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posted by janrinok on Sunday December 18 2022, @02:23PM   Printer-friendly
from the regulating-self-regulation dept.

Germany wants countries to regulate the crypto industry after the FTX and Bankman-Fried debacle- Technology News, Firstpost:

Germany's top regulator this week called for global regulation of the cryptocurrency industry to protect consumers, prevent money laundering and preserve financial stability.

Mark Branson, the president of Germany's financial market regulator BaFin, also known as the Federal Financial Supervisory Authority of Germany, said a that hands-off approach that would "just let the industry grow as a playground for grownups" was the wrong tactic.

"We've seen the self-regulated world. It will not work," Branson told journalists in Frankfurt on Tuesday evening.

Branson was speaking hours after U.S. prosecutors accused Sam Bankman-Fried, founder of cryptocurrency exchange FTX, of misappropriating billions of dollars and violating campaign laws in what has been described as potentially one of America's biggest financial frauds.

[...] Regulation of the industry has been loose and patchwork at best. Germany requires licences for banks to deal with cryptocurrency.

[...] The European Union has been working on a new Markets in Crypto Assets Regulation (MiCA) that some, including European Central Bank President Christine Lagarde, say would need to be broadened out in a future iteration and branded "MiCA 2".


Original Submission

Related Stories

SBF Asks for 5-Year Prison Sentence, Calls 100-Year Recommendation “Grotesque” 20 comments

https://arstechnica.com/tech-policy/2024/02/sbf-asks-for-5-year-prison-sentence-calls-100-year-recommendation-grotesque/

Convicted FTX fraudster Sam Bankman-Fried pleaded for a lenient prison sentence in a court filing yesterday, saying that he isn't motivated by greed and "is already being punished."

Bankman-Fried requested a sentence of 63 to 78 months, or 5.25 to 6.5 years. Because of "Sam's charitable works and demonstrated commitment to others, a sentence that returns Sam promptly to a productive role in society would be sufficient, but not greater than necessary, to comply with the purposes of sentencing," the court filing said.

[...] The filing urged the court to "reject the PSR's barbaric proposal" of 100 years, saying that such sentences should only be for "heinous conduct" like terrorism and child sexual abuse.

The founder and ex-CEO of cryptocurrency exchange FTX, Bankman-Fried was convicted on seven charges with a combined maximum sentence of 110 years after a monthlong trial in US District Court for the Southern District of New York. The charges included wire fraud and conspiracy to commit wire fraud, securities fraud, commodities fraud, and money laundering.

[...] Kaplan said before the trial that SBF "could be looking at a very long sentence" if convicted. After the conviction, law professors were quoted as saying that Bankman-Fried's sentence was likely to be at least 20 or 25 years and conceivably as much as 50 years.

[...] "Sam was not predatory. He did not set out to prey on the elderly, the unsophisticated, or implement a plan to poach pension assets. His conduct falls far lower on the culpability scale," the filing said. He also "never intended to cause loss for the purpose of his own personal gain," his legal team said.

Bankman-Fried's conduct should be characterized as "risk shifting," the filing said. Risk-shifting "offenses are not specifically intended to cause loss. Instead, they shift the risk of any potential loss from the defendant (or from others involved in the criminal undertaking) to a third party, such as the victim of the offense."

According to Bankman-Fried's legal team, this makes his offenses similar in severity to "false statements for the purpose of obtaining a bank loan that is intended to be repaid. Such offenses are generally less culpable than those where loss is specifically intended."

[...] Bankman-Fried's sentencing submission was accompanied by letters of support from his parents and others. His mother, Barbara Fried, wrote that "Sam is the first person we would call if we needed an angel of mercy in a pinch," and that he "lived an exemplary life in every way prior to the events that brought FTX down."

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  • (Score: 2) by crafoo on Sunday December 18 2022, @02:55PM (25 children)

    by crafoo (6639) on Sunday December 18 2022, @02:55PM (#1283001)

    so good. never missing an opportunity to add laws, rules, regulations, fines, tax incentives. ever-expanding surface area of government-corporation grift and criminal activity.

    This new thing is dangerous and requires a far more granular and controlling intrusion into your life.

    If we can't protect the stupid, the careless, the lazy, and the unproductive, can we even call ourselves a society? Hey guys, come on, we aren't Hitlers. That's why we all need to support as much regulation and government-corporate cooperation as possible. We aren't evil Nazi fascists like Ye.

    • (Score: 0) by Anonymous Coward on Sunday December 18 2022, @03:12PM

      by Anonymous Coward on Sunday December 18 2022, @03:12PM (#1283004)

      Interesting coincidence that the QOTD at the bottom of your comment when I read it was:

      "We don't have to protect the environment -- the Second Coming is at hand." -- James Watt

      If you don't know, or don't remember, who James Watt was (and some of us are unfortunate enough to have had to endure him), he was Ronald Reagan's Environmental Protection Agency cabinet head.

    • (Score: 2, Touché) by Anonymous Coward on Sunday December 18 2022, @04:57PM

      by Anonymous Coward on Sunday December 18 2022, @04:57PM (#1283014)

      Yes, if a Russian oligarch can't buy digital NFT photoshops of Donald Trump in a cowboy hat for millions of dollars in untraceable cryptocurrency, then HOW CAN WE BE FREE????

    • (Score: 2) by sjames on Sunday December 18 2022, @07:40PM (21 children)

      by sjames (2882) on Sunday December 18 2022, @07:40PM (#1283033) Journal

      Well, we tried it the other way and that gave us a regular stream of embezzlement, ponzi schemes, thefts, and each time a follow on of other operations crashing because they got cooties from the frauds. All while seeing these things marketed to less sophisticated investors just looking to put away a retirement fund, including Superbowl commercials.

      Even the most staunch libertarian will say that enforcement against fraud and theft are very much legitimate functions of government.

      If nobody's looking at the books, how will fraud and theft be prevented?

      • (Score: 1) by khallow on Monday December 19 2022, @06:54AM (20 children)

        by khallow (3766) Subscriber Badge on Monday December 19 2022, @06:54AM (#1283124) Journal

        If nobody's looking at the books, how will fraud and theft be prevented?

