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Presented by CTIA - The Wireless Association: How the next wave of technology is upending the global economy and its power structures | | | | |  | | By Ben Schreckinger | Presented by CTIA - The Wireless Association | With help from Derek Robertson
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The logo for Ethereum, a blockchain network with the second largest cryptocurrency by market share. | Beata Zawrzel/NurPhoto via Getty Images | A legal fight over the software infrastructure behind a large portion of crypto activity is heating up with a new Swiss court ruling. The fight pits billionaire Joe Lubin, considered a de facto co-founder of Ethereum, against a group of his former employees at ConsenSys AG, a firm that was central to the development of the second-oldest blockchain network. While at one level the court battle comes down to a squabble over corporate governance and the value of some key assets, it can also be seen as emblematic of a bigger question shaping the world that crypto and Web3 evangelists hope to build: Should blockchain systems embrace existing corporate and government structures, or maximize their independence from them? In the crypto world, a more pragmatic and business-minded camp sees the involvement of big banks and government entities as validation of the technology and a prerequisite for achieving its potential. Crypto purists, on the other hand, distrust those established players, and see their arrival as a threat to the original promise of the blockchain — by, for example, collecting user data or ensuring compliance with government regulations that the purists consider unjust. The latest ruling prolongs a feud that has split an important group of early crypto pioneers. The former employees of ConsenSys, who are also minority shareholders in the firm, contend that it improperly transferred some important assets to a separate entity now owned by Lubin and a who’s-who of big-name investors including J.P. Morgan, Microsoft, Softbank and Singapore’s state-owned Temasek. Those assets include MetaMask, a popular crypto wallet, and Infura, a suite of software tools for blockchain developers — meaning that those tools are now in the hands of a company backed by big financial powerhouses. In March, the minority shareholders filed a request for a special audit. Soon after, it filed a demand that the transfer be put to a retroactive shareholder vote. Last month, in a previously unreported decision, a judge in the Swiss canton of Zug granted the former employees’ demand for that shareholder vote. For the plaintiffs, the victory is merely tactical. Because Lubin himself owns the majority of ConsenSys AG shares, the vote is expected to ratify the transfer. But the decision paves the way for more legal wrangling, because the vote would produce a shareholder resolution that can be challenged in court, allowing the minority shareholders to press the substance of their legal challenge: That Lubin’s stake in the new entity represented a conflict of interest, and that the assets were purchased for too low a price — roughly $50 million. “Any way you look at it, this is really, really bad management of our assets,” said Arthur Falls, one of the former employees who acts as a spokesman for the group. The group argues that the hundreds of millions of dollars invested into the new entity, ConsenSys Software Inc., since the transfer imply a much higher value for the assets. In an emailed statement, a spokesperson for ConsenSys AG, which now does business as ConsenSys Mesh, denied the allegations, saying the transfer was conducted in consultation with top law firms and on the basis of an independent valuation by PwC. The statement contends that the price was reasonable at the time the transfer happened in 2020, during a moment of pandemic-induced economic uncertainty, before the latest crypto bull run and the NFT craze pumped the value of the assets to new highs. Given the obstacles to reversing a complex, years-old transaction, it is unclear what the outcome of a successful legal challenge might entail. But the conflict highlights the industry’s rocky transition from its roots in scrappy, informal projects fostered by idealistic computer coders to a big global business. Falls said a privacy policy update issued last month that allows MetaMask to collect users’ IP addresses was emblematic of MetaMask’s turn away from crypto’s ideals under its new ownership. Read the full story here.
