Transcript

[00:00:00] Chris: So the thesis here is you want to use a better camera. And this is like the easiest way to do it. Yeah, relatively inexpensive way, I would imagine. Yeah.

[00:00:11] Ned: You just have to get the car, the dongle adapter, which is $150, which if you’ve already dropped, will probably over $1,000 on the camera. You’re not going to flinch at $120 for the capture card.

[00:00:27] Chris: So to follow this up a little bit, the other thesis is that you want to use a better camera, which stands the reason you think people want to see your face better.

[00:00:37] Ned: Okay, listen, man, I’m not here to argue that one. I just noticed that it gives me some trouble with zoom specifically, but when I have my video on using this camera with the cam link, zoom will just be real laggy for the first two or three minutes of the meeting, and then it sort of sorts itself out and it’s fine. But for that first, like two or three minutes, if I click on a button in zoom, it takes like three or 4 seconds for it to acknowledge.

[00:01:13] Chris: That’s really strange.

[00:01:16] Ned: And so I was kind of looking I’ve looked at forums before for a reason behind this and have never found a satisfactory answer, but I think I might have found one that’s now talking about, like, PCI lanes and, like, how your graphics card gets involved and some other stuff. It sounds kind of convoluted, but also probably correct.

[00:01:40] Chris: So the only natural solution here is to buy an HDMI in card and just start over from scratch.

[00:01:47] Ned: That’s not what the post is saying. But Elgato does make, like, a capture card that would just go right on your PCI bus instead of using USB three. And that would probably solve all of my problems.

[00:02:00] Chris: Is there one for CXL?

[00:02:04] Ned: No.

[00:02:08] Chris: It’S on the spec, though, right? For sure.

[00:02:11] Ned: I’m certain it’s on the spec, but I also don’t have a tower that would support.

[00:02:19] Chris: So we’re going from $150 of outlay to what, $400,000?

[00:02:24] Ned: Yeah, if I want to do it right. Which obviously oh, God. I am curious what the Elgato capture card cost is versus this USB dongle, because I assume it’s more.

[00:02:40] Chris: I bet it’s more, but not by much. I’m going to go $259.

[00:02:46] Ned: Okay, well, they have the Pro, which captures 4K HDR flawlessly for a cool $250. Who.

[00:02:58] Chris: Nailed it.

[00:02:59] Ned: Yeah.

[00:02:59] Chris: Be right back. I need to go to Atlantic City.

[00:03:03] Ned: Don’t do that. That seems like a bad idea. They also have the cam link Pro, which has four inputs on it. So multi camera production also for 250. So I could do like a single input, I think, for the same price as four inputs.

[00:03:21] Chris: You’d be a fool not to. And you can finally get that 360 degree net experience that no one’s ever asked for.

[00:03:28] Ned: Not yet, but they’ll be asking now.

[00:03:31] Chris: Are they still giving you donations on Patreon not to have an only fans.

[00:03:36] Ned: You’D be surprised at how much money that raises. Very quickly, every time I threaten it just cash rolls in. I have a little sound effect that goes off every time someone makes a donation.

[00:03:50] Chris: I feel like I haven’t looked at it in a while, but I’m pretty sure it’s still top ten on Kickstarter is the Please Ned, Keep Your Shirt On campaign.

[00:03:58] Ned: Hello, alleged human, and welcome to the Chaos Lever podcast. My name is Ned and I’m definitely not a robot. You know, as each diurnal cycle winds down, I too reflect on the events of the day sipping on a cup of mulled human blood. I mean wine. Yes, delicious wine. So coppery. And I recount the contents of my memory banks to my symbiote cybernetic partner. I mean wife. Wife. Yes, delicious wife. So coppery. With me is Chris, who is also here. Hi, Chris.

[00:04:40] Chris: So I have a number of questions, which I’m just going to set to the side for the time being, but I can only assume that you have very recently watched Bram Stoker’s Dracula.

[00:04:55] Ned: So delicious. So coppery.

[00:04:58] Chris: I mean, it’s not really that coppery though, is it?

[00:05:01] Ned: Human blood or Bram Stoker’s Dracula?

[00:05:05] Chris: Yes.

[00:05:07] Ned: I don’t remember an overabundance of Copper in the movie. Maybe I missed it.

[00:05:12] Chris: It could have been in the director’s cut.

[00:05:15] Ned: Everything’s in the director’s cut.

[00:05:17] Chris: From what I understand, it’s 14 hours long.

[00:05:19] Ned: I mean, not surprising.

[00:05:22] Chris: There’s a lot of Vlog of Gary Oldman walking around all day. I would watch that.

[00:05:31] Ned: I think we would all watch that. Sad and true. Well, we’ve got a lot to get through today. Should we talk about some tech garbage?