        How do the authorities determine that fraud and theft happened in cases where there's no accounting? There's already procedures in place for enforcing laws in these cases. But in the case of FTX, there was accounting and there was obvious signs of gross negligence with a mysterious disappearance of cryptocurrency. It was already regulated and now, they're enforcing the regulations.

        • (Score: 2) by sjames on Monday December 19 2022, @09:09AM (19 children)

          by sjames (2882) on Monday December 19 2022, @09:09AM (#1283132) Journal

          With better regulation, the earlier irregularities would have been caught before they totally imploded. It would have at least given people a chance to pull out.

          Part of regulation is that you have to do the accounting.

          • (Score: 1) by khallow on Monday December 19 2022, @03:23PM (18 children)

            by khallow (3766) Subscriber Badge on Monday December 19 2022, @03:23PM (#1283150) Journal

            With better regulation, the earlier irregularities would have been caught before they totally imploded.

            There's two problems here. First, with better regulation, there's more hubris and false sense of security due to the sentiment you mention above. Second, it drops the firewall between risky investments and institutional investors. The crypto market becomes "better regulated" so why shouldn't your pension fund bet the farm on it?

            My take is that better regulation is just a prelude to bigger implosions. Presently, these businesses implode so fast (FTX took merely three years) that the outside markets don't have time to lose a lot of money on them. I'd rather have frequent burns of billions of dollars valuation than trillions.

            • (Score: 2) by sjames on Monday December 19 2022, @04:05PM (17 children)

              by sjames (2882) on Monday December 19 2022, @04:05PM (#1283158) Journal

              You really had to bend backwards and grab your ankles to twist that into an argument against regulation. Next up, the best way to eliminate crime is to make everything legal...

              • (Score: 1) by khallow on Monday December 19 2022, @04:20PM (16 children)

                by khallow (3766) Subscriber Badge on Monday December 19 2022, @04:20PM (#1283159) Journal
                You have yet to present a serious argument for more regulation. I'll note that the FTX stories are merely entertaining. It's not our money and thus, not our problem. But one can't say the same of the global real estate crisis of 2008 which was in large part due to those poor choices made by "better" regulators. There's a huge difference between failures that lose billions and failures that lose trillions.
                • (Score: 2) by sjames on Tuesday December 20 2022, @01:28AM (11 children)

                  by sjames (2882) on Tuesday December 20 2022, @01:28AM (#1283251) Journal

                  The poor choices regulators made in 2008 was the choice to look the other way while thousands of bad loans were written, each practically designed to fail, then sold off hot potato style to crooks who sliced and diced them like a crypto-coin mixer and slapped a fraudulent AAA label on the resultant CDOs. The loans were traded so fast and furiously that often by foreclosure time, the alleged lender couldn't even produce the paperwork. Finally a few fed-up judges declared a few such foreclosures invalid. Then, those same crooks who had been allowed to get too big to fail (see regulators looking the other way) held the U.S. economy hostage and stuck their hands out for a fat juicy bailout.

                  And, of course, the regulators had been ordered to look the other way by the anti-regulation free market fanatics in the Bush administration. What needed to happen was for regulators to start throwing flags on the plays back in 2004.

                  The crypto thing is smaller, in part because it's trying to avoid coming under the sort of scrutiny that might make the music stop.

                  As for the idea that it doesn't matter because it doesn't immediately affect you personally, that sounds like some cross of Main Character Syndrome and a personality disorder. But be careful! If regulators don't get involved, the next failure may affect the bank that has your money in it.

                  • (Score: 1) by khallow on Tuesday December 20 2022, @02:12AM (10 children)

                    by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @02:12AM (#1283253) Journal

                    The poor choices regulators made in 2008 was the choice to look the other way while thousands of bad loans were written, each practically designed to fail, then sold off hot potato style to crooks who sliced and diced them like a crypto-coin mixer and slapped a fraudulent AAA label on the resultant CDOs.

                    The regulators made poor choices before 2008 that were just as bad, particularly allowing huge leverage on these securities (50 to 1 leverage as I recall) and providing easy credit. Anything would become a crime-ridden casino under that combination. The criminal activity is a symptom of risk ignorance/hubris not a cause.

                    • (Score: 2) by sjames on Tuesday December 20 2022, @05:03AM (9 children)

                      by sjames (2882) on Tuesday December 20 2022, @05:03AM (#1283273) Journal

                      The common theme is that the regulators didn't regulate, because they were ordered not to. By anti-regulation free market fanatics.

                      So I suggest not making that same mistake with Crypto before that whole thing becomes a toxic smoking crater.

                      • (Score: 1) by khallow on Tuesday December 20 2022, @06:01AM (8 children)

                        by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @06:01AM (#1283280) Journal

                        By anti-regulation free market fanatics.

                        While those probably were involved to some minor degree, I think the real reason is that much of the western world, particularly the Bush administration in the US got caught in a Keynesian trap. They aggressively spurred economic growth following 9/11 and the wars of that time via said leverage and plentiful Fed credit. My take is that there were two broad choices - keep this going or cut it off and suffer a mild recession while the western world figured out how to do other things than build houses and issue real estate securities. They chose to keep it going. In the US, it was probably because they thought the good times would continue for a while and they needed that good economy going into the 2008 elections. Instead, it completely fell apart about two months before the elections.

                        That's the real dynamic that I think is missed here. Not free market absolutists, but politicians and bureaucrats trying to keep the gravy train going because stopping it would cause a recession. And that's the problem with these calls for better regulation. We had that. But the people in charge thought it better to suspend such regulation because any serious enforcement would put a wet blanket on this rapidly growing economic bubble.

                        My view with crypto is that it's better to just not bother with regulation that'll get suspended when it's politically convenient. In the long run, I think these multi-billion failures will do more to tame irrational bubble dynamics than regulators with massive conflict of interest.

                        • (Score: 2) by sjames on Tuesday December 20 2022, @06:31AM (7 children)

                          by sjames (2882) on Tuesday December 20 2022, @06:31AM (#1283283) Journal

                          They would have been OK if they had regulated against the time bomb mortgages and CDOs. The problem wasn't house construction, it was building McMansions and convincing people who should have been buying starter homes that they could somehow magically afford them.

                          The courts bear some responsibility as well. If they had sent the message early on that lenders better have all of their paperwork in order or instead of foreclosure they'll be writing the whole thing off, they would have been a lot more careful and there would have been a lot less robosigning.

