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It’s a lesson to remember as we watch the crypto space melt down, with ex-billionaire Sam Bankman-Fried

It’s not like perfidy in crypto was some hidden secret. At the top of the market, back in December 2021, I wrote a piece very explicitly saying that crypto was a set of Ponzi schemes. It went viral, and I got a huge amount of hate mail from crypto types

one of the more bizarre aspects of the crypto meltdown is the deep anger not just at those who perpetrated it, but at those who were trying to stop the scam from going on. For instance, here’s crypto exchange Coinbase CEO Brian Armstrong, who just a year ago was fighting regulators vehemently, blaming the cops for allowing gambling in the casino he helps run.

FTX.com was an offshore exchange not regulated by the SEC. The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore. Punishing US companies for this makes no sense.

many crypto ‘enthusiasts’ watching Gensler discuss regulation with his predecessor “called for their incarceration or worse.”

Cryptocurrencies are securities, and should fit under securities law, which would have imposed rules that would foster a de facto ban of the entire space. But since regulators had not actually treated them as securities for the last ten years, a whole new gray area of fake law had emerged

Almost as soon as he took office, Gensler sought to fix this situation, and treat them as securities. He began investigating important players

But the legal wrangling to just get the courts to treat crypto as a set of speculative instruments regulated under securities law made the law moot

In May of 2022, a year after Gensler began trying to do something about Terra/Luna, Kwon’s scheme blew up. In a comically-too-late-to-matter gesture, an appeals court then said that the SEC had the right to compel information from Kwon’s now-bankrupt scheme. It is absolute lunacy that well-settled law, like the ability for the SEC to investigate those in the securities business, is now being re-litigated.

Securities and Exchange Commission Chair Gary Gensler, who took office in April of 2021 with a deep background in Wall Street, regulatory policy, and crypto, which he had taught at MIT years before joining the SEC. Gensler came in with the goal of implementing the rule of law in the crypto space, which he knew was full of scams and based on unproven technology. Yesterday, on CNBC, he was again confronted with Andrew Ross Sorkin essentially asking, “Why were you going after minor players when this Ponzi scheme was so flagrant?”

it wasn’t just the courts who were an impediment. Gensler wasn’t the only cop on the beat. Other regulators, like those at the Commodities Futures Trading Commission, the Federal Reserve, or the Office of Comptroller of the Currency, not only refused to take action, but actively defended their regulatory turf against an attempt from the SEC to stop the scams.

Behind this was the fist of political power. Everyone saw the incentives the Senate laid down when every single Republican, plus a smattering of Democrats, defeated the nomination of crypto-skeptic Saule Omarova in becoming the powerful bank regulator at the Comptroller of the Currency

Instead of strong figures like Omarova, we had a weakling acting Comptroller Michael Hsu at the OCC, put there by the excessively cautious Treasury Secretary Janet Yellen. Hsu refused to stop bank interactions with crypto or fintech because, as he told Congress in 2021, “These trends cannot be stopped.”

It’s not just these regulators; everyone wanted a piece of the bureaucratic pie. In March of 2022, before it all unraveled, the Biden administration issued an executive order on crypto. In it, Biden said that virtually every single government agency would have a hand in the space.

That’s… insane. If everyone’s in charge, no one is.

And behind all of these fights was the money and political prestige of some most powerful people in Silicon Valley, who were funding a large political fight to write the rules for crypto, with everyone from former Treasury Secretary Larry Summers to former SEC Chair Mary Jo White on the payroll.

(Even now, even after it was all revealed as a Ponzi scheme, Congress is still trying to write rules favorable to the industry. It’s like, guys, stop it. There’s no more bribe money!)

Moreover, the institution Gensler took over was deeply weakened. Since the Reagan administration, wave after wave of political leader at the SEC has gutted the place and dumbed down the enforcers. Courts have tied up the commission in knots, and Congress has defanged it

Under Trump crypto exploded, because his SEC chair Jay Clayton had no real policy on crypto (and then immediately went into the industry after leaving.) The SEC was so dormant that when Gensler came into office, some senior lawyers actually revolted over his attempt to make them do work.

In other words, the regulators were tied up in the courts, they were against an immensely powerful set of venture capitalists who have poured money into Congress and D.C., they had feeble legal levers, and they had to deal with ‘crypto enthusiasts' who thought they should be jailed or harmed for trying to impose basic rules around market manipulation.

The bottom line is, Gensler is just one regulator, up against a lot of massed power, money, and bad institutional habits. And we as a society simply made the choice through our elected leaders to have little meaningful law enforcement in financial markets, which first became blindingly obvious in 2008 during the financial crisis, and then became comical ten years later when a sector whose only real use cases were money laundering

, Ponzi scheming or buying drugs on the internet, managed to rack up enough political power to bring Tony Blair and Bill Clinton to a conference held in a tax haven billed as ‘the future.’

it is comforting to think that scientific truth inevitably emerges and scientific frauds will be caught and punished.

Dr. Hwang’s scandal suggests something different. Researchers don’t always have the resources or motivation to replicate others’ experiments

Even if they try to replicate and fail, it is the institution where the scientist works that has the right and responsibility to investigate possible fraud. Research institutes and universities, facing the prospect of an embarrassing scandal, might not do so.

Industry leaders believe the new A.I. systems could be as important as the introduction of the web browser in the early 1990s and could lead to breakthroughs in areas ranging from drug research to education.

But gnawing at many industry insiders is a fear that they are releasing something dangerous into the wild. Generative A.I. can already be a tool for misinformation. Soon, it could be a risk to jobs. Somewhere down the line, tech’s biggest worriers say, it could be a risk to humanity.

“It is hard to see how you can prevent the bad actors from using it for bad things,” Dr. Hinton said.