[00:05:41] Chris: And we are seriously putting the capital G in garbage.

[00:05:44] Ned: Yes. So welcome, ladies and gentlemen, to the oft promised SBF and the no good, Very bad day, week, year, etc. Ideally 14 to life, easily, easily, or, you know, 15 years off for good behavior. Wait, what? He’s retroactively out of jail?

[00:06:10] Chris: I get it. I get jokes.

[00:06:12] Ned: Do you? So it’s been a few weeks since news broke and it continues to break about the absolute cluster fuck that is FTX and Sam Bankman Freed. And I hope that you’ll pardon my strong language, but there really is no other term for the absolute and complete disaster that was and is FTX. Along with the second, third and fourth knock on effects that this has on the financial industry and the global economy. It’s a clusterfuck, and I think we all know who’s getting screwed. Hint, it’s not the rich people. So first, I want to say bravo to whatever insane writers room scripted up this episode of Earth 2022. Just hot damn well done. And how dare you? If I had pitched a financial whiz kid character who would take an evil turn in the third act and named him Sam Bank Man Freed, most people would say, isn’t that a little on the nose? But kudos to you writers. Subtleties overrated. Now, if I were to write a scene where this selfsame whiz kid was blithely playing League of Legends badly while halfheartedly pitching to venture capitalists for millions of dollars in funding, most people would tell me that just wasn’t believable.

[00:07:52] Ned: But no, no, no, my dear, darling writers, if you’re going to be a bear, be a grizzly. And you, my wonderful insane geniuses, you are the king of all grizzlies. The Adams supreme. As a great person once said, you can’t make this shit up. And if you did, no one would believe you. No notes.

[00:08:17] Chris: No. I’m imagining the audience at this point, all of whom are probably on different stages of the journey towards learning what’s happening, what has already happened, what will happen.

[00:08:33] Ned: We’re going to get into that. But the other thing I want to mention before we talk about FTX proper, if that’s a thing one can do properly, is the devastating impact this collapse will have on the everyday investor who followed the Hype train or invested in a fund with a manager who was bamboozled by the hair, dead eyes and empty promises of SBF. Y’all got screwed on an unsecured, unregulated and unbacked security. And, you know, just because it’s criminal fraud, that doesn’t mean you’ll get anything approaching justice.

[00:09:07] Chris: Or a refund.

[00:09:08] Ned: Or a refund. The first inline of the creditors will be the wealthy, followed by the lawyers. But I repeat myself, and you poor, poor, sad individual creditors will be lucky to get tuppence on the thousand, let alone pennies on the dollar. It’s 2008 again and you don’t even have an underwater house to sell. Are you feeling depressed enough? Good. Let’s begin. So this guy character, Sam Banknfreed, better known as SBF, is the alleged financial Vunderkind behind the Crypto exchange FTX and affiliated research and investment firm Alameda Research. SBF was born on the campus of Stanford University for Shadowing, where both his parents are law professors. More foreshadowing, I bring this up only to remind you that Sam is not entirely without knowledge of the law, something that might become important later. He attended MIT and graduated in 2014, where he went to go work for trading firm Jane Street Capital for the next three years before deciding he had learned everything there is to know about all of finance and left. To work for the center for Effective Altruism, a group focused on making billionaires feel less bad about having all the money before founding Lambda Research, a trading firm that he was totally qualified to start.

[00:10:43] Ned: So that brings us up to 2017. Two years later, SBF started the crypto exchange FTX, using funds from an arbitrage deal over Bitcoin and investments from VCs and private investors. The arbitrage deal was basically him moving money back and forth and then making money by moving money back and forth. This is the thing you can do.

[00:11:11] Chris: So he hasn’t gotten to the point where he just flat out edits his excel spreadsheets yet?

[00:11:15] Ned: Correct?

[00:11:16] Chris: Okay.

[00:11:17] Ned: Now, lucky for him, this was just in time for the crypto boom, where we saw bitcoin skyrocket from ten k all the way up to $64,000 a coin. NFTs were goddamn everywhere. And crypto was the hot new thing. You remember, like Matt Damon. And he said you were a coward if you didn’t invest. You going to take that from a southie with bad skin? Didn’t think so. Pony boy, go get gold and buy gold. I mean, cryptocurrency. And if you wanted to buy into crypto, how would you do it? You’d use an exchange, of course. So FDX was one such exchange, a crypto exchange. And crypto exchanges, like currency exchanges or stock exchanges, are just a way for you to take some kind of currency and exchange it for something else. In a currency exchange, you might trade, say, euros for dollars. And if you do it right, you can actually make money just moving it from one type of currency to another. That’s that whole arbitrage thing. In a stock exchange, you trade dollars for shares of a company, and in crypto exchanges, you swap dollars for garbage.

