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Sam Bankman-Fried of FTX lived life of luxury in Bahamas enclave

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Crypto wunderkind Sam Bankman-Fried had promised the island paradise a path to financial glory. His meltdown has left some Bahamians worried about the ripple effects.

(Video: Courtey of Margaux Avedisian; Jeenah Moon/Bloomberg; Obtained by The Post)

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NASSAU, Bahamas — Before Sam Bankman-Fried’s $16 billion empire imploded, Margaux Avedisian remembers thinking there was something unsettling about the cryptocurrency wunderkind.

Bankman-Fried had become a legend by pushing an image of monkish aloofness, vowing to forsake the allures of his extraordinary wealth — sleeping on beanbag chairs, driving a Toyota Corolla — and to give away his fortune for the greater good.

Yet in April, when Avedisian was hired as a master of ceremonies for a conference in the Bahamas sponsored by FTX, Bankman-Fried’s crypto exchange, she saw how the 30-year-old billionaire really lived: in a guarded island compound, every need closely catered to, the world’s elite at his beck and call.

Conference guests partied in casinos where Bahamians weren’t allowed to gamble and hobnobbed with celebrity attendees, including singer Katy Perry and football veteran Tom Brady. For one party, VIPs took a boat from the island to a second, even fancier island for a feast of lobster, a private DJ concert and an open bar.

“You’re living this lifestyle of poverty, but you’re partying with Katy Perry?” she recalled thinking. “Why would you want to hang out with these celebrities if you’re so head-down trying to change the world?”

When Bankman-Fried and his band of crypto risk-takers moved to the Bahamas last year in a blitz of extravagant spending, they promised to remake the island paradise into a global capital of the new financial elite. Some Bahamians said they felt lucky to have an opportunity to work so close to a superstar.

Instead, Bankman-Fried stepped down as FTX’s CEO earlier this month after presiding over one of the fastest meltdowns of wealth in modern history. FTX, valued earlier this year at $32 billion, has been declared bankrupt, and his $16 billion personal fortune nosedived to zero in less than a week.

James Bromley, an FTX lawyer, said at a bankruptcy hearing Tuesday that Bankman-Fried had treated the company as his “personal fiefdom” before it all fell apart. “The emperor had no clothes,” he said.

The do-gooder movement that shielded Sam Bankman-Fried from scrutiny

In the Bahamas, many are anxiously waiting to see how the fallout from this legendary blunder will shape their lives. At a gate that workers use to enter Albany, the closely guarded enclave where Bankman-Fried and his top deputies shared a $40 million waterfront penthouse, one construction worker told a reporter on a recent morning that, if Bankman-Fried were still inside, “we would grab him and bring him out.”

A giant lawn at the center of the Albany, a gated luxury enclave in the Bahamas, featured a full-size replica statue of Wall Street’s Charging Bull. (Video: Obtained by The Post)

As investigators begin to piece together FTX’s financial wreckage, the Bahamas has emerged as a centerpiece for Bankman-Fried’s many contradictions — and fueled questions about why so many there and elsewhere had supported a company with so many warning signs.

FTX had called itself “the cleanest brand in crypto” and promised investors “High Returns, No Risk.” But FTX’s new chief, John J. Ray III, hired to clean up the mess, said in a recent legal filing that Bankman-Fried’s “very small group of inexperienced, unsophisticated and potentially compromised individuals” in the Bahamas had spent lavishly on themselves while failing to track where billions of clients’ dollars were sent or stored.

Though FTX became one of the world’s biggest financial exchanges, rooted in a complex web of more than 130 now-bankrupt business entities, the team functioned like a dorm-room start-up, with no centralized lists of bank accounts or even employees, Ray said.

FTX spent clients’ funds on seaside homes for employees’ use and routed money to Bankman-Fried’s other company, the crypto trading firm Alameda Research, Ray said. Corporate reimbursements were often requested via an online chat box and approved by supervisors using “personalized emoji.” Only “a fraction” of customers’ money has been located and secured.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” said Ray, who once oversaw the liquidation of Enron, one of America’s most infamous corporate frauds.