                          • (Score: 1) by khallow on Tuesday December 20 2022, @07:13AM (6 children)

                            by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @07:13AM (#1283290) Journal

                            They would have been OK if they had regulated against the time bomb mortgages and CDOs. The problem wasn't house construction, it was building McMansions and convincing people who should have been buying starter homes that they could somehow magically afford them.

                            It still would have been a shitstorm. Those things are superficial features of a far bigger problem. "Time bomb mortgages and CDOs" were just the chosen form of the Destructor. If they were sufficiently regulated, the risk seekers would have found another way with the heady participants giving zero care about criminality and such because they're going to make zillions of dollars anyway.

                            • (Score: 2) by sjames on Tuesday December 20 2022, @03:50PM (5 children)

                              by sjames (2882) on Tuesday December 20 2022, @03:50PM (#1283344) Journal

                              But a lot of people would have kept their homes and the big risks would have been forced away from things that were "too big to fail" so we could let the big risk takers take their richly deserved drubbing and move on. Unfortunately, the regulations that kept the big risk takers out of banking were repealed.

                              • (Score: 1) by khallow on Tuesday December 20 2022, @05:12PM (4 children)

                                by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @05:12PM (#1283363) Journal

                                But a lot of people would have kept their homes

                                More likely, they wouldn't have those homes and be renting instead. Without the high house construction, there wouldn't be a surplus of houses for sale.

                                and the big risks would have been forced away from things that were "too big to fail" so we could let the big risk takers take their richly deserved drubbing and move on.

                                Sorry, if it weren't real estate, it'd be something else. When an economy gets into a Keynesian trap like this, it becomes a game of where will the bubbles be? Needless to say, one of those bubbles is crypto.

                                What gets missed with this urge to regulate cryptocurrency is that there isn't much one can do to regulate it. A typical paper trail will be a series of transactions starting from an anonymizer wallet that's not under the control of the authorities and ending in another such wallet. They won't be able to tell jurisdiction or legality of the trading.

                                Instead the big problem with regulation is that it would legitimize the involvement of "too big to fail" organizations. That's the point I want to make. When crypto is unregulated, it's just stories in the news for most of us. When crypto is legitimized through regulation, then who knows who will have their hands in the cookie jar? It turns billion dollar problems into trillion dollar problems.

                                My take is that if regulation is inevitable, at least let the crypto markets crash hard a few times to shake out some of the craziness.

                                • (Score: 2) by sjames on Tuesday December 20 2022, @06:34PM (3 children)

                                  by sjames (2882) on Tuesday December 20 2022, @06:34PM (#1283381) Journal

                                  Regulation could make sure that 'stable' coins claimed to be backed by something of value aren't actually backed by empty promises and more magic beans. They could make sure the books aren't cooked. A lot of the monkey business at FTX wouldn't have happened if federal auditors were reviewing the books.

                                  Note that until the recent debacles, several more traditional firms including banks already had their toes in the water. A strong message that crypto won't get them out from under regulation would likely have cooled their already tepid interest.

                                  Note that FTX was already running commercials during sports broadcasts including the Super Bowl, marketing to much less sophisticated investors trying to make themselves look like a bank or a more conservative investment firm in the public's eyes.

                                  The people forced out by foreclosure might have found a nice starter home they could actually successfully maintain or they might have had to remain renting and saving, but at least they wouldn't be renting with their savings wiped out and a foreclosure on their record. The McMansion building boom would have been cooled considerably if nobody could get a loan for a McMansion.

                                  I don't think it's too much to ask that there be enough regulation to keep the books un-cooked and to make sure assurances are actually something like true. If someone wants to set up a 'Wild Blue Yonder Over the Rainbow" coin backed by nothing and "what books?" for accounting, that's fine as long as they say so and have the big red warning sticker on it, as long as pension funds and such are banned from touching it.

                                  • (Score: 1) by khallow on Tuesday December 20 2022, @11:37PM (2 children)

                                    by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @11:37PM (#1283412) Journal

                                    Regulation could make sure that 'stable' coins claimed to be backed by something of value aren't actually backed by empty promises and more magic beans.

                                    What makes you think regulation doesn't already do that? Truth in advertising laws, for example.

                                    They could make sure the books aren't cooked.

                                    I can list a bunch of recent, fully regulated frauds where the regulators "could make sure", but they didn't.

                                    A lot of the monkey business at FTX wouldn't have happened if federal auditors were reviewing the books.

                                    I doubt federal auditors routinely review anyone's books. That's not how they operate. And there's always the two book trick: a real accounting book for yourself, and a fake one for the regulators. The fraudsters got this.

                                    Note that until the recent debacles, several more traditional firms including banks already had their toes in the water. A strong message that crypto won't get them out from under regulation would likely have cooled their already tepid interest.

                                    Those debacles are an even stronger message.

                                    Note that FTX was already running commercials during sports broadcasts including the Super Bowl, marketing to much less sophisticated investors trying to make themselves look like a bank or a more conservative investment firm in the public's eyes.

                                    And? They aren't now.

                                    The people forced out by foreclosure might have found a nice starter home they could actually successfully maintain or they might have had to remain renting and saving, but at least they wouldn't be renting with their savings wiped out and a foreclosure on their record. The McMansion building boom would have been cooled considerably if nobody could get a loan for a McMansion.

                                    So what? If things had gone differently, it'd be a slightly different class of gullible person you'd be defending and a slightly different class of "too big to fail" that you'd be criticizing. Remember there would still a Destructor no matter what form it took. The only way to stop it is to get rid of the underlying engine: leverage and easy credit.

                                    I don't think it's too much to ask that there be enough regulation to keep the books un-cooked and to make sure assurances are actually something like true. If someone wants to set up a 'Wild Blue Yonder Over the Rainbow" coin backed by nothing and "what books?" for accounting, that's fine as long as they say so and have the big red warning sticker on it, as long as pension funds and such are banned from touching it.

                                    What makes you think it isn't now? There's no law that allowed FTX to get away with what it did. That was all highly illegal. But that's how enforcement regulation works. It's after the fact.

                                    • (Score: 2) by sjames on Wednesday December 21 2022, @12:37AM (1 child)

                                      by sjames (2882) on Wednesday December 21 2022, @12:37AM (#1283426) Journal

                                      You have successfully argued that regulation needs to be vigorous and have teeth. I agree.