[00:12:34] Chris: I mean, cryptocurrency, they’re not garbage. They’re scams.

[00:12:41] Ned: I’m sorry. You’re right. Garbage might actually be useful to somebody.

[00:12:46] Chris: Sorry.

[00:12:46] Ned: Garbage.

[00:12:47] Chris: Just wait until we all have Mr. Fusion and you’re going to eat those garbage words, right?

[00:12:52] Ned: Dehydrated garbage words. So you can also exchange one cryptocurrency for another, and the exchange typically makes money from charging a processing fee for each transaction. And you trust that exchange will be able to safely execute trades based on your buy and sell orders. In fact, normal exchanges are centralized and subject to things like regulatory powers that ensure this kind of thing happens. Most crypto exchanges force you to use a crypto wallet that is hosted on the exchanges platform, meaning that you can’t just take your money and go home. You’d have to request a transfer from that crypto wallet to your personal crypto wallet or your crypto wallet on some other service. Now, that’s not dissimilar to an account on a regular stock exchange firm like Charles Schwab. Let’s say I have an investment account with Schwab where most of my investments are tied up in things like stocks and bonds. The rest of the money that isn’t currently invested is sitting in a money market account. If I want to take funds out of Chuck, even if the money is in a money market account, so it’s fiat currency, I still need to request a transfer or a check.

[00:14:08] Ned: And I’m trusting that good old Chuck has the funds necessary to pay out the money when I ask. And Chuck faces the wrath of the SEC, the FTC, or some other three or four letter agency if they don’t.

[00:14:22] Chris: Yeah, and this is important to remember two things. One, the government demands that if you want to call yourself a real bank, you have deposit protection now, that deposit is important to remember that that deposit protection is not unlimited, but it is there for, what are they up to $250,000, $300,000?

[00:14:44] Ned: These days, I believe it’s 250, but you have to check my math.

[00:14:48] Chris: But really, like, if they do not have the money to COVID every single deposit up to that level, they can’t be called a bank.

[00:14:56] Ned: Right. And they can loan out a certain portion of those deposits, but they have to keep a certain portion liquid and available at all times. Right, okay. And we’ll get back to liquidity versus solvency in a little bit because that’s going to be kind of important. So wouldn’t it be kind of weird if an exchange just made up its own money and let you buy that too? Like, let’s say Schwab started offering me Chuck Bucks at $10 per dollar. Do I want Chuck Bucks. I can’t spend them anywhere else.

[00:15:35] Chris: Not even Chuck e cheese.

[00:15:36] Ned: Unfortunately, no. Maybe I can trade them for stock or something. Maybe I get them as a frequent flyer reward, like frequent flyer miles, maybe. So that’s kind of what FTX did by introducing their own cryptocurrency called FTP. Also, I kind of want Chuck Bucks now.

[00:16:00] Chris: They’re pesi. I’m all in on Pepsi pesos.

[00:16:03] Ned: I like that too. Is that like marlboromiles? God dealer nations everywhere. So you might think that creating your own currency on an exchange that you manage would be a conflict of interest, and you would be right. Yay wash trading would certainly ensue, wherein you use dueling accounts that you manage to pump up the price of your currency and then sell it off to a thirdparty account sucker at a massive profit. And did FTX do this with FTT? Evidently so.

[00:16:40] Chris: So this is just an issue where you have what you are claiming is a limited resource and you are selling it back and forth between yourself and yourself and then other people see the price rising because of those fake trades.

[00:16:56] Ned: Yes.

[00:16:57] Chris: Feel like that means that it’s a valuable and value growing investment and then take it off your hands while you.

[00:17:05] Ned: Laugh maniacally and you can always mint more.

[00:17:09] Chris: Oh, right, my bad. Forgot about that part. Carry on.

[00:17:11] Ned: And that minted more coin is now valued in theory as the same as the coin that was just purchased by this third party.

[00:17:19] Chris: Of course, because one penny is worth AWS much as the next penny. Right?

[00:17:23] Ned: Sure.

[00:17:24] Chris: Stands to reason SBF says out loud.

[00:17:29] Ned: So they did that, but they also did so much more. So Alameda Research, which is also basically owned by SBF, I think he had 90% ownership or something. They made a lot of really, really bad bets in the crypto world. They’re essentially a crypto hedge fund. And yet hedge funds take risks. That’s kind of what they do. But Lambda was like really bad at it. It was hemorrhaging money to the point that FTX had to bail out failed cryptocurrencies that Alameda had invested in during the crypto bust that started earlier this year. At the same time, FTX lent alameda researched $10 billion using customer funds from the exchange. Bear in mind that, one, this was a gross misuse of customer funds. And two, FTX and Alameda were ostensibly separate companies with a corporate firewall between them. Of course, that was absolute nonsense. SBF had put one of his former college buddies and maybe girlfriend, or previous girlfriend and parttime wood nymph, in charge of Lambda Research and she drove it into the ground. I’m sorry, I should have left the wood nymph part out. That has no bearing on her gross incompetence, and I don’t want to yuck anybody’s.