In a letter to FTX employees on Tuesday, Bankman-Fried said he regretted “what happened to all of you” and tried to deflect blame onto external factors, such as a rush of withdrawals and a market crash, without acknowledging the reported misuse of customer funds. “You were my family. I’ve lost that, and our old home is an empty warehouse of monitors,” he wrote. “When I turn around, there’s no one left to talk to.”

The victims of FTX’s spectacular collapse are just now being counted, and the damage will probably be enormous: In bankruptcy court filings, lawyers have estimated that more than a million people or businesses have lost money, with more than $3 billion in losses from the top 50 creditors alone.

But in the Bahamas, the implosion has meant not just lost fortunes but lost confidence in a dream of financial acclaim.

“There was just this feeling of overall shock,” said Tevin Bannister, a community manager at Crypto Isle, a co-working space for blockchain investors and entrepreneurs in Nassau. How many of the people who worked hard when FTX landed here, he wondered, have been burned?

Sam Bankman-Fried charmed Washington. Then his crypto empire imploded.

In October 2021, Bankman-Fried and his crew landed in the Bahamas with the force of a conquering power.

FTX had just been valued at $25 billion after raising $420 million from major investors, including the Ontario teachers’ pension plan, in a move that Bankman-Fried had said cemented FTX as “the world’s most transparent” crypto exchange.

Bitcoin had just reached a record high at $66,000, and FTX had become one of the crypto industry’s biggest names thanks to a gusher of promotional spending: The Miami Heat basketball team played in the FTX Arena, and Major League Baseball umpires wore the crypto exchange’s logo on their arms.

Bankman-Fried that month had just left Hong Kong for the Bahamas, citing the tropical archipelago’s permissive regulations around both crypto trading and pandemic-era travel — important, given Bankman-Fried’s frequent international investor meetings and media tours.

The Bahamas, a former British colony comprising hundreds of islands 45 minutes from the Florida coast, has for decades been a darling of American tourists for its scenic beaches — and of offshore financial engineers and money launderers for its minimal taxes and corporate disclosure rules.

Bankman-Fried’s FTX spent hundreds of millions of dollars buying up top-grade real estate across the Bahamas’ most populous island, New Providence, including offices, apartments and vacation homes used by FTX’s senior executives, according to property records and FTX attorneys.

A major chunk of the spending spree went to Albany, an ultraexclusive luxury community developed in 2010 by a British billionaire with investment from musician Justin Timberlake and golfers Tiger Woods and Ernie Els.

Encircled by marshes and scrub forests, the 600-acre community of pearl-white towers is walled-off to practically everyone. A giant lawn at the community’s center, near a Rolex store, features a full-size replica of Wall Street’s famous Charging Bull sculpture. A lavish recording studio there, known as the Sanctuary, has been used by Drake, Mariah Carey and Alicia Keys.

Bankman-Fried and nine of his closest allies moved into one of the community’s crown jewels, a sprawling penthouse atop a luxury tower known as the Orchid. Their balcony overlooked an oceanfront marina where action-movie-caliber speedboats are anchored, and where, on a recent visit, crews could be seen cleaning the decks of 200-foot megayachts with names such as Dare to Dream.

The view from Bankman-Fried’s $40 million penthouse in the Albany, a gated luxury enclave in the Bahamas. (Video: Obtained by The Post)

After Bankman-Fried moved in, the enclave’s workers began sharing rumors and sightings about the movement of this strangely disheveled billionaire, according to contractors who spoke with a reporter outside the gates.

One construction worker, who spoke on the condition of anonymity because he’d not been authorized to talk, said Bankman-Fried was frequently spotted walking the grounds of Albany “like a regular tourist.”

“There was no one who would bother him,” the man said. “It’s like a different world there.”

FTX says it owes more than $3 billion to creditors

In fawning profiles, Bankman-Fried, known as “SBF,” had long been celebrated for his “seeming rejection of earthly pleasures”: He parked a Toyota Corolla in the penthouse parking lot and shared photographs of himself sleeping on office beanbag chairs — a sign of his hardcore dedication. “Putting the finishing touches on the Nassau office,” Bankman-Fried tweeted that October, attaching a photo of a rumpled beanbag.

He almost exclusively wore shlubby T-shirts, shorts and tube socks and never combed his nest of curly hair. He played video games during conference calls with major investors, and he was candid about his use of performance-enhancing drugs, tweeting in 2019 his keys to success: “stimulants when you wake up, sleeping pills … when you sleep,” and in-office naps to keep one’s mind in “work mode.”

