Telegram is about Regulation vs Crypto Scams and Propaganda. The Feds vs the Bad Guys.

Blain’s Morning Porridge August 29^th 2024 – Telegram is about Regulation vs Crypto Scams and Propaganda. The Feds vs the Bad Guys.

“Dans ce pays-ci, il est bon de tuer de temps en temps un amiral pour encourager les autres.”

The arrest of Telegram’s Pavel Duroc earlier this week was a significant moment. Are Western Governments going to clamp down on Criminality across Social Media? Its critical they understand how Crypto Shills and Bad-Actor Propagandists have exploited the opportunities presented by Social Media to spin their scams.

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Nvidia

There will be plenty written across the wires this morning pontificating about what Nvidia’s price wobble after mixed numbers and production issues says about the future of AI. The big Tech Mega Chips can keep spending to build more and more data centres and train more and more chips, but the likely reality is most businesses don’t have the cash to invest in AI, and many simply don’t see how AI will significantly improve their business, except at enormous cost. The AI everything bubble is deflating. More on this later..

Meanwhile…..

Monty Python’s brilliant “Life of Brian” features a crowd scene where proto-Messiah Brian urges the crowd to leave him alone and think for themselves: “You’re all different”, he tells them. The Mob answers mechanically as one; “YES, WE’RE ALL DIFFERENT,” yet a heartbeat later a single very boring sounding voice quietly says… “I’m not…”. It is a sublime moment.

It’s a scene the propagandists fighting to dominate and control information flows through messaging apps and social media will understand completely. Think about how it works:

• Britain’s jails are full of right-wing thugs, arrested after being persuaded to riot by influencers, (including Elon Musk), posting across social media posts about immigrants storming the beaches intent on murdering us all.
• This morning, the same right-wing illuminati are urging their peons to riot again, this time in defence of the arrested Russian technoking who messaging app business just happens to be one the prime enablers of the people-smuggling-gangs who transport illegal immigrants across the channel!

Doh!

Propaganda and Apps drive the madness of crowds, influencing them to believe in whatever nonsense they can be persuaded to believe – which remains especially true of the whole crypto/technosphere, and the otherwise sensible folk who believe the fake news Russian bot farms feed them about the Red Army valiantly liberating Ukraine. These delusions have become a modern sickness, and a rising threat to economic stability, driven by the speed insidious fake news and criminality is spread through society by tech.

The arrest of “messaging app” Telegram’s frontman Pavel Durov in France, (even though his brother Nikolai is said to be the brains behind it), is worth thinking about. It throws up a host of potential consequences and could well widen many of the fault-lines apparent across Western Economies. It also raises critical questions about the role of the state relative when truth and security are under assault.

A host of right personalities, including Elon Musk, Tucker Carlson, but also big blockchain investors like Justin Sun of Tron, Ethereum founder Vitalik Buterin, and a number of Silicon Valley investors have come out in support of Durov. They are all crypto-barkers and/or Right-Wing Libertarians. Their comments should come as no surprise – they have positions to protect.

Over the last few days social sites are full of right-leaning tirades about the perceived French assault on freedom of speech, personal liberties, and Durov’s innocence. According to one report carried on Al-Jazzera, the UAE has apparently cancelled the purchase of French aircraft – because Durov holds UAE citizenship. Even the Russian government has come out in support of Durov – probably because they are terrified Western Security Services might gain access to end-to-end unencrypted chats between Russian government agencies!

Take nothing at face value – and don’t accept the nonsense the French clampdown on the criminality their investigators discovered on the Telegram platform is an attack on the free press, a denial of individual rights, or an assault upon democracy. At stake is the fundamental duty of the state to protect citizens from criminality, and to counter propaganda designed to break citizens trust in the state. All that Libertarian bollchocks about personal freedoms is nothing but distraction.

What’s creating the noise around Durov’s arrest is the Crypto ecosystem’s fear of just how much renewed regulatory clampdowns on social media, crypto, and blockchain tokens could damage their scam of an “industry”.