                                      • (Score: 1) by khallow on Wednesday December 21 2022, @01:05AM

                                        by khallow (3766) Subscriber Badge on Wednesday December 21 2022, @01:05AM (#1283430) Journal

                                        You have successfully argued that regulation needs to be vigorous and have teeth.

                                        If we're going to have it, sure. If we don't have it, then it doesn't need to be anything.

                • (Score: 2) by quietus on Tuesday December 20 2022, @05:28PM (3 children)

                  by quietus (6328) on Tuesday December 20 2022, @05:28PM (#1283365) Journal

                  "But one can't say the same of the global real estate crisis of 2008 which was in large part due to those poor choices made by "better" regulators."

                  While it's true that Fannie Mae and Freddie Mac played a substantive role in the rise of prices in real estate before 2008, let us not forget that the true tools of the Great Recession of 2008 and beyond were CDO's and CDS's, and these were 'self-regulated' by the industry.

                  • (Score: 1) by khallow on Wednesday December 21 2022, @01:17AM (2 children)

                    by khallow (3766) Subscriber Badge on Wednesday December 21 2022, @01:17AM (#1283431) Journal

                    While it's true that Fannie Mae and Freddie Mac played a substantive role in the rise of prices in real estate before 2008, let us not forget that the true tools of the Great Recession of 2008 and beyond were CDO's and CDS's, and these were 'self-regulated' by the industry.

                    Keep in mind as the largest sources of capital, the FMs were the dominant self-regulators of CDOs and CDSs. And a big thing missed here is that US regulators (similarly with European regulators) had determined that institutions playing with these securities could leverage ownership of these securities to ridiculous levels. As I understand it, the securities were treated in the US as being as reliable as normal real estate, which they might well have been - normal real estate was not reliable in 2008 either, and then permitted to be leveraged to the degree of 50 borrowed dollars for every one dollar of ownership - I believe it was 40 to 1 and higher in most of Europe.

                    And there's plenty of other regulation even in the lands of self-regulated securities.

                    • (Score: 2) by quietus on Thursday December 22 2022, @05:33PM (1 child)

                      by quietus (6328) on Thursday December 22 2022, @05:33PM (#1283608) Journal

                      Not exactly. What happened was that banks circumvented their regulated leverage ratio (the amount of cash they need to have at hand versus the amount of loans outstanding). They did so by creating so-called SIVs (structured investment vehicles), whose only purpose was to offload the banks own loan securities, then slice-and-dice 'em with other securities, then sell those mixes as packages to third-party investors. (Slice and dice 'em means taking slices of high-risk loans -- say C-rated -- and combining these with high-quality (say A++) loans, and selling the mix as an A-minus package.)

                      The devil was with the SIVs, and their limited lifeline (in terms of financial support when things went South) to the banks that created those very SIVs in the first place. The uncertainty with regards to those, and consequentially the CDO/CDS market, was what led to a freezing of the interbank market by the middle to end of October that year; and that was the real crisis.

                      • (Score: 1) by khallow on Friday December 23 2022, @01:15AM

                        by khallow (3766) Subscriber Badge on Friday December 23 2022, @01:15AM (#1283663) Journal

                        What happened was that banks circumvented their regulated leverage ratio (the amount of cash they need to have at hand versus the amount of loans outstanding). They did so by creating so-called SIVs (structured investment vehicles), whose only purpose was to offload the banks own loan securities, then slice-and-dice 'em with other securities, then sell those mixes as packages to third-party investors.

                        In other words, banks "circumvented" regulated leverage ratio by selling off their loans to other parties? Sounds like their leverage ratio didn't actually change for real.

                        The devil was with the SIVs, and their limited lifeline (in terms of financial support when things went South) to the banks that created those very SIVs in the first place. The uncertainty with regards to those, and consequentially the CDO/CDS market, was what led to a freezing of the interbank market by the middle to end of October that year; and that was the real crisis.

                        In other words, the issuing banks weren't threatened by these SIVs going south, their investors who very often were other banks, were.

    • (Score: 2) by mcgrew on Monday December 19 2022, @10:04PM

      by mcgrew (701) <publish@mcgrewbooks.com> on Monday December 19 2022, @10:04PM (#1283230) Homepage Journal

      Let Germany regulate the German fools any way they want. Nobody can keep your money safe if you're foolish enough to invest somewhere that you don't know where it's going. Like Florida in the 1920s [mcgrewbooks.com] (link is to Only Yesterday, a 1933 history of the 1920s). The easiest people to defraud are dishonest greedy people.

      --
      mcgrewbooks.com mcgrew.info nooze.org
  • (Score: 2) by Mojibake Tengu on Sunday December 18 2022, @03:07PM (4 children)

    by Mojibake Tengu (8598) on Sunday December 18 2022, @03:07PM (#1283003) Journal

    Why every wholesale mass scale scam in history looks and behaves like a cult?

    The fundamental flaw in cryptocurrencies is in shallow binding real money to them. That creates an exchange gap vulnerability.

    As usual, a weakness in any formal (or engineered) system is introduced by inadequate topology of processing.
    In case of cryptocurrency system, fiat liquidity creates virtual pressure on that system which causes structural collapse when potential stress grows too high.
    In real world money systems, banks function as dampers/buffers in analogous situations. An added level of indirection.

    --
    Respect Authorities. Know your social status. Woke responsibly.
    • (Score: 3, Interesting) by Thexalon on Sunday December 18 2022, @03:22PM (3 children)

      by Thexalon (636) on Sunday December 18 2022, @03:22PM (#1283005)

      Because if you're trying to confuse people into making stupid decisions, the techniques are the same whether you're trying to get them to part with their money, part with their bodily autonomy, or simply back a particular political candidate.

      The technique, in a nutshell: Bypass their higher-order brain functions with appeals to deep emotions like parents' love of their children. The first ask is always something small, so they'll be likely to say yes to it. Apply guilt and shame as needed to convince them to say yes to it. Once they say yes to it, slowly ramp up what you're asking of them, and tell them it's all OK in service of a good cause. Repeat until they're willingly turning over their life savings, or signing 1-million-year contracts, or other ridiculous stuff.

