The GiD Report#145 — Ripple’s SEC response and Signal’s moderation problem

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GlobaliD

6 min readFeb 2, 2021

Welcome to The GiD Report, a weekly newsletter that covers GlobaliD team and partner news, market perspectives, and industry analysis. You can check out last week’s report here.

New podcast: EPISODE 03 — Should we trust Facebook?

This week:

Ripple’s response to SEC
This week in crypto
College kids: Big Tech has too much power
Signal’s moderation problem
Apple v. Facebook
Stuff happens

1. Ripple’s response to the SEC:

Coindesk:

The U.S. Securities and Exchange Commission (SEC) is ignoring that the XRP cryptocurrency has utility, fintech startup Ripple alleged in its response to a securities complaint filed by the regulatory agency.
In a Friday filing, Ripple Labs pushed back against the SEC’s allegations, which claim the San Francisco-based firm violated U.S. securities laws for over seven years by selling $1.3 billion worth of XRP tokens.

But wait, there’s more. Ripple also filed a Freedom of Information Act Request with the SEC.

Fortune:

The cryptocurrency company Ripple has taken the unusual step of filing a Freedom of Information request with the Securities and Exchange Commission, asking the agency to release documents concerning its determination that Bitcoin and Ethereum — the two most popular digital currencies — are not securities.
…
In a letter, Ripple asked for any correspondence between the agency and those who helped create Ethereum, including Vitalik Buterin and Joe Lubin. It also asks for letters between former SEC Chairman Jay Clayton, agency staff and members of Congress.
…
For its part, the company says it has never claimed that owning XRP amounts to an ownership claim in Ripple, which has long tried to persuade banks and financial institutions to use its software — and XRP — as facilitate global money transfers. The company also asserts that the price of XRP is not correlated to Ripple’s business activities, and notes that other agencies, including the Justice and Treasury Departments, have characterized XRP as a currency not a security.
In this context, Ripple’s demands for SEC correspondence about Bitcoin and Ethereum appear to be an attempt to portray the agency’s lawsuit as arbitrary and unfair. In particular, Ripple is likely to focus on the SEC’s 2018 conclusion that Ethereum is not a security — even though the Ethereum conducted a so-called “Initial Coin Offering” that gave outside buyers an opportunity to buy into the project early.

Greg Kidd:

Forcing the [SEC] to reveal why it’s picking winners and losers rather than putting out clear guidelines and sticking to its mission. Score one for transparency.

In case you missed our podcast: EPISODE 01 — The SEC’s crypto turf war and why XRP isn’t a security

2. This week in crypto:

Tweet of the week:

3. College kids think Big Tech should be regulated and have too much power.

Axios:

The big picture: The national survey of 852 two-year and four-year college students, conducted Jan. 22–25, is one of the earliest looks at how young people are reacting to the end of the Trump era, the Biden administration’s early days and the related challenges of governance.
The bottom line: Gen Z and young Millennials live and breathe social media and technology and are confident in their own ability to use these platforms and detect misinformation. Yet, with notable bipartisan agreement, they think Big Tech’s power must be checked.

Lawmakers not only agree, they’re suddenly well positioned. Axios:

The big picture: Many Democrats want to hit Big Tech with new antitrust laws, updates to Section 230, privacy legislation and more. The party may be united enough on such issues — and able to peel off GOP support — to pass laws around them even as the Senate’s 50–50 party-line split and shifting priorities imperil other legislative possibilities.

Chart of the week:

4. Read of the week: Straddling the line between privacy and moderation.

The Verge (via /vs):

But Signal’s rapid growth has also been a cause for concern. In the months leading up to and following the 2020 US presidential election, Signal employees raised questions about the development and addition of new features that they fear will lead the platform to be used in dangerous and even harmful ways. But those warnings have largely gone unheeded, they told me, as the company has pursued a goal to hit 100 million active users and generate enough donations to secure Signal’s long-term future.
Employees worry that, should Signal fail to build policies and enforcement mechanisms to identify and remove bad actors, the fallout could bring more negative attention to encryption technologies from regulators at a time when their existence is threatened around the world.
“The world needs products like Signal — but they also need Signal to be thoughtful,” said Gregg Bernstein, a former user researcher who left the organization this month over his concerns. “It’s not only that Signal doesn’t have these policies in place. But they’ve been resistant to even considering what a policy might look like.”
Interviews with current and former employees, plus leaked screenshots of internal deliberations, paint a portrait of a company that is justly proud of its role in promoting privacy while also willfully dismissing concerns over the potential misuses of its service. Their comments raise the question of whether a company conceived as a rebuke to data-hungry, ad-funded communication tools like Facebook and WhatsApp will really be so different after all.

5. Facebook and Apple continue to squabble over privacy.

As Greg likes to say, it’s Godzilla v. Mothra. (And in the end, Tokyo is destroyed.)

WSJ:

The clash between Apple Inc. AAPL +1.94% and Facebook Inc. FB +2.00% intensified as the chief executives of the two tech giants squared off in public remarks over privacy, the impact of algorithms and competition and offered dueling visions of the future of the internet.
Without naming Facebook directly, Apple CEO Tim Cook leveled a blistering condemnation of “conspiracy theories juiced by algorithms” in a speech Thursday as he discussed a new privacy tool the iPhone maker plans to roll out in the next several months. Mr. Cook also tied recent social unrest to a broader argument that app-tracking tools are turning consumers into advertising products.
Facebook CEO Mark Zuckerberg singled out Apple Wednesday as one of its most formidable competitors and accused the company of using its platform to interfere with how Facebook apps work. Mr. Zuckerberg has previously cast the fight as one between ad-supported players like his company who offer free apps with targeted advertising and privacy-conscious, fee-based services like those Apple is backing for consumers.