Silicon Valley Tech News Roundup – March 26th

Shou Zi Chew (the CEO of TikTok) testifies in Congress – 3/23

On Thursday, Shou Zi Chew (the CEO of TikTok) testified before the House Energy and Commerce Committee for over five hours. The lawmakers wanted to discuss several potential issues. They wanted to know if the U. S. user data can be turned over to the Chinese government via ByteDance, the Chinese owners of TikTok, and also if the app is potentially harmful to children.

According to Shou Zi Chew, the ByteDance employees in China still may have access to the U. S. user data. However, he also claims once “Project Texas” is completed, that would not be the case anymore. “Project Texas” is TikTok’s risk mitigation plan. According to the company, it is already implementing “Project Texas.” TikTok is deleting U. S. user data from the servers in Virginia and Singapore. Once the data gets deleted, the Chinese employees will not have access to it.

Chinese law allows the government to access the data for national security purposes. Shou Zi Chew denied the company shares data with the Chinese Communist Party. He said TikTok is a “private business” that relies on a global workforce.

Last week, in an article published by the Wall Street Journal, an allegation was made TikTok is a Chinese espionage operation. The company’s spokesperson denied the claims and stated: “Since October of 2022, all new U. S. user data has been stored exclusively in the Oracle Cloud Environment, with protected data fully out of reach of any foreign government. That data is managed exclusively by U. S. Data Security – a TikTok subsidiary made up of Americans, led and located in America – whose sole focus is to protect U. S. national security interests by securing U. S. user data and preventing outside manipulation of our systems.” The report also claimed the Chinese government would oppose the proposed sale of TikTok because it would mean the export of technology.

Utah approves a new law – under-18s need parental consent for social media – 3/24

On Thursday, Spencer Cox (the Governor of Utah) signed two new laws that require under-18s to have the consent of their parents or guardians to use social media platforms.

The two new laws are H.B. 311 and S.B. 152 and are a part of the Social Media Regulation Act. The S.B. 152 bill requires all social media platforms to ensure age verification and get parental consent for minors. The H.B. 311 bill bans social media platforms from “using a design or feature that causes a minor to have an addiction.”

Under-18s cannot use social media between 10:30 PM and 6:30 AM. Likewise, social media platforms have to allow parents or guardians to set time limits on how much children can use social media and allow them access to all of their children’s posts. Furthermore, social media companies cannot display content or ads targeted to minors, collect their data, or display minors in public search results. The law does not clarify how the state plans to enforce these regulations.

Governor Spencer Cox tweeted about the regulation and said: “We’re no longer willing to let social media companies continue to harm the mental health of our youth.”

The law should come into effect on March 1st, 2024. However, experts believe social media companies will challenge the legislation.

Binance’s employees and volunteers instruct Chinese users on how to bypass the crypto ban – 3/23

Since the Chinese government banned cryptocurrency trading in 2021., Binance cannot operate in China. The government banned crypto exchanges in 2017. But Binance employees and Binance-trained volunteers share techniques on how to bypass Binance’s KYC (know-your-customer system), as well as residency and verification systems. These include everything from falsifying bank documents to methods on how to evade Binance’s systems. The messages are shared via the company’s Telegram group and Discord server. The two channels have over 200,000 registered users and are accessible to anyone who joins and registers.

Binance is the largest crypto exchange globally based on assets and volume. Changpeng “CZ” Zhao described the company’s know-your-customer system as a billion-dollar effort. The purpose of the system is to ensure customers who are not supposed to use the platform cannot do so.

Experts believe this information questions the effectiveness of Binance’s anti-money laundering efforts.

When contacted to comment on these findings, Binance’s spokesperson stated to CNBC: “We have taken action against employees who may have violated our internal policies including wrongly soliciting or making recommendations that are not allowed or in line with our standards. We have strict policies requiring all users to pass KYC by providing us with their country of residence and other personal identification information… Binance employees are explicitly forbidden from suggesting or supporting users in circumventing their local laws and regulatory policies, and would be immediately dismissed or audited if found to have violated those policies.”

Do Kwon (Terraform Labs) arrested in Montenegro – 3/24

South Korean police confirmed that Do Kwon (the Founder of Terraform Labs) got arrested in Montenegro. The authorities are accusing Kwon of the $40 billion collapse of Luna and terraUSD tokens.

Filip Adzic (the Minister of Interior of Montenegro) announced the news about the arrest on Twitter. The authorities arrested Kwon at Podgorica airport. According to Adzic, Kwon traveled under a false name and with false documents. South Korean authorities confirmed his identity after matching his fingerprints to the ones on record. Montenegro does not have extradition treaties with South Korea or the United States.

The South Korean authorities issued an arrest warrant for Kwon in September last year. On Thursday, the U. S. authorities charged Kwon with wire fraud, commodities fraud, securities fraud, and conspiracy. Likewise, the U. S. authorities stated in February Kwon and his company Terraform Labs “failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for Luna and TerraUSD.”

In May of last year, despite Kwon’s claims that the tokens would increase in value, the tokens and their cryptocurrency plunged to almost zero.