Since its inception, Crypto has relied upon, and ruthlessly exploited social media to advance its’ constructed agendas about digital gold, better than money, and market itself via fake news, fake ads and FOMO. It has established HODL and “want to stay poor” as marketing draws to pull in the next greater fool. The primary goal of the crypto shysters is to replace government money with “their” money. After that, they want to replace traditional finance with their de-regulated version.

In 2019 the SEC effectively banned the substitution of SEC regulated securities by unregulated Coin and Token based deals – although a whole lightly regulated tokenisation industry/ecosystem has now sprung up in Europe. Following the French action against Durov and Telegram, the Grand Council of Dark Crypto Satraps (GCDCS) (Ok – I made that up…) is terrified other global regulators will come down hard and harder on platforms enabling crime and fake news. If they do it will it’s going to unravel a host of crypto ecosystem investments – and Elon Musk desperately doesn’t want to be held financially responsible for the utter BS that now appears on Twitter.

Back in 2018, Telegram originally funded itself through an Initial Coin Offering (“ICO”) of Telegram Open Network coins – which cost it an $18.5mm fine in 2019 when the SEC accused it of illegally raising funds from US investors. Toncoin, a derivative crypto on the blockchain from that original Telegram Open Network, has since become a primary transaction method within Telegram – the price of the crypto-coin rising through the last few years as Telegram’s subscriber base grew. It crashed 20% after Durov’s arrest – according to the FT some crypto-funds have been heavily impacted. After reversing the original ICO (repaying investors like Sequoia), Telegram went on to fund itself largely through convertible debt – among the buyers was UAE SWF Mubadala. That debt now looks distinctly “junk”.

The French are clearly signalling to the tech ecosystem they are going to get tough. It remains to be seen in Brussels will fall behind them. Police forces across Europe have been monitoring Telegram closely. The Dutch police infiltrated user-groups and found over 2.5 million messages offering drugs for sale. It’s the favourite site of Z-Bloggers, Russians and their Western shills bigging up the performance of the Red Army in Ukraine.

Durov’s arrest follows a French investigation of how the Telegram site has enabled organised crime, drug trafficking, child sex abuse, fraud, money laundering, and people smuggling. A French official told the NYT: “The criminal activity being covered by the investigation includes the distribution of child sexual abuse material, drug sales, money laundering and refusing to cooperate with law enforcement.”

Europe’s Digital Services Act is designed to force social media and other tech sites to act and remove illegal content, protect children, block disinformation and prevent “online harm”. The French say Durov’s arrest is outside the DSA. Durov is Russian born, but obtained French citizenship before also becoming a Dubai resident citizen a few years back. (He is also a citizen of St Kitts and St Nevis.. bless..)

I would like to know what readers think about Telegram?

A number of funds and businesses I deal with swear by it. (I stick to using email.) I am told it is secure and revolutionary technology, but others tell me Telegram can access and read everything that passes across its site – which raises all kinds of issues about who learns what. Remember: Information is only valuable if you can withhold it!

This is not just about Crypto…

In terms of the bigger picture, I’m increasingly convinced the largest danger to Western Economies comes not from Central Bank interest rate decisions and inevitable mistakes, misguided speculation (like into crypto), or a failure of nations due to unsurmountable debt triggering the collapse of the “virtuous sovereign trinity” of stable currencies, sustainable bond markets and political competency. Instead peril comes from the increasing malign effects of misinformation and propaganda enabled by the internet and social media destabilising Western economies.

Persuading voters that crypto is somehow more stable and reliable than fiat currencies is one aspect of the destabilisation scam. The other is outright destabilisation of law, order and the state. It leads to the burgeoning distrust that is now at the centre of everything. History repeatedly demonstrates how humanity quickly becomes a mob, influenced by what the most astute propagandists tell them to believe.