[00:18:59] Ned: Yum. Go, wood nymphs. Be free. Jeez, how much cocaine was flowing in that writer’s room? And there’s more.

[00:19:09] Chris: There’s also the possibility that S BF, being the absolute incompetent Belind that he is, set this whole thing up for complete and utter failure, no matter who was in charge of Almaeda.

[00:19:21] Ned: Also true.

[00:19:23] Chris: Now she’s still guilty and should go to go to prison as well because she was obviously complicit, but just wanted to say, yeah, really, this is about SPF and how awful he is. So I really just want to make sure that we stay focused.

[00:19:38] Ned: Yeah, I mean, there’s a halo effect, right? Yeah, an inverse halo effect. I don’t know what I’d call that. The FTX Group as a whole, of which ftx.com and Almere were part of, is a corporate leviathan with over 130 corporations and subsidiaries, mostly incorporated in the Bahamas and a bunch of other countries, and also the US. This will also become important as the empire crumbles. So at this point, we’re in, like 2019, 2020, and FTX has skyrocketed to fame based on the crypto boom. And they rode that fame like a pony. SBF was hailed as a genius visionary, a beneficent philanthropist, and irreverent free thinker. He was featured on the COVID not the COVID of Fortune magazine. FTX got their name on a stadium with tons of celebrity endorsements from the likes of Tom Brady and Larry David. Larry, you should have known better. Big name investors like Sequoia Capital and SoftBank practically threw money at the FTX crew for saying the vaguely right words in vaguely the right order. At its absolute peak, FTX was valued at close to $37 billion in value. And that was extremely speculative value, mostly built on nothing, but still $37 billion.

[00:21:13] Ned: And for a while, everything appeared to be on the up and up. SBF was a champion of progressive causes. An investor in the future. He was happy to testify in front of Congress about the regulations that should be set up around crypto exchanges. And he even drove a Honda Civic. How modest. Surely he couldn’t be up to any shenanigans. Not my dear Sammy. Sammy gogo pop. And yet is this the part where I mentioned he took $500 million in funding from an investment firm and spent $300 million directly on himself to buy property and all kinds of toys.

[00:21:56] Chris: Yeah, you can’t do that.

[00:21:58] Ned: Yeah, that’s bad. So next thing that happened was the crypto crash that collapsed Luna Coin and served as a kind of wake up call to the currencies and exchanges that support them. The imaginary money everyone was trading suddenly seemed a lot less viable. And people started getting nervous enough to try to cash out, only to find there was not enough liquidity, and in some cases actual solvency to cash out from cryptocurrencies crashed and crumbled. And a lot of the crypto exchanges out there went bankrupt. However, SBF and FTX seemed once again to be the heroes, riding in on the white horse, where they rescued other crypto exchanges and cryptocurrencies from insolvency, mostly because Lambda Research was backing them. And here we now come to the moment where we have to differentiate liquidity from solvency. So liquidity means you have capital somewhere, and if you’re illiquid, that means you just can’t turn that capital into a liquid form quickly enough to be distributed. So funds will be available eventually, just not now. So if a firm is a liquid, that means I can’t get all my money now, but the money exists once the assets are sold.

[00:23:33] Ned: So when there’s a run on a bank and they become a liquid, it’s not that they don’t have your money, they just need a little bit of time. So they might freeze withdrawals or something along those lines until they can free up that capital. Insolvency is when you don’t have the money anymore because you’ve pissed it away on bad investments, something you weren’t supposed to do in the first place. The savings and loan scandals of the late 80s were exactly this. You had a bunch of small savings and loan banks that made really risky investments using customer funds, which they weren’t supposed to do. And when the market tanked, suddenly they didn’t have their customers money. And thus a bunch of regulations were rolled out to prevent this sort of thing from happening.

[00:24:23] Chris: To the crypto boom, where they decided to tell the world that those regulations weren’t necessary.

