

This article originally appeared on Engadget at https://www.engadget.com/tesla-reportedly-faces-investigation-over-its-mysterious-glass-house-project-051518583.html?src=rss