After the San Francisco start-up OpenAI released a new version of ChatGPT in March, more than 1,000 technology leaders and researchers signed an open letter calling for a six-month moratorium on the development of new systems because A.I technologies pose “profound risks to society and humanity.

Several days later, 19 current and former leaders of the Association for the Advancement of Artificial Intelligence, a 40-year-old academic society, released their own letter warning of the risks of A.I. That group included Eric Horvitz, chief scientific officer at Microsoft, which has deployed OpenAI’s technology across a wide range of products, including its Bing search engine.

Dr. Hinton, often called “the Godfather of A.I.,” did not sign either of those letters and said he did not want to publicly criticize Google or other companies until he had quit his job

Dr. Hinton, a 75-year-old British expatriate, is a lifelong academic whose career was driven by his personal convictions about the development and use of A.I. In 1972, as a graduate student at the University of Edinburgh, Dr. Hinton embraced an idea called a neural network. A neural network is a mathematical system that learns skills by analyzing data. At the time, few researchers believed in the idea. But it became his life’s work.

Dr. Hinton is deeply opposed to the use of artificial intelligence on the battlefield — what he calls “robot soldiers.”

In 2012, Dr. Hinton and two of his students in Toronto, Ilya Sutskever and Alex Krishevsky, built a neural network that could analyze thousands of photos and teach itself to identify common objects, such as flowers, dogs and cars.

In 2018, Dr. Hinton and two other longtime collaborators received the Turing Award, often called “the Nobel Prize of computing,” for their work on neural networks.

Around the same time, Google, OpenAI and other companies began building neural networks that learned from huge amounts of digital text. Dr. Hinton thought it was a powerful way for machines to understand and generate language, but it was inferior to the way humans handled language.

Then, last year, as Google and OpenAI built systems using much larger amounts of data, his view changed. He still believed the systems were inferior to the human brain in some ways but he thought they were eclipsing human intelligence in others.

“Maybe what is going on in these systems,” he said, “is actually a lot better than what is going on in the brain.”

As companies improve their A.I. systems, he believes, they become increasingly dangerous. “Look at how it was five years ago and how it is now,” he said of A.I. technology. “Take the difference and propagate it forwards. That’s scary.”

Until last year, he said, Google acted as a “proper steward” for the technology, careful not to release something that might cause harm. But now that Microsoft has augmented its Bing search engine with a chatbot — challenging Google’s core business — Google is racing to deploy the same kind of technology. The tech giants are locked in a competition that might be impossible to stop, Dr. Hinton said.

His immediate concern is that the internet will be flooded with false photos, videos and text, and the average person will “not be able to know what is true anymore.”

He is also worried that A.I. technologies will in time upend the job market. Today, chatbots like ChatGPT tend to complement human workers, but they could replace paralegals, personal assistants, translators and others who handle rote tasks. “It takes away the drudge work,” he said. “It might take away more than that.”

Down the road, he is worried that future versions of the technology pose a threat to humanity because they often learn unexpected behavior from the vast amounts of data they analyze. This becomes an issue, he said, as individuals and companies allow A.I. systems not only to generate their own computer code but actually run that code on their ow

And he fears a day when truly autonomous weapons — those killer robots — become reality.

“The idea that this stuff could actually get smarter than people — a few people believed that,” he said. “But most people thought it was way off. And I thought it was way off. I thought it was 30 to 50 years or even longer away. Obviously, I no longer think that.”

Many other experts, including many of his students and colleagues, say this threat is hypothetical. But Dr. Hinton believes that the race between Google and Microsoft and others will escalate into a global race that will not stop without some sort of global regulation.

But that may be impossible, he said. Unlike with nuclear weapons, he said, there is no way of knowing whether companies or countries are working on the technology in secret. The best hope is for the world’s leading scientists to collaborate on ways of controlling the technology. “I don’t think they should scale this up more until they have understood whether they can control it,” he said.

Dr. Hinton said that when people used to ask him how he could work on technology that was potentially dangerous, he would paraphrase Robert Oppenheimer, who led the U.S. effort to build the atomic bomb: “When you see something that is technically sweet, you go ahead and do it.”

He does not say that anymore.

Secondly as Stuart Ritchie points out in this excellent article, to date the evidence assembled by proponents of the social media theory like Jonathan Haidt and Jean Twenge, has shown correlations not causal relationships. Yes, it seems that young people who use social media a lot have worse mental health, but that could easily be because young people with worse mental health choose to use social media more!  

recently I’ve shifted to thinking it probably is a major cause for three reasons:

1.       I can’t think of anything else that fits. Other suggested causes just don’t work.

Social media does fit, the big increase in take up maps well on to the mental health data and it happened everywhere in rich countries at the same time. The most affected group, teenage girls, are also the ones who report that social media makes them more anxious and body conscious in focus groups

It is of course true that correlation doesn’t prove anything but if there’s only one strongly related correlation it’s pretty likely there’s a relationship.

2.       There is no doubt that young people are spending a huge amount of time online now. And that, therefore, must have replaced other activities that involve being out with friends in real life. Three quarters of 12 year olds now have a social media profile and 95% of teenagers use social media regularly. Over half who say they’ve been bullied, say it was on social media.

  We finally have the first evidence of a direct causal relationship via a very clever US study using the staged rollout of Facebook across US college campuses to assess the impact on mental health. Not only does it show that mental illness increased after the introduction of Facebook but it also shows that it was particularly pronounced amongst those who were more likely to view themselves unfavourably alongside their peers due to being e.g. overweight or having lower socio-economic status. It is just one study but it nudges me even further towards thinking this a major cause of the problem.

I have blocked my (12 year old) twins from all social media apps and will hold out as long as possible. The evidence isn’t yet rock solid but it’s solid enough to make me want to protect them as best I can.