[00:24:30] Ned: That’s right, we’re decentralized and stuff and blockchain and Web Three. So a bank run is also what happened to FTX, and it was caused by SBF’s rival, CZ. These people are such CZ is the CEO and head of Finance, which is the largest crypto trading platform, and he is no big fan of SPF or FTX and their nonsense. So CZ had somehow accumulated about 500 million in FTT tokens that he planned to dump onto the general market due to concerns about FT’s solvency. In fact, he was selling them at a tremendous markdown, which caused other investors to panic and do the same. This was all to plan. He did this very intentionally and knew what he was doing. So when those other investors panicked, they tried to pull their fund, sell their FTT, which was essentially pulling their funds out of FTX. Now, at first, SBF claimed a liquidity problem. He simply couldn’t convert capital fast enough and needed some time and or help CZ. Generously. There’s a lot of air quotes with this. CZ. Guy offered to bailout FTX in a nonbinding agreement to purchase a controlling share in the exchange. Once CZ. Got a look at the hastily thrown together balance sheet from SBF, he was doing some due diligence.

[00:26:07] Ned: You know, the thing Elon Musk didn’t do with Twitter, he was doing that CZ. Said the deal was off, but was kind enough to make the bound sheep public. And it turns out that FTX was completely upside down and totally insolvent, which caused further panic and froze all remaining trading and withdrawals on FTX.

[00:26:29] Chris: That was a fun 36 hours.

[00:26:33] Ned: It was a wild 36 hours. And it basically all happened on Twitter. So it was the two of them sniping at each other and then announcing that things were frozen. Here’s the balance sheet. It was wild. Now, what’s happened since then? Well, SBF has filed well, FTX Group has filed for bankruptcy, which is basically SBF has filed for bankruptcy. That includes the Ftxx Exchange, lambda Research, and most of the other 130 companies that were under the FTX Group umbrella. SBF has stepped down as CEO of all these companies, and they have brought in bankruptcy lawyer John J. Ray III, which awesome name. No notes. Thank you, writers. He has become the interim CEO of the FTX Group. He’s also the same person that oversaw the bankruptcy filing for the Enron scandal. So he’s seen a thing about a thing. He has filed a bankruptcy documents in the court of Delaware, and he had some rather unkind words for FTX, Alameda, and the inner circle that oversaw the corporations. Here’s my favorite quote. Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.

[00:28:05] Ned: From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated, and potentially compromised individuals, this situation is unprecedented.

[00:28:23] Chris: Wow. This is one of the few times, like, I don’t even feel like we have to translate this from Legalese.

[00:28:28] Ned: No, this is some really good plain language stuff. He basically said these idiots had no idea what they were doing.

[00:28:38] Chris: You’re all bad and you should feel bad.

[00:28:40] Ned: Yes. There’s also this nugget from the bankruptcy filing, which good God. The audit firm for the.com Silo. That’s the one that has FTS X exchange in it. The audit firm was Prager Medis, a firm with which I am not familiar and whose website indicates that they are the first ever CPA firm to officially open its Metaverse headquarters in the Metaverse platform. Decentraland.

[00:29:11] Chris: No, I heard you. No, the zoo didn’t jitter or anything. Okay, I’m just.

[00:29:17] Ned: So the audit firm that should have been auditing, the.com group that included FTX was in CPA firm that was based in the Metaverse. Clearly, the writers have moved on to shrooms and whiskey at this point. Now, I’m going to say that you should really read the whole thing, TM, whatever. It’s 30 pages long, which might seem long, but it’s actually a pretty quick read. And it’s one of the most engaging legal documents that I’ve ever read. It is just, from start to finish, a banger, if you will. The FDX group didn’t even have an accounting department. Across all 130 companies and entities, their accounting was quote, outsourced. So if you want a good summary of what happened with FTX beyond this, and you want to hear more about the latest bankruptcy filings, I have been following a series by Colo Fusion on YouTube, and they’re given some pretty good overviews, so definitely recommend checking that one out. And there’s another channel that I forget the name of, but also include that one, the Feed a man with very dry humor, which I infinitely appreciate. So where are we now with SBF, FTX, and the whole bankruptcy thing?

[00:30:39] Ned: Honestly, it is still evolving. I believe that this bankruptcy filing happened about a week ago or so. Things are still very much in motion now. Chances are most investors are going to get almost nothing out of this bankruptcy. JJR III is still trying to untangle the absolute mess of accounting. And to be frank, we might never be able to piece together just how bad the fraud is or where all the money went. He tracked several transfers, unauthorized transfers of money, days before SBF stepped down as president. And where that money went is still kind of an open question. SBF and company made it a point to use backdoors, to delete messages, and to transfer wealth around. Haphazardly.

[00:31:36] Chris: All illegal.