| | | | A message from CTIA - The Wireless Association: 5G is powering America’s fastest growing home broadband service, bringing competition to cable and fast, reliable, affordable home and business internet to millions of Americans. The wireless industry needs a pipeline of exclusive-use, licensed spectrum to expand wireless broadband service, bridge the digital divide and bring real competition and choice to more Americans. Learn more at www.ctia.org. | | | | | | |  John Carmack speaking in 2015. | AP | One of the gaming world’s pioneers has had enough of Meta. On Friday afternoon Insider reported that John Carmack, the designer of paradigm-changing 1990s video games like Doom and Quake, was leaving Meta, where he served as a CTO and consulting CTO for Oculus since 2013. Carmack’s rationale: That the company is being run inefficiently, with the very thing that enables its expensive and ambitious investment in the metaverse — that is, the company’s massive size — is bogging the project down in bureaucratic red tape. “We have a ridiculous amount of people and resources, but we constantly self-sabotage and squander effort,” Carmack wrote in the post announcing his resignation, which he later posted in full on Facebook. “There is no way to sugar coat this; I think our organization is operating at half the effectiveness that would make me happy.” Carmack, long one of the most outspoken game developers of his generation, complained of the same issues on Lex Fridman’s podcast earlier this year. Age, however, appears to have mellowed Carmack, who nevertheless insisted in his farewell note that “VR can bring value to most of the people in the world, and no company is better positioned to do it than Meta” — and on Twitter, Meta’s CTO Andrew Bosworth wished him well by saying “it is impossible to overstate the impact you’ve had on our work and the industry as a whole… Thank you and see you in VR.” — Derek Robertson
| | | | A message from CTIA - The Wireless Association:   | | | | | the end of the end of homework | | Point, counterpoint: Not everyone is convinced that large language models like the one on which ChatGPT runs are going to “end homework.” Robert Pondiscio, a senior fellow at the American Enterprise Institute, dissented in an essay published by the think tank last week, arguing that the element of human judgment involved in communication makes it impossible to automate except for rote or functional tasks. “...It takes knowledge to communicate knowledge — or even to have the discernment to judge whether an AI-generated piece of text makes sense or sufficiently responds to a prompt,” Pondiscio writes. He argues further that the assumption that AI could replace human writing is actually dangerous to literacy in its own right: “Artificial intelligence will provide time-saving tools for knowledge-haves, but it will be fatal to the interests of knowledge have-nots, if they are denied the opportunity to develop the language proficiency the well-educated take for granted, and which make AI tools useful.” In other words: As fellow wonk Samuel Hammond wrote in his own recent post about the social implications of AI, it’s not what the tech can do, but what we choose — and choose not to — do with it. — Derek Robertson
| | | | A NEW POLITICO PODCAST: POLITICO Tech is an authoritative insider briefing on the politics and policy of technology. From crypto and the metaverse to cybersecurity and AI, we explore the who, what and how of policy shaping future industries. We’re kicking off with a series exploring darknet market places, the virtual platforms that enable actors from all corners of the online world to traffic illicit goods. As malware and cybercrime attacks become increasingly frequent, regulators and law enforcement agencies work different angles to shut these platforms down, but new, often more unassailable marketplaces pop up. SUBSCRIBE AND START LISTENING TODAY. | | | | | | | | | 
| | | | | Stay in touch with the whole team: Ben Schreckinger (bschreckinger@politico.com); Derek Robertson (drobertson@politico.com); Steve Heuser (sheuser@politico.com); and Benton Ives (bives@politico.com). Follow us @DigitalFuture on Twitter. Ben Schreckinger covers tech, finance and politics for POLITICO; he is an investor in cryptocurrency. If you’ve had this newsletter forwarded to you, you can sign up and read our mission statement at the links provided.
| | | | A message from CTIA - The Wireless Association: 5G is shaking up the home broadband market – expanding access to high speed, affordable broadband and powering broadband choice for millions of Americans. Households and businesses outfitted with 5G Home Broadband can do everything they do with cable, with great speed and performance, including streaming, video conferencing, homework, telemedicine, gaming and more. 5G Home Broadband is essential to solving the digital divide and driving new competition. In order to expand this service to more Americans, the wireless industry needs a long-term pipeline of licensed mid-band spectrum. The wireless industry has 5% of lower mid-band spectrum, while the unlicensed community has 7X, and government users 12X that amount. According to Accenture, unlocking more exclusive use mid-band spectrum will help rebalance these spectrum allocations and deliver on 5G’s broadband promise. Allocating these bands as exclusive-use, licensed spectrum, operating at full power, is the key to bringing more affordable options like 5G Home Broadband to more Americans. Learn more at www.ctia.org. | | | | | | | LISTEN TO POLITICO'S ENERGY PODCAST: Check out our daily five-minute brief on the latest energy and environmental politics and policy news. Don't miss out on the must-know stories, candid insights, and analysis from POLITICO's energy team. Listen today. | | | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