      --
      The only thing that stops a bad guy with a compiler is a good guy with a compiler.
      • (Score: 2) by bzipitidoo on Sunday December 18 2022, @08:14PM (2 children)

        by bzipitidoo (4388) on Sunday December 18 2022, @08:14PM (#1283038) Journal

        It also has to do with gathering the sorts of people vulnerable to emotional manipulation. In short, finding the suckers. Part of that works includes weeding out those who ask too many probing questions that get them on the right track to figuring out what is really going on. Such members are pushed out as soon as possible, before they can tell anyone else in the group what they've learned, and preferably before they themselves have it entirely figured out. In recent times, the US Republican Party has gone down that path. It is now a giant coalition of suckers.

        The demagogues and similar ilk, to make these cons more effective, attack education itself. Well educated people, with learning firmly grounded in science and rational thinking and not the religious indoctrination that the demagogues falsely label as education, are a lot harder to con. Another reason is that young people are of course far less experienced with cons, as well as not yet finished with formal education, and are therefore more vulnerable. A third reason is that science that gives the lie to their cons must be answered somehow, and their preferred methods are to bury it, keep the suckers from ever hearing it, and where that fails, go on the attack, try to discredit scientists and science and education itself, employing any bull that might stick in the minds of the suckers. The ones running these cons don't just find and gather suckers, they also try to make suckers.

        How this age old con with a thousand faces can finally be shut down forever, is the question. I think that actually, we're closer than ever to the end of it. Yes, recent political events had these forces enjoy a brief ascendancy, but ultimately their time in power served mainly to further educate the public on what they really are, bigoted hypocrites, and what fascism really is. Meanwhile, typical superstitions of the 19th century and earlier have been reduced to mere entertainment. Paranormal woo enjoyed a short burst of popularity and serious consideration some 60 years ago, but that faded. Scientists of the 17th century had to labor under a cloud of oppressive religious thinking, ever having to worry whether a discovery might be considered blasphemous, and constraining their inquiries to avoid that sort of trouble. Today, that is not completely gone, but it is much lessened. In recent times, pretty much only the stem cell researchers had to tiptoe around religion. Information showing what evil frauds and liars these demagogic leaders are is more copious and accessible than ever. Incidents such as the Jonestown mass suicide are hugely infamous and well documented. The mass murders perpetrated in the Holocaust are also extremely well documented. There surely were many mass suicides before the 20th century, but I'm guessing most have been forgotten. Some of the Crusades could be considered mass suicides. At any rate, the whole idea of Crusading lost credibility as it became impossible to explain why God had allowed so many of them to fail horribly, why they didn't appear to be divinely favored after all. For centuries, it's been all downhill for irrationality. For the purely financial cons, such as the infamous Ponzi scheme, Madoff's fraudulent investment fund, and now this crypto currency collapse, not only is there more recorded information about it all, there is also more study and analysis of it.

        • (Score: 1) by khallow on Monday December 19 2022, @07:13AM (1 child)

          by khallow (3766) Subscriber Badge on Monday December 19 2022, @07:13AM (#1283127) Journal

          How this age old con with a thousand faces can finally be shut down forever, is the question.

          End all sentient life. Shouldn't be too hard, right?

          This is just a standard outcome of an environment with free-willed entities and conflicts of interest. There's no magic sauce that can get rid of it altogether. You can merely attach some level of negative consequences to the behavior and mitigate it.

          Keep in mind that some of those conmen are in government making the laws. And unlike you, I'm not going to just blame one party for it.

          • (Score: 2) by quietus on Tuesday December 20 2022, @05:35PM

            by quietus (6328) on Tuesday December 20 2022, @05:35PM (#1283367) Journal

            Government (and, as a consequence, regulation) has at least a majority voting system to prevent the conmen of getting their way too easily.

  • (Score: 2) by VLM on Sunday December 18 2022, @03:37PM

    by VLM (445) on Sunday December 18 2022, @03:37PM (#1283007)

    global regulation

    They mean gloablist regulation not global

  • (Score: 2, Insightful) by khallow on Sunday December 18 2022, @04:04PM (8 children)

    by khallow (3766) Subscriber Badge on Sunday December 18 2022, @04:04PM (#1283009) Journal
    They haven't demonstrated a need for regulation.

    "We've seen the self-regulated world. It will not work," Branson told journalists in Frankfurt on Tuesday evening.

    News flash: it doesn't have to work. Unless you're in on crypto (that is, hodling crypto [knowyourmeme.com] not even merely using it short term for purchases) it doesn't matter what crypto does or how badly it fails. But sure, let's use excessive government power to solve non-problems.

    Here's my take on the necessary level of government power needed. A microwave around 1000W power and some pop corn.

    • (Score: 3, Interesting) by PiMuNu on Sunday December 18 2022, @05:13PM (3 children)

      by PiMuNu (3823) on Sunday December 18 2022, @05:13PM (#1283016)

      > it doesn't have to work.

      Unfortunately, if an emerging market, be it dotcoms, crypto or the price of tulips, takes a big enough volume of capital then the financial system as a whole becomes exposed to it. Capitalism sits on a horrible, high dimensional and nonlinear differential equation with unexpected feedback loops all over the place. It seems to me that there is no stable equilibrium and the system requires constant tuning to stop it from falling over.

      So while you may not be directly exposed to crypto, if you have a mortgage or savings account, as 99% of folks have, then you are exposed to such things.

      • (Score: 1) by khallow on Monday December 19 2022, @04:22AM (2 children)

        by khallow (3766) Subscriber Badge on Monday December 19 2022, @04:22AM (#1283107) Journal

        So while you may not be directly exposed to crypto, if you have a mortgage or savings account, as 99% of folks have, then you are exposed to such things.

        Then you need a firewall between the risky stuff and the pension funds. They already do that, right? If not, then regulators aren't doing their job and we have bigger problems than the lower regulated nature of crypto.

        • (Score: 2) by PiMuNu on Monday December 19 2022, @09:36AM (1 child)

          by PiMuNu (3823) on Monday December 19 2022, @09:36AM (#1283135)

          > Then you need a firewall between the risky stuff and the pension funds

          There is no leak-proof firewall. That's my point. If crypto (tulips) hold enough capital, they can dip the entire market.

