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Partisan dunks eclipse Section 230 in Senate hearing on social media giants



In a hearing before the Senate Commerce Committee on Friday, the CEOs of Facebook, Twitter and Google’s parent company, Alphabet, faced a veritable firing squad in what has become bipartisan hatred based on partisan reasons. But while Republicans and Democrats have different gripes with the platforms, all are clearly out for blood. 

Today’s hearing, theoretically, set out to focus on Section 230, a component of the Communications Decency Act that has historically served to protect online content hosts from the responsibilities that publishers take on. However, the actual questioning ended up being primarily political dunking.

Many members commented on the speed with which the hearing was set up, which was clearly in response to the fact that the national election is Tuesday. The three CEOs — Mark Zuckerberg, Jack Dorsey and Sundar Pichai — all appeared remotely, but it was after a threat of subpoena. Democrat Senator Richard Blumenthal chided the Republicans on the committee for trying to sway the election last-minute:

“I am appalled that my Republican colleagues are holding this hearing days before the election when they seem to want to bully and browbeat the platforms here to try to tilt them toward President Trump’s favor. The timing seems inexplicable except to game the ref, in effect.”

Senator Brian Schatz (D-HI) went further: “We have to call this hearing what it is: It’s a sham.”

Meanwhile, Republicans such as Ted Cruz, who lost to Donald Trump in the presidential primaries in 2016, portrayed Twitter’s removal of the New York Post’s story on alleged corruption by the son of Democratic presidential candidate Joe Biden as proof that they are censoring conservative narratives. Cruz said:

“The three witnesses we have before us today collectively pose, I believe, the single greatest threat to free speech in America and the greatest threat we have to free and fair elections.”

Since the 2016 elections, Facebook in particular has fallen far out of the favor of Democratic congresspeople. Many attribute Donald Trump’s victory to Russian misinformation on the platform, as well as the sale of user data to the Trump campaign. Given the continued circulation of conspiracy theories and far-right recruitment on the platform, Democrats have put new pressure on Facebook to do more content moderation.

Meanwhile, President Trump and the Department of Justice have attacked Section 230 as a means for these platforms to remain unaccountable for how they perform content moderation. Here is a rare area where everyone seemed to agree. These platforms don’t make any of the algorithms running their suggestions public and have very limited information available about their new content moderation practices.

“The moderation practices used to suppress or amplify content remain a black box to the public,” said Senator John Thune (R-SD). “Due to exceptional secrecy with which platforms protect their content moderation practices it’s been impossible to prove one way or another whether political bias actually exists.”

Thune is a co-sponsor alongside Schatz on a bill that aims to add accountability to social media content practices while operating within the boundaries of Section 230. Other bills are floating around with more aggressive provisions against partisan removal of content.

But at least one leader in blockchain-based social media noted that proprietary controls over the algorithms running searches and content suggestions have no accountability because nobody ever sees them. This, says Bill Ottman — CEO of Minds — is something you could actually change fundamentally with legislation:

“The algorithms have to be open source. If the algorithms are not open source, there’s no way for anyone to know if they’re playing favorites. So that’s the regulation that would actually be useful to everybody, because it’s not so much a question of if search is a part of the multi-headed monster that is Google, it’s more like, can we audit search?”

Cointelegraph has previously speculated on whether the continuing attacks on Big Tech could ultimately push the market toward decentralization. Ottman suggested that making algorithms open source would allow public accountability on an ongoing basis, similar to how crypto operates.

Underlying all of these complaints is the awareness of the power of these platforms. They have become more critical to public discourse than anyone could have predicted in the mid-90s, when Section 230 emerged. Facebook, Twitter and Google are leading sources of information for many U.S. voters, a status some allege they have used to feed into their own size. Zuckerberg, Pichai and Dorsey all appeared before the House Judiciary Committee for antitrust violations in July.

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ICO issuer charged with fraud by SEC for selling unregistered security




The United States Securities and Exchange Commission, or SEC, has charged a cryptocurrency issuer for “making materially false and misleading statements” in connection with an unregistered security offering conducted between August 2017 and January 2018, offering further evidence that regulators were still targeting initial coin offerings from the last major market mania. 

Loci Inc., the platform behind LOCIcoin, and CEO John Wise were formally charged on Tuesday. The SEC claims that Loci and Wise misled investors about the company’s revenues, employee numbers and user base during the $7.6 million crowdsale. The regulator also alleges that Wise misused $38,163 in investor proceeds for personal expenses.

“Loci and its CEO misled investors regarding critical aspects of Loci’s business,” said Kristina Littman, the head of the SEC Enforcement Division’s cyber unit, adding:

“Investors in digital asset securities are entitled to truthful information and fulsome disclosures so they can make informed investment decisions.”

The order also requires that Loci and Wise pay a $7.6 million civil penalty for their transgressions.

Handing out penalties to cryptocurrency businesses is nothing new for U.S. authorities. Regulators from the SEC, Commodity Futures Trading Commission and Financial Crimes Enforcement Network have imposed fines of more than $2.5 billion on cryptocurrency-related businesses since 2014, underscoring the murky regulatory climate surrounding digital assets.

Elliptic Enterprises, a blockchain analytics firm headquartered in the United Kingdom, reported Tuesday that the $2.5 billion in penalties covered a broad range of infractions, including fraud, the selling of unregistered securities and a failure to uphold Anti-Money Laundering regulations.

The SEC accounted for the lion’s share of the penalties at $1.69 billion. The CFTC imposed penalties of $624 million and FinCEN slapped crypto businesses with $183 million in fines. The Office of Foreign Asset Control handed out the smallest fines among the regulators at $606,000.

Cryptocurrencies have been described by many as the wild west of finance. Tens of thousands of crypto-centric projects have launched in the wake of Bitcoin’s genesis block in early 2009. Many of these companies got their start in 2017 during the height of the initial coin offering boom.

Related: With US regulators handing out $2.5B in fines since 2014, crypto is not the ‘wild west’ of finance

ICOs allowed crypto startups to raise millions of dollars without having to meet the stringent regulations of more traditional security offerings. ICO funding reached the tens of billions in 2017 and 2018 combined, attracting unwanted attention from securities regulators. The SEC successfully charged the founders of several crypto companies, which effectively put an end to the mania — in the United States, at least.