Kryptomogul launches new super PAC-POLITICO

With help from Derek Robertson

Brock Pierce, co-founder of stablecoin Tether, tells Digital Future Daily that after months of flirting with a Vermont Senate seat, he’s decided to launch a super PAC instead.

Pierce cited personal reasons for the pivot, but it comes as crypto backers’ boldest political projects have come back to earth as crypto markets have cooled in recent months.

Pierce — who ran a quixotic presidential bid in 2020 that endorsed pot legalization — told me that the premature birth of a daughter in July was his primary reason for retiring Senate campaign. The former child movie star (remember The Mighty Ducks?) said he plans to use it to push the development of a decentralized internet, often called Web3, as a way to combat the power of large technology companies, along with other political priorities such as food security.

The group, called One America, will focus this year on races in the Northeast, he said. Pierce is still in the process of choosing candidates to endorse, but said he expects to move quickly now that the decision has been made to channel his political aspirations into a PAC.

“The freight train, or the Brock Train, or maybe blockchain could start running at lightning speed,” he said.

Pierce said he expects to spend $5 million or more this cycle, and his spokesman, David Weiner, said the group had lined up another $5 million in commitments from other donors.

This election cycle is the first where crypto has become a bona fide issue and the industry has emerged as a significant source of political funding. Crypto’s supporters have launched several PACs to promote the industry and their own pet issues, led by Sam Bankman-Fried, founder of crypto exchange FTX, who has dropped around 40 million dollars in political giving this year. (Much of Bankman-Fried’s spending has been promoting a rationalist approach to philanthropy called effective altruism.)

The results so far have been mixed. Pro-crypto Senate candidates Blake Masters and JD Vance, both backed by pro-crypto billionaire and PayPal co-founder Peter Thiel, won high-profile Republican primaries in Arizona and Ohio, respectively. Elsewhere, crypto donors and candidates have let loose. In California, Democrat Brad Sherman, the most vocal crypto critic in the House, easily fended off pro-crypto primary challengers. In Oregon’s Sixth District, Matt West, a decentralized finance developer, and Carrick Flynn, the efficient altruist who received millions of dollars in support from Bankman-Fried, both fell short in the Democratic primary.

But as Pierce’s investment illustrates, the crypto-rich continue to build the infrastructure to convert profit into lasting political influence. Many close to the industry consider this year the dress rehearsal for 2024, as they expect crypto to become a bigger issue and cryptocurrency to become a bigger factor.

Pierce is no exception, saying he plans to increase the PAC’s ambitions in 2024. “I’m just getting started,” he said.

When is it good to fail a test?

When you, like the massive crypto firm Coinbase, are subject to a active SEC investigation for the potential sale of unlicensed securities, perhaps.

Satisfying Howey test, which sets the bar for what does and does not qualify as a security, is many crypto-entrepreneurs’ worst fear, with the possibility that passing it could open them up to further regulatory scrutiny from the SEC. Coinbase is at the center of the long-running regulatory debate over how cryptocurrencies should be classified, which has only intensified now that the company has announced that it is collaboration with BlackRock.

So I called Agostino Capponiprofessor at Columbia University and research fellow at Crypto and Blockchain Economic Research Forumto shed some light on the debate – and he claimed the deal was likely to be one good thing for Coinbase, based on his belief that cryptocurrencies definitely fail the Howey test. (To qualify as a security under the test, a traded product must be “[1] An investment of money [2] in a joint enterprise [3] with expectations of profit [4] to be derived from the efforts of others.”)

“If you think about IBM or Google, managers work to improve their products, which are then worth more, and the price of the stock goes up,” Capponi said. “When we think of digital assets like tokens managed by Coinbase, they don’t really pass that test and so they’re not securities … I don’t think Coinbase needs to worry that what they’re trading will be classified as securities [only] because BlackRock manages securities.”

Capponi also argued that crypto needs its own unique asset classification, which does not fit neatly into the classification of securities or commodities (a bill introduced in the Senate last week would place crypto under the regulatory authority of the Commodity Futures Trading Commission, seen as much friendlier by the crypto community.)

“They don’t fit into either category,” Capponi said. “This has been a long-standing debate between the CFTC and the SEC … digital assets need to be classified and given some guidelines, but I don’t think seeing them as securities or commodities is the way to go.” — Derek Robertson

Less than an hour after yesterday’s Digital Future Daily was publishedanother The Web3 firm tweeted that security was breached and warned users to stay put away from their website: Curve Finance, a “decentralized finance” company that demonstrates “deep on-chain liquidity using advanced bond curves.”

Curve is far from the only crypto finance company to suffer from such a hack, and this one appears to have been relatively modest (Bloomberg reported that Curve retweeted a post saying hackers stole roughly $500,000 worth of crypto, although said tweet has now been deleted). In the last week alone, ether was worth $190 million stolen from the platform Nomadand the cryptocurrency Solana was hacked to a value of more than 5 million dollars. Decentralization can have its benefits, but sometimes you just miss the good old FDIC. — Derek Robertson

Computer… improve.

The tropics of all-powerful computer imaging technology that can turn barely legible security camera footage into useful evidence is, well, just that—a trope, but it’s based on real advances in technology. It may fly under the radar when “sentient” chatbots and meme-generating virtual “artists” otherwise dominate the news, but machine learning and AI tools are slowly making the “enhancement button” something closer to reality.

ONE article published this year by a team of Chinese researchers explains how they use machine learning to improve image resolution to a remarkable degree, such as to increase the visibility of printed text in a blurry image (see a brief description demonstration here).

For their problems, the researchers won this year’s prize for “Stereo Image Super-Resolution” at New trends in image restoration and enhancement workshop, a global symposium akin to the Olympics for the people who work in the lab to make it possible Jack Ryan, The. Elliot Stablerand various other fictional crime fighters in their hard work of “improving”.

The applications for this kind of powerful technology in everything from law enforcement to historic preservation are obvious—but I’m inclined to suggest that a Redditorwho pointed out that it can be used to solve one of the UFO environments oldest mysteries. — Derek Robertson

Stay in touch with the entire team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakaes ([email protected]); and Heidi Vogt ([email protected]). Follow us on Twitter @DigitalFuture.

Ben Schreckinger covers technology, finance and politics for POLITICO; he is an investor in cryptocurrency.

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