Photos of his office setup — a gaming chair sitting at a cluttered desk, entombed in half a dozen computer screens — sometimes showed boxes for Emsam, a stimulant patch used recreationally to boost focus and confidence. The chemical playbook was common among his work buddies: Caroline Ellison, a co-chief of Bankman-Fried’s Alameda Research, tweeted last year, “Nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, nonmedicated human experience is.”

The odd behavior did not stop Bankman-Fried from building a brand as the volatile industry’s voice of reason. He’d been celebrated for pushing for crypto regulation on Capitol Hill, donating generously to pandemic-prevention efforts and Democratic politicians, and preaching a dogma known as “effective altruism” that used math and logic to determine where their donations could accomplish the most global good.

But the Bahamas outpost showed how inaccurate Bankman-Fried’s ascetic image had become. FTX offered its workers incredible luxury, giving its employees free meals and a personal chauffeur service for traveling around the island.

When the Dubai-based video blogger Nuseir Yassin visited Bankman-Fried earlier this year for an interview, he remembers a penthouse of incredible opulence, with a grand piano and gleaming balcony. But to Yassin, the place felt eerily sterile. Bankman-Fried seemed to prefer sitting inside at his laptop screens, near a fridge stocked with bottles of vegan egg substitute; few rooms showed signs of life.

“It was used like a hotel room for an extended stay,” he said. “It felt like a place where smart people lived, but it didn’t feel like a home.”

When Yassin asked Bankman-Fried why he shared the penthouse with roommates, the then-billionaire responded, “I like living with people, I like the built-in social life, and it makes communication … about work, a lot easier,” according to an unpublished recording. When asked if he could be a trillionaire one day, Bankman-Fried responded, “I would hope that it was a possibility, but we’ll see.”

FTX employed people like George Lerner, an in-house psychiatrist and performance coach, who did not respond to requests for comment but has said in previous interviews that he helped the group of 20-somethings navigate the stresses of work and isolation in the Bahamas after they left their old lives behind.

Part of his job, he told Vice, involved finding “dating options” to keep workers feeling happy and fulfilled in their new home. After meeting Lerner at a party, Avedisian, the conference emcee and a crypto entrepreneur, said Lerner asked her whether she’d be interested in pursuing something romantic with Bankman-Fried. The whole arrangement struck her as odd.

“A lot of start-ups offer, like, free food, free gym — not ‘we’ll find you a wife,’” she said.

Rumors of the team’s polyamorous lifestyle were common in the crypto community, and Avedisian said the FTX team appeared to be “all weirdly intermingled.” The crypto news outlet CoinDesk reported earlier this month that the 10 roommates had been at times paired in romantic relationships. Ellison, who had reportedly dated Bankman-Fried, had written on her Tumblr blog, called “worldoptimization,” in 2020 that she had embraced polyamory in the style of an “imperial Chinese harem.”

Lerner has tried to swat down such gossip, telling the New York Times that the place was “pretty tame,” overworked and “undersexed.” Yassin also expressed some doubt.

“I’ve seen places where orgies happen. Those places had sexual vibes,” he told The Post. “This place did not.”

Congress took millions from FTX. Now lawmakers face a crypto reckoning.

‘Cold, emotionless, calculated’

FTX’s choice of the Bahamas sparked a rush of local energy around crypto. Bannister, who launched the co-working space Crypto Isle in 2018 after having worked in the prime minister’s office, said he knew many residents who rushed to update their résumés and enroll in training courses in hopes of latching onto a potentially multibillion-dollar industry.

The Bahamas’ last two prime ministers had worked to market the nation as a haven for cryptocurrency, he said, and middle- and working-class Bahamians had started looking for ways to invest. FTX was the first exchange to register under the Bahamas’ new crypto regulation, known as the Dare Act, which the government had hoped would attract more financial firms to the islands.

“Everyone just sort of went crazy,” Bannister said. “A lot of people looked at it as the advent of the boom, and the jobs that would flow from it.”