          • (Score: 1) by khallow on Monday December 19 2022, @03:18PM

            by khallow (3766) Subscriber Badge on Monday December 19 2022, @03:18PM (#1283149) Journal

            There is no leak-proof firewall.

            Doesn't have to be perfect.

            If crypto (tulips) hold enough capital, they can dip the entire market.

            "IF". We have yet to show that is a real problem. My bet is that this continuing string of highly public failures keeps capital away from the crypto mosh pit. It's the market working as intended.

    • (Score: 0) by Anonymous Coward on Sunday December 18 2022, @07:01PM (1 child)

      by Anonymous Coward on Sunday December 18 2022, @07:01PM (#1283025)

      You seem to be under the impression that regulation leads to institutional corruption. Maybe so, but absence of regulation does not lead to freedom - it leads to criminal corruption. We have shown over the past 1000 years or so that we are slowly getting a grip on institutional corruption (Kings, emperors, dictators).

      • (Score: 1) by khallow on Monday December 19 2022, @03:11AM

        by khallow (3766) Subscriber Badge on Monday December 19 2022, @03:11AM (#1283101) Journal

        You seem to be under the impression that regulation leads to institutional corruption.

        It leads to institutional corruption that matters. If the organizations are low funded and powerless, then it really doesn't matter how corrupt they get.

        Maybe so, but absence of regulation does not lead to freedom - it leads to criminal corruption. We have shown over the past 1000 years or so that we are slowly getting a grip on institutional corruption (Kings, emperors, dictators).

        Will messing with crypto by these clods prevent the disappearance of any regulation? Else there won't be an absence of regulation. For a glaring example, gains on crpyto is taxable almost everywhere. Failing to report those taxable gains is similarly illegal. Increased or reduced global regulation of crypto doesn't change that a bit.

    • (Score: 2) by quietus on Tuesday December 20 2022, @05:37PM (1 child)

      by quietus (6328) on Tuesday December 20 2022, @05:37PM (#1283368) Journal

      Define excessive.

      • (Score: 1) by khallow on Tuesday December 20 2022, @06:26PM

        by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @06:26PM (#1283377) Journal
        It's a felony if you don't fill out the paperwork right.
  • (Score: 4, Insightful) by Opportunist on Sunday December 18 2022, @05:04PM (17 children)

    by Opportunist (5545) on Sunday December 18 2022, @05:04PM (#1283015)

    With a hint of luck, the whole "small government! Stay out of my business!" idiots will crash and burn hard and either finally wake up that "da man" is not out to get them or they simply continue the rest of their (hopefully short) existence under some bridge and don't matter anymore.

    • (Score: 2) by HiThere on Sunday December 18 2022, @05:55PM (5 children)

      by HiThere (866) Subscriber Badge on Sunday December 18 2022, @05:55PM (#1283020) Journal

      The problem is that it's not an either/or, but rather a both/and. Yes, "the man" is out to get you. But it's also true that the system is grossly unstable without regulation and oversight.

      Perhaps modern civilization is inherently unstable, and people are inherently unable to fairly stabilize it. BOTH sides are pointing to valid problems, unfortunately their proposed solutions exacerbate the problems pointed out by the other side.

      --
      Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
      • (Score: 0) by Anonymous Coward on Sunday December 18 2022, @07:05PM

        by Anonymous Coward on Sunday December 18 2022, @07:05PM (#1283028)

        > Perhaps modern civilization is inherently unstable

        No shit. You must be a student of history. Civilization is on its way someplace and I don't think humans are in control. Perhaps we are laying down conditions for a billion year rule of the cockroaches.

      • (Score: 2) by JoeMerchant on Sunday December 18 2022, @07:09PM

        by JoeMerchant (3937) on Sunday December 18 2022, @07:09PM (#1283030)

        Transparency, broad overview education, making ALL the information available to potential investors in as unbiased a form as possible - these all seem to me like they would be more effective than attempts at regulation - and probably less expensive to implement, but... major drawback is that they don't benefit the existing (regulation compliant) investment sellers as much as barriers to competition would.

        --
        🌻🌻 [google.com]
      • (Score: 2) by Opportunist on Sunday December 18 2022, @09:47PM (2 children)

        by Opportunist (5545) on Sunday December 18 2022, @09:47PM (#1283046)

        If "da man" is out to get you, kick that asshole to the curb and elect someone better.

        • (Score: 2) by HiThere on Monday December 19 2022, @12:17AM (1 child)

          by HiThere (866) Subscriber Badge on Monday December 19 2022, @12:17AM (#1283064) Journal

          You have a very narrow definition of "da man". It's basically a catch-all term for powerful authoritarian figures. And, from your perspective, they are out to get you. All of them. From their perspective what they're trying to do (generally) is either make their job easier, or, occasionally, to do it at all. Often this can be played for mutual advantage, but this is by no means always true, and even when it is, making it work demands that *you* be the one who is flexible. They're dealing with lots of people at the same time, so usually they either can't be flexible, or don't see that they can.

          --
          Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
          • (Score: 2) by Opportunist on Saturday December 24 2022, @10:10AM

            by Opportunist (5545) on Saturday December 24 2022, @10:10AM (#1283835)

            And this is pretty much why we need governments in the first place. Powerful interest stakeholders don't need governments. Actually, they're the first who cheer if they go away. If I have the power myself, anyone who could step up and claim it is my competitor and never my ally. That's what I don't get, when someone who is powerless because he has no money nor power, wants "small government". That's not in your interest, buddy. The government is probably the only power in the country you're in that you actually have any kind of say in. Yes, your say ain't big, but at least you have one. In that industrial juggernaut over there, you have ZERO say. None. And if there isn't anything stopping him, he'll just move over you and sell your carcass.

    • (Score: 1) by khallow on Monday December 19 2022, @03:56AM (10 children)

      by khallow (3766) Subscriber Badge on Monday December 19 2022, @03:56AM (#1283105) Journal

      either finally wake up that "da man" is not out to get them

      Not going to happen, because conflict of interest. Perhaps you've heard of that?

      will crash and burn hard

      I'm fine with that. Stability and instability are poorly understood in this thread. Stability is widely considered good because it reduces uncertainty and risk, and instability bad for the opposite reason. But this ignores opportunity costs and long tail risks. Sure, it'd be bad to have a world so unstable that you don't know where your next meal or place to sleep will come from. But a world with a great deal of economic instability has some powerful advantages. First, it reveals societal and institutional weaknesses. If we're really having trouble with huge amounts of capital flocking to crypto casinos, then that indicates that there's something wrong with the managers of capital and their decision-making - including widespread gullibility.