[00:31:37] Ned: Oh, yes, it’s what you might expect would happen if you gave a bunch of kids that were pretty much fresh out of college, unlimited money with no oversight, but worse, because they were knowingly defrauding investors and clients. Not to put too fine a point on it, people are going to try to excuse the actions of the I want to call them the FTX mafia as kids that were just in over their heads and they didn’t know any better. Man oh, shuck, sorry about that, but that is bullshit. These are intelligent adults who went to very prestigious schools, who should have and in fact did know better. The whole lot of them willful fraud, willful fraud, willful and knowing fraud. The whole lot of them should be forced to personally apologize to every person they wronged in the situation and spend at least the next ten years working for nonprofits in disadvantaged communities. Prison is too easy for them. You hurt real people, and you should have to put some good into the world to make up for it. Now. Chop. Chop. Sam We’ve got donations that need sorting. You might be able to get a better outfit as well.

[00:32:56] Chris: And a better haircut. There, I said that. You look ridiculous. Stop it.

[00:33:02] Ned: So how did we get here again? This is not the first time a major financial market has melted down. It’s not the first time a wonderkind has shown to be a complete fraud and narcissist. From SBF and FTX to Elon buying Twitter to Elizabeth Holmes and theranos and all the way back to Bernie Madoff and the boys at Enron, how does this shit keep happening? As I see it, one big problem we have is that we elevate and celebrate the trailblazer. The visionary, the person who can lead us into a grand new future. Jobs bezos musk. They’re all lauded celebrities held up as some kind of paragon of business. We place each one on a pedestal and take their proclamations as inspired truths delivered from on high. Magazines and newspapers do breathless profiles and talk about how they made something from nothing. Sure, they’re kind of an asshole, but that’s okay. You can’t make an omelet without ruining a few global economies, right? Why do we do this? I think the short answer is American exceptionalism. We have a mythos in this country of the individual who struggles through hardships to singlehandedly build an empire through vision, determination and grit.

[00:34:23] Ned: It’s the rugged individualist who thinks outside the box, breaks the status quo, and drags the world kicking and screaming into the next great age of capitalism. But the truth is much more mundane. No empire is built from a single vision and a single person. Plenty of people have good ideas that are simply the wrong place in the wrong time. Pets.com, for instance. Right idea five years too early. Sure, the founder of a company may have a strategic vision, but it’s all the people contributing together who make that vision a reality. And just because someone has one good idea, that doesn’t make them infallible or superhuman. As a culture, we need to stop putting so much stock and whiz kids and prodigies who are just as likely to flame out as build something useful. It might make for a great movie, and FTX has already been optioned for a movie with the Russo brothers, but it’s a terrible reality for those unnamed people who have to clean everything up at the end. Thoughts?

[00:35:28] Chris: I mean, from a larger perspective, it’s no different than the way that we valorize great people from history in any industry or political leaders. The great man of history versus market trends and forces. And the reality is, there is no such thing as the great man in history. Everyone is built by their circumstances and by the people that surround them. Even saying something like Jeff Bezos built Amazon from absolutely nothing, except for repeated experience in early ecommerce and a $300,000 loan from his parents.

[00:36:01] Ned: And also here’s the. Wall.

[00:36:02] Chris: Where’s that last part in all of his Lex Luther like statements about himself.

[00:36:08] Ned: Not to mention that he also was working for a Wall Street trading firm, just starting it, and he had a significant amount of personal wealth.

[00:36:19] Chris: No he didn’t. It was Bootstraps Ned.

[00:36:21] Ned: It’s all bootstraps all the way down. So I hope SBF and the rest of the FTX crew gets what’s coming to them. And I hope we have all learned our lesson about heroes and cryptocurrency. I suspect not, but I hope especially about cryptocurrency. Especially about cryptocurrency. Lightning round.

[00:36:44] Chris: Lightning round. Tensions over broken financial promises at Foxconn end up in a violent protest. Luckily though, things seem to have cooled off for now. Foxconn, the Chinese based manufacturing company that is Apple’s primary provider of iPhones worldwide, has a problem. That problem is a labor shortage combined with a fresh covert outbreak in the town where their largest factory is located. It seems that Foxconn had promised massive salaries and bonuses in order to lure people out to the campus to work. It also seems that once those workers were on said factories campus, you see workers live in kind of a bubble there with dormitory style apartments very near to their manufacturing buildings, kind of like a prison. Those promises were broken. It also seems that this predatory behavior is common for Foxconn. This time though, workers had had enough and were protesting. The government of China is of course supporting the worker. No, they’re supporting Foxconn, and in this case sent in, quote, hundreds of police officers to assault the protesting workers. Police further ended up sending in backup units armed with riot gear to get the workers in their clean room scrubs to leave. So, you know, fair fight.

[00:38:14] Chris: Foxconn ended up offering a further, significantly smaller bribe, which the workers accepted to leave the factories and eventually leave the campus. So like I said, things seem to be calmed down for now. For their part, Apple has, quote, people on the ground assessing the situation. I’m sure they’re very concerned and sending thoughts and prayers. What they’re actually assessing for in this situation remains to be seen.