But local residents said Bankman-Fried and his team were rarely seen around the island. They didn’t socialize and seemed to leave their guarded palace only for public-relations events: a groundbreaking in April for FTX’s new headquarters, attended by the Bahamian prime minister; a company handout of tablet computers last month to the Bahamian police. (Police officials say they’ve launched an investigation into FTX. The prime minister’s office says it is working to “protect the interests of clients [and] creditors.”)

Ali Pourdad, the chief executive of Quantfury Trading, a licensed broker-dealer that had an office close to FTX’s, said the gated community may have helped keep FTX officials’ social lives discreet because the location is for golf enthusiasts and otherwise secluded. “There’s really no reason to be there unless you want to kind of keep to yourself,” he said.

Still, he said, FTX was a constant topic in the island’s hotels and restaurants. “It got to that level where it was becoming part of the Bahamian narrative, which makes it obviously more disappointing now,” he said.

Beyond just building a new corporate headquarters on the New Providence waterfront, FTX officials had said they wanted to establish an “effective altruism” (EA) hub in the Bahamas, offering six-month fellowships with paid travel, housing, $10,000 stipends and room in an “EA co-working space” to applicants committed to the cause. They also offered to pay for the flights and accommodations of any EA believers who filled out a Google form and wanted “to come and hang out in the Bahamas.”

Ellison, of the Alameda trading firm, had written on a forum for EA devotees that the island nation was small enough that they could become “a somewhat influential force in the country.” She did warn, however, that “it’s not perfect” and said it shared “many of the downsides” of the San Francisco Bay area, including a high cost of living and crime rate.

But Bankman-Fried’s flashy spending in the name of philanthropy made some effective altruists deeply uncomfortable. On the EA forum, one of the most popular posts, from an EA supporter named George Rosenfeld, expressed worries about its billionaire funding, the Bahamas visitor program and other indulgences and was written in April, while Bankman-Fried was working to finagle his way into Elon Musk’s Twitter takeover.

Crypto’s free-wheeling firms lured millions. FTX revealed the dangers.

FTX’s meltdown earlier this month stunned many on the island. Bannister said he’s gotten messages from investors scrambling to “offload” their investments and knows Bahamians who lost money in the collapse. On local radio stations in the Bahamas, where the government says the average household makes about $50,000 a year, commentators now deride bitcoin as “funny money and funny transactions that you should not get into anymore.”

Even beyond lost cash, some worry that the industry they’d scrambled to learn might be doomed by FTX’s fall. The scandal is “a blow both to the industry and … the Bahamas itself,” said Stefen Deleveaux, who founded the Caribbean Blockchain Alliance in 2016 and lives in Nassau. “A lot of people who were on the fence, or skeptical before this, probably now see it as a scam.”

It’s also led people who met Bankman-Fried early on to reevaluate the image he’d created. Crypto venture capitalist Alexander Pack met Bankman-Fried in 2018 when he was seeking his first equity investment in Alameda and showed up to a fancy cocktail bar in Hong Kong wearing a T-shirt and shorts. The look seemed to puzzle the bar staff, Pack said, but investors were intrigued: “He stood out in the right way, like, ‘Oh, I’m so disheveled. I’m coding all day. I don’t even have time to put on pants.’”

Pack, who reviewed Bankman-Fried’s business in 2018 while his firm considered investing, remembers employees saying that Bankman-Fried compared crypto trading to a video game: He referred to his equity in Alameda — millions of dollars in profits used as capital for new trades — as a “hit points bar,” a term for the shrinking progress bar that shows how much damage a character has endured.

“As long as it didn’t go much past zero, our backers wouldn’t have to know about it,” Pack recalls Bankman-Fried’s associates telling him. “It felt like Sam was playing life like a video game.”

Pack said his firm declined to invest in Alameda after learning that Bankman-Fried had hidden $10 million in losses and planned to use their money to fund FTX, not Alameda, without telling them. The episode, he said, had many of the same issues that ultimately led to FTX’s bankruptcy: Bankman-Fried’s secrecy and deception about how money was spent; his cryptic messages and shoddy record-keeping; his excuses for losing clients’ funds.

“They were very brilliant traders. They made a lot of money … but they also lost it almost as fast as it came in,” he said. They had a “cold, emotionless, calculated approach to playing with other people’s money.”