      Another big problem is that stable societies are only stable in the long run when there are no unexpected changes. When there are unexpected changes (internal unrest or accidents, or external disasters or rival human powers), then they are very fragile, that is, poorly equipped to deal with the change. A classic example is the fall of the USSR. They fell due to growing inability to compete with the western world, internal factors like the economic rot from rigid central planning systems, and the spectacular failure of Chernobyl. The stability of these systems comes from rigid control of societal change. Once, the society has to change in order to survive, then these control mechanisms get in the way.

      The western world has similar examples: most recent recessions have some element of excessive attempts at stability: for example, the Japanese recession of 1990-1991, the dotcom bubble, the real estate crisis of 2008, and the covid response of 2020-2022.

      Consider this hypothetical example. You're running an auto company and you have some business in your supply chain producing a critical part for you. It means lives lost, if this is done wrong. As that elusive breed, the ethical businessperson, do you merely hope that part is made right? Or do you test the hell out of it?

      Here, we have a bunch of regulators wanting to regulate some side market allegedly because it is unstable. But has any part of this story been tested? Do we know the regulators are at all competent at regulating crypto markets? Do we know that their idea of regulation is at all beneficial to us? No. So are we merely going to hope they get it right? Or use crypto and other sources of economic instability as tests that they're getting it right?

      • (Score: 2) by Opportunist on Tuesday December 20 2022, @01:09PM (4 children)

        by Opportunist (5545) on Tuesday December 20 2022, @01:09PM (#1283311)

        Consider this hypothetical example. You're running an auto company and you have some business in your supply chain producing a critical part for you. It means lives lost, if this is done wrong.

        What does it cost if lives are lost? Is there some government agency that crushes my balls if people croak? Do I have to pay compensation if they do? Can I write it into the contract that they only got themselves to blame if they're stupid enough to by my crap and die because of it?

        As that elusive breed, the ethical businessperson

        Ethical businessmen don't exist. Or at least, they don't exist for long. An ethical businessman gets muscled out of the market while pondering whether he should do something that could be morally questionable by someone who doesn't ask that question and doesn't even understand why the fuck anyone would ask that question.

        • (Score: 1) by khallow on Wednesday December 21 2022, @06:38AM (3 children)

          by khallow (3766) Subscriber Badge on Wednesday December 21 2022, @06:38AM (#1283450) Journal

          What does it cost if lives are lost? Is there some government agency that crushes my balls if people croak? Do I have to pay compensation if they do? Can I write it into the contract that they only got themselves to blame if they're stupid enough to by my crap and die because of it?

          Generally in the US, $10 million per for negligent homicide with sky-is-the-limit, if the plaintiff can show defendants knowingly caused death.

          The smart psychopath wouldn't brag as you do above. That'll save them a lot of money in the long run.

          As that elusive breed, the ethical businessperson

          Ethical businessmen don't exist. Or at least, they don't exist for long. An ethical businessman gets muscled out of the market while pondering whether he should do something that could be morally questionable by someone who doesn't ask that question and doesn't even understand why the fuck anyone would ask that question.

          It depends what the business is. A business sector that requires a lot of trust, reputation, or integrity can encourage a great deal of morality, though perhaps of a sort most people wouldn't recognize. We can easily come up with businesses where immoral behavior is routinely rewarded - such as illegal drug sales. But there's also businesses where immoral behavior ended the business. A classic example comes from the accounting world. For example, when Authur Andersen [wikipedia.org] signed off on Enron fraud, overnight (well over the course of nine months) it went from one of the top four accounting/auditing firms of the today to bankruptcy court.

          • (Score: 2) by Opportunist on Thursday December 22 2022, @10:56AM (2 children)

            by Opportunist (5545) on Thursday December 22 2022, @10:56AM (#1283575)

            So I guess what you're saying here is what makes companies give a shit about their customer's safety is governmental regulation of the industry, did I get that right?

            • (Score: 1) by khallow on Friday December 23 2022, @01:18AM (1 child)

              by khallow (3766) Subscriber Badge on Friday December 23 2022, @01:18AM (#1283664) Journal
              Lawsuits are a very different sort of regulation which is very popular with government minimalists.
              • (Score: 2) by Opportunist on Saturday December 24 2022, @10:05AM

                by Opportunist (5545) on Saturday December 24 2022, @10:05AM (#1283834)

                Lawsuits only work if there are laws. Else, well, you can sue, but there ain't anything to base your case on.

                Now guess who makes those laws. And where again do you take those lawsuits?

      • (Score: 2) by quietus on Tuesday December 20 2022, @05:42PM (4 children)

        by quietus (6328) on Tuesday December 20 2022, @05:42PM (#1283369) Journal

        "First, it reveals societal and institutional weaknesses."

        I guess a theorist doesn't appreciate the difference between his ivory tower, and the common ground.

        • (Score: 1) by khallow on Tuesday December 20 2022, @05:54PM (2 children)

          by khallow (3766) Subscriber Badge on Tuesday December 20 2022, @05:54PM (#1283372) Journal
          Show that's a real problem.
          • (Score: 2) by quietus on Thursday December 22 2022, @05:14PM (1 child)

            by quietus (6328) on Thursday December 22 2022, @05:14PM (#1283604) Journal

            The economic shocktherapy applied to Russia after the disintegration of the USSR, by Friedman and the rest of the Chicago Boys.

            • (Score: 1) by khallow on Friday December 23 2022, @01:26AM

              by khallow (3766) Subscriber Badge on Friday December 23 2022, @01:26AM (#1283665) Journal

              The economic shocktherapy applied to Russia after the disintegration of the USSR, by Friedman and the rest of the Chicago Boys.

              Even so, the Chicago Boys didn't create the oligarchs. Or the corruption of present day Russia and Ukraine. I agree that the approach you mentioned failed hard. I don't agree that it is somehow relevant to my observations (which are independent of Chicago Boys). After all, Russia didn't get to that abject state, where Chicago Boys were taken seriously, through deliberately sown instability, but through an authoritarian straitjacket that had bound the society for over 70 years.