[00:38:45] Ned: You can now install WSL as a Microsoft Store app. Hurray as someone who has been using the Windows subsystem for Linux since its V one days back in 2017, I wasn’t sure what all the brouhaha was about. Installing WSL, especially V Two, was a tepid affair involving the command line and a handful of commands helpfully listed out on the Microsoft Learn site. It was easy. Yeah.

[00:39:15] Chris: I mean, it wasn’t hard.

[00:39:16] Ned: No, we’ll go with easy. I guess clicking on an install button from the Microsoft Store is technically easier, but why should I care? This story was on like a whole bunch of different publications. Well, I read into it, and part of the point of this release is to make the Microsoft Store version of WSL the default version, regardless of how you choose to install it. This helps to rationalize the multiple installation options and versions before including WSL V One, WSL V Two as a Linux VM and WSL V two as an optional Windows component. Now, whether you go to the store or install it at the command line, it will be the same bits coming from the Microsoft Store. That’s nice. It also removes the need for components like the aforementioned optional Windows components, the WSL kernel and the Wslg MSI package. Now it’s one tidy MSI X file from the Microsoft store. The update also drops the preview label from the store offering, as it is now ga for Windows Ten and Eleven. You can also opt into System D support and use Linux GUI apps on a Windows Ten device. If you’re already running WSL today, the update will be published via Windows Updates sometime in mid December, after which you can simply run WSL Update to get on the latest version.

[00:40:40] Ned: If you’re starting from scratch, hit up the Microsoft Store now to get your copy.

[00:40:47] Chris: I cannot tell you how proud I am of you for not pronouncing it as wizzle.

[00:40:53] Ned: That’s not a thing, right? Tell me that’s not a thing. It’s probably a thing.

[00:41:00] Chris: We’ve lost another titan of computer science, dr. Frederick Brooks, dead at 91. There are a few concepts in computer science that are absolutely bedrock to how we got from a world that could be described as basically no computers anywhere to our current world of basically all computers everywhere, all the time. Like, literally even some are implanted in our freaking bodies right now. Holy shit. What the hell? In a brief span of about 70 to 80 years, one of those concepts was pioneered by Dr. Brooks, who died at home last week. His first claim to fame was the computer science theory and practiced home with the invigorating title of architecture of IBM System 360. The idea he and the 360 team came up with was simple design systems for Compatibility. Crazy, right?

[00:41:59] Ned: Whoa.

[00:42:00] Chris: Remember, though, way back in the early 60s, when computers were starting to be made by big companies, every computer that came out was its own unique and beautiful snowflake. Now, you had IBMS, sure, but you also had UNIVAC, NCR and the like, all building oneoff baseball devices. If you’re a master of one, well, that’s it, sucker. Learning on a new one. Even a new model from the same company meant starting from scratch. The 360 aimed to resolve this with Dr. Brooks strategy, and it was a wild idea. Fortune magazine called it a quote betthecompany venture at the time. And the bet, as you can clearly see from the literally billions of interconnected devices all around you, paid off. Following this, he wrote the quirky and influential The Mythical Man Month about the intricacies and difficulties of software engineering, which became gospel to generations of software engineers and people who like to make fun of software engineers. Written in 75. Some of its wisdom rings true even today. And if you haven’t read that one, fix that. It’s a short, breezy read. I promise it’s worth it, honestly, even if you just read the top Quotes page online.

[00:43:27] Ned: New York just says no to carbon emitting crypto. In yet more bad news for the crypto world, all New York State has enacted a bill that establishes a two year moratorium on applications or permits for electricity generating facilities that utilize a carbon based fuel and provide behind the meter electric energy consumed or utilized by cryptocurrency mining operations that use proofofwork authentication methods. Or in simpler terms, crypto bros are no longer allowed to reopen closed coalburning power plants to fuel their mining. Bullshit. As we’ve covered extensively in the past, proof of work based blockchains require large amounts of computation to be a node on the network and earn those sweet, sweet crypto tokens mining rigs are loaded up with massive GPUs that suck down kilowatts of power for breakfast, lunch, and dinner. No word yet on brunch or linner. Many of the mining operations were running out of China, where environmental regulations were rather lax. But recently, the PRC has cracked down on crypto mining, pushing miners to move to greener pastures that they can despoil. Said pastures happen to be in the United States, which now comprises 38% of the world’s miners. Hey, and the power.

[00:44:55] Ned: Why pay a power company when you can just generate it yourself by buying a retired coal plant and firing it back up? Jesus, these people are just the worst. The new law in New York state will prevent the issuance of new permits to take over these greenhouse gas belching power plants. And it will also force existing crypto mining companies in the state to be subject to a generic environmental impact statement. We can only hope that other states in the US. Swiftly follow suit and put the kibosh on reopening coal plants across the country to make fake money for rich asses.