The surest way to destabilise society is to undermine its foundations through propaganda – which Nazis and Russians understand perfectly. The internet and social media have opened multiple new vectors for propaganda in the form of disinformation, fake news, maskirovka and other distractions.

None of us is immune to disinformation. Some of the smartest people I know believe in stuff I think utterly hatstand. (Many of them think my faith in the new UK Labour government is a sign of my inherent imbecility.)

Consider how the World has changed. 10 years ago we would have discussed the economic effectiveness of each parties policies and objectives – today political debate is largely about trashing the personalities and imagined actions of political figures. Respect for our politicians is gone – a big tick to the Kremlin. I has a clear illustration of this yesterday while discussing the US election y’day: a young American parroted out the whole Trump Playbook of insults about Kamala Harris; clueless, flip-flopper, inexperienced, giggly, etc. It doesn’t take more than a moment to google her real record of political experience, prosecution success and determination – something he felt he didn’t have to do.

Western economies are founded on liberty, freedom, trade, open markets, democracy and capitalism. They are enabled by competent government supported by the rule of law and regulation. They work, and to a degree generally work well – massively outperforming authoritarian regimes.

In times of stress and conflict Governments have to take the tough decisions – justifying actions many citizens will disagree with and object to. Government is a necessary evil – on the basis letting the people decide does not necessarily generate the optimal solutions. As has been said many times before “democracy is the worst form of government, except for any of the alternatives.”

One way to destabilise an economy is to break its’ faith in politics – which is exactly what is happening across the West. We live in an age where populism – the art of blaming government to become the new government – has been exploited to the full by disruptive politicians across Europe and the USA. Populism works by persuading the people they are “different” – just like in Monty Python. Which is why every Trump voter wants to talk about building a wall, while every Reform voter wants to talk about immigration.

The challenge for Governments is to control the propaganda vectors on Social Media and Group Messaging sites represent. Hence the EU’s DSA. Hence the French unilateral action on Telegram. There needs to be balance – how do governments regulate for the truth on websites, and how do they do so without trampling on social liberties? One way to do so is hitting the enablers in the wallet. In times of conflict – which we are effectively in – the State comes first.

A starting point is to acknowledge the need for regulation to undo the damage being done by social media abuse. Over 80% of global advertising now flows through the internet into places like Amazon and Google and apps like Facebook, Twitter and Telegram. While regulators demand they protect users from the brutal truths and lies of the world – (depends on how you define them) – it’s in the interest of these Tech sites to attract users by being different, controversial and “of-the-moment”. Sadly, that includes milking the multiple conspiracy theories to attract users of social media.

The fact so many conspiracy theories support a clear libertarian bent – that big government is denying people multiple freedoms and liberties – is revealing.  There is no bad publicity in a world where the definition of good vs bad has become so distorted by conspiracy theories.

I am quite proud of a quote I came up with a while back: “The difference between a Communist and a Libertarian is a communist wants what is yours, while a Libertarian already owns it.”

That is now evolving – the Libertarians now demand the full force of the law is used to protect their wealth. Duroc and his brother are cryptocurrency billionaires, and espouse all the usual libertarian waffle about the independence, privacy and freedom from Government fiat these supposedly create. He says he replicated these ideals in Telegram. Really?

The point of this Morning’s Porridge is to make you think – what is the real agenda at play. The first is the crypto industry desperate to make its easy money by pillaging the greater fools through social media advertising, and second “bad actors” using social media to undermine Western Society. The social media barons want to make money from advertising – and they get that from their content – which gets more hits the more of-the-moment it is.

What strikes me as very apparent is how similar the “shocked” libertarians and tech investors supporting Duroc today sound like appeasers from the 1930s. They have an agenda.

Most folk are not fools – but some very clever people are extremely gullible.

Out of time..

Bill Blain

CEO and Founder,

Wind Shift Capital

www.windshift.capital

Blain’s Pub to Club Swim.