        • (Score: 1) by khallow on Wednesday December 28 2022, @06:18PM

          by khallow (3766) Subscriber Badge on Wednesday December 28 2022, @06:18PM (#1284239) Journal
          Another thing "theorists" know about is historical examples of civilization collapses. For example, I have been reading about the Late Bronze Age Collapse. What's interesting about it is that they have no obvious cause. That's a strong candidate for collapse due to fragile societies.

          I think policies that create trillion dollars collapses instead of billion dollar collapses are much more likely to create a fragile society and contribute to some future collapse of civilization.
  • (Score: 3, Insightful) by JoeMerchant on Sunday December 18 2022, @07:02PM (2 children)

    by JoeMerchant (3937) on Sunday December 18 2022, @07:02PM (#1283026)

    Rather than attempting to inspect and approve every lamp in Arabia and attempting to prevent people rubbing them in hopes of getting three wishes, I feel like an education campaign would be more effective. Tell people to look for things like:

    1. Transparency in accounting:
      1. How are their funds being handled?
      2. Who is certifying the books?
      3. What makes an auditor worthy of trust?
      4. Where and when are these records disclosed?
    2. Standards of practice:
      1. What does a reputable operation look like?
      2. What are the historical rates of return for ALL investors in various similar forms of investment?
      3. Where can I find lists of similar investment opportunities and their information?
    3. Jurisdiction information:
      1. When there is a dispute, how will it be resolved with this entity?
      2. Historically, what has problem resolution resulted in for the aggrieved in situations with similar entities?
      3. Historically, what has the rate of successful returns on investment been for investment in similar entities?

    The thing to emphasize in the education process, particularly for things like Crypto-Ponzi schemes, is the hollowness of the "NEW!!! Nothing like this has EVER been available to investors like YOU before in the history of the world!!! This is a once-in-a-lifetime opportunity!!!!!" claim. The media, word of mouth, and all other forms of communication emphasize the amazing positive outcomes - like the US news outlets that endlessly promote lottery winner stories without what I believe should be a required disclosure something along the lines of:

    34 year old mother of three Melanie J from Rockford Alabama won $74 million from a $2 Powerball Lotto ticket on Saturday night. Asked what she was going to do with the money, she said: "This is going to change my whole family's life entirely, I'm gonna get mama's house back from the bank, put college money for the kids into trust accounts, and get my ex-husband into a good detox program." (Required disclosure which is missing from today's reports:) records show that Mrs. J and her mother regularly purchased an average of $57.15 per month worth of lotto products over the past 27 years, representing a total investment of over $18,000 against winnings of $627 prior to her big win this past Saturday. After their previous big win of $500 in 2016 their purchases increased from an average of $15 per month up to over $200 per month which demonstrably led to Mrs. J's mother losing her home to the bank in 2019 when the cost of their lotto purchases didn't leave enough left over to pay the refinancing note they took out in 2017. While Melanie's story ends happily for her and her family, there are an estimated 300,000 families in Alabama in similar financial situations who also spend significant portions of their available income on lotto products and fully 30,000 of those families have had real-property repossessed by banks under similar circumstances in the past 10 years. Lotto winners like Melanie who are able to get their mothers' homes back only happen in Alabama approximately once every 17 years. Lotto players spent over $300 Million on losing tickets in the drawing which resulted in Melanie's $74 Million win. Please play responsibly. Gambling addiction affects one in three low income Alabama families, free counseling and support is available, call 1-800-ALA-WINS for information.

    In print at least as large and prominently placed as the good-news side of the story, similar to black box warnings on cigarettes.

    For myself, I paid $3500 for an education in international contract law... see, a contract written in English has no standing in a Costa Rican court. Related stories:

    https://www.internationalappraiser.com/2019/07/tropical-american-tree-farms-update.html [internationalappraiser.com]

    https://ticotimes.net/2012/05/17/investors-where-s-our-money [ticotimes.net]

    https://www.finewoodworking.com/forum/tropical-american-tree-farms [finewoodworking.com]

    --
    🌻🌻 [google.com]
    • (Score: 0) by Anonymous Coward on Sunday December 18 2022, @07:07PM

      by Anonymous Coward on Sunday December 18 2022, @07:07PM (#1283029)

      Somebody sounds jelly they didn't get in on the ground floor of the unique Trump-in-a-space-outfit NFTs...

    • (Score: 0) by Anonymous Coward on Monday December 19 2022, @01:02AM

      by Anonymous Coward on Monday December 19 2022, @01:02AM (#1283070)

      Rather than attempting to inspect and approve every lamp in Arabia and attempting to prevent people rubbing them in hopes of getting three wishes, I feel like an education campaign would be more effective.

      It doesn't help one a bit to be educated if the pension fund - educated or not - invests one's money in crypto-fluff.

  • (Score: 2, Interesting) by Veyrdite on Sunday December 18 2022, @10:25PM (2 children)

    by Veyrdite (6386) on Sunday December 18 2022, @10:25PM (#1283054)

    Companies that deal with securities are regulated in most countries. Otherwise it's too easy for them to defraud people, especially smaller investors.

    Is crypto different to other securities? I don't think it has any unique features that say it shouldn't be regulated in some way like other securities handling companies are. The only practical reason they have been able to skirt regulation is the fact they are new and fast.

    • (Score: 2) by c0lo on Monday December 19 2022, @01:12AM (1 child)

      by c0lo (156) Subscriber Badge on Monday December 19 2022, @01:12AM (#1283074) Journal

      Cryptos aren't securities [investopedia.com], they are commodities at best. This is what allowed them to grow with no (or very little) regulations.

      The Howey Test refers to the U.S. Supreme Court case for determining whether a transaction qualifies as an "investment contract," and therefore would be considered a security and subject to disclosure and registration requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934. Under the Howey Test, an investment contract exists if there is an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."

      --
      https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
      • (Score: 1) by khallow on Monday December 19 2022, @03:32PM

        by khallow (3766) Subscriber Badge on Monday December 19 2022, @03:32PM (#1283152) Journal
        Why should the rest of us consider the Howey test a legitimate measure of what is a security? Notice the second part "and subject to disclosure and registration requirements". Sounds like a typical routing around bad regulation to me.
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