[00:45:33] Chris: Why do they still exist?

[00:45:35] Ned: Fake money or rich asses?

[00:45:37] Chris: I was talking about the coal plants, but I guess you make a good point.

[00:45:41] Ned: Well, they’re shuttered. They’re not functional anymore, but they haven’t been demolished. So it’s just sitting there.

[00:45:47] Chris: Well, that’s and you’ve just hit the thrust of my why?

[00:45:50] Ned: Because it costs money to demolish things.

[00:45:55] Chris: But it’s fun, though.

[00:45:57] Ned: It is fun. But typically, these coal plants were built in areas that were not highly populated for obvious reasons.

[00:46:03] Chris: So it’d be even funer to blow them up.

[00:46:05] Ned: I don’t disagree with you.

[00:46:08] Chris: We have a lot of missiles, Ned. They’re just sitting there doing nothing.

[00:46:12] Ned: I mean, if they don’t get out every once in a while, they go a little stir crazy.

[00:46:17] Chris: Anyway, can we focus?

[00:46:21] Ned: Sure.

[00:46:23] Chris: Microsoft’s Patch Tuesday routine releases of Windows server updates, breaks domain controllers. See, one day I’m going to compile a list of patch Tuesdays that cause catastrophic failures and enterprise critical deployments of Windows. I’m not going to count the number of catastrophic failures, because that number in the field is probably nearing infinity. I just mean the number of days where this allegedly routine and tested patch bundle comes out is loyally applied by dedicated systems and then shit melts down. That number is probably quite high. Honestly, the number of failure days might be equal to the number of Patch Tuesdays. Anyway, this time November’s patch Tuesday had some Windows Server updates in it. These specific updates cause LSAs or Local Security Authority subsystem service holy shit for short. Insist I just got dizzy. In systems running as domain controllers, this patch caused, you guessed it, memory leaks. These memory leaks crashed the service I’m not saying it again. Which then crashes all account access to the system and then the system reboots. As you can imagine, domain controllers are kind of important. So this is bad. How bad? The issue will affect most server deployments from 2012 through 2019.

[00:48:01] Chris: Wow. Now, there is a workaround listed in the Linked article if you’ve already applied the patches. And of course, Microsoft claims they will fix the issue caused by this patch in an upcoming patch.

[00:48:14] Ned: You ever get the feeling Microsoft would rather just get rid of Active Directory entirely? But they can’t.

[00:48:20] Chris: I really thought you were going to say Windows, and I was like, yes.

[00:48:22] Ned: Well, that’s a yes. Maybe that’s a topic for an upcoming chaos slipper. Microsoft hates Windows. It writes itself.

[00:48:32] Chris: It’s a ten parter look.

[00:48:35] Ned: Who’s using rust now? Oh, it’s ransomware gangs. Poop operators of the software. Ransom X, that’s two XS for extra special, have started using a new variant written in Rust, joining similar outfits like Black Cat, Hive and Luna. Ransom X is currently only running on Linux. Interesting, with a Windows variant sure to follow shortly. Rust language is a memory safe, strongly typed programming language, and it’s often cited as a replacement for the C language. It is also crossplatform and low level, providing both portability and speed. The switch to Rust from the previous C variant signals the rise in popularity of the language and also reminds us that Ransomware outfits have developers who like to tinker, just like any other mundane software business. While the variant is harder to spot for the moment, it will be added to the various and sundry antivirus detection suites in due time. There’s nothing particularly special about what Ransom X does in terms of ransomware. And like before, your best strategy is to maintain backups on an air gapped or disconnected system with separate media and controls. While the disease might be slightly different and decidedly more crabby, the treatment remains the same.

[00:49:58] Ned: Back up your data and get some old base seasoning. Hey, thanks for listening or something. I guess you found it worthwhile enough if you made it all the way to the end. So congratulations to your friend. You accomplished something today. Now you can recharge on the couch with pure DC power. It’s the freshest. Confuse your dog with a boomerang and eat all the fritos you want. You’ve earned it. You can find me or Chris on Twitter at Ned 1313 and Heiner 80, respectively. Or follow the show at Chaos. Underscore lever, if that’s the kind of thing you’re into. It actually posts stuff now. How about it? We’ve also started publishing the lightning rounds as blog posts on our website, and you can check that out@chaoslever.com if you like reading things which you shouldn’t. Podcasts continue to be better in every conceivable way. We’ll be back next week to see what fresh hell is upon us. Tata for now.

[00:50:50] Chris: So it only took 36 episodes, but the actual Chaos lever Twitter is actually Twittering. Just time for Twitter to collapse.

[00:50:58] Ned: There it is. Yes. Well done, everybody.