Is crypto a house of cards? A look behind the scenes of the unstable industry

Bankman-Fried, once a crypto hero, now faces a growing list of enemies. His attorneys resigned, citing his “incessant and disruptive tweeting.” Tara Mac Aulay, who co-founded Alameda with Bankman-Fried in 2017 but quit a year later because of concerns over his business ethics and appetite for risk, tweeted recently that she was furious for all of the victims who had their trust “betrayed, savings lost and livelihoods destroyed.”

In messages to a Vox reporter, Bankman-Fried lashed out at government regulators and sought to portray himself as the victim of a bad streak of luck. “Each step was in isolation rational and reasonable,” he said, but “sometimes life creeps up on you.”

Asked about his ethical commitments, he said they were “what reputations are made of” and equated them to a “dumb game we woke Westerners play where we say all the right shibboleths and so everyone likes us.”

“A month ago, I was one of the world’s greatest fundraisers,” he said. “Now, I’m the fallen wreckage of one.”

Bankman-Fried’s crisis has threatened to undermine the broader crypto economy; bitcoin’s price has plunged to $16,000, its lowest point in two years. And investors have lost a fortune, including the Ontario teachers’ pension plan, which said last week that its $95 million investment into FTX is now worthless.

But some in the Bahamas have seen a positive side. On the day the bankruptcy became public, Philip Hillier, an agent with the Christie’s International Real Estate brokerage in the Bahamas, began fielding calls from buyers wanting to snap up FTX’s vast property holdings before they were liquidated.

“Literally, the day it occurred, they called and said, ‘Let me know. I will pay cash,’” Hillier said. “People see opportunity.”

In the last few weeks, Bankman-Fried has stayed in the Bahamas, accompanied by his father, as many of his bankrupt company’s employees fled.

He was photographed last week inside Purveyors, a gourmet market close to his penthouse, where the aisles are stocked with kale chips and $1,300 bottles of Dom Pérignon champagne. He appeared to be alone, looking at his phone.

Craig reported from the Bahamas, Harwell from Florida and Tiku from California. Dalton Bennett and Jeremy Merrill contributed to this report.

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Oh no, they added NFTs to Winamp • TechCrunch

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Winamp version 5.9.1 is here, rejoice! The venerable — nay, aged — but reliable media player has been receiving sporadic updates over the last couple decades, but little truly new functionality has appeared (and that’s just fine by us users). But this new version brings an unexpected and thankfully optional feature: NFT playback.

No, this doesn’t just read out the current valuation of your various square avatars; NFT-type tech has been applied to music as well, offering the capability of limited releases of digital tracks the way you might have a limited vinyl run. At least that’s the idea — I don’t think it’s quite caught on, and with the cryptocurrency world currently in disarray, it’s hard to blame anyone for declining to take part in a potentially risky ecosystem.

“Winamp was a key part of the first digital music innovation, when mp3s changed the way we listen and enjoy music. Now we’re supporting the leading edge of the next one, as more and more artists explore web3 and its potential,” said Winamp CEO Alexandre Saboundjian in a press release.

As you may recall, Winamp was purchased by Radionomy in 2014, and in 2018 a new effort was announced to revivify the brand. The idea, Saboundjian told me at the time, was to act as a unifying layer for all the music services out there, so whether you use Apple Music or Spotify or Tidal or all three, you can just open Winamp and select a track or playlist. It opens up in a different interface, though.

Image Credits: Winamp

That unified experience hasn’t exactly come to pass. In fact the redone app still counts an equalizer among its “coming soon” features. So it’s a little odd to hear that a functioning NFT layer arrived first:

Winamp’s latest version lets music fans link their Metamask wallet via Brave, Chrome, or Firefox to Winamp. It then connects their favorite music NFTs to their tried-and-true player. Winamp supports audio and video files distributed under both the ERC-721and ERC-1155 standards, and is launching this new feature for Ethereum and Polygon/Matic protocols.

To be clear, the fabled new unified player still seems to be a distant prospect. It’s the original, old-school player that’s getting the new feature, alongside a boatload of bug fixes and optimizations. The changes are listed, as they pretty much always have been, in a post on the Winamp forum, followed by ardent thanks from the community and obscure bug reports.

I for one am grateful that this piece of software is still actively maintained. I won’t be using the NFT function, but it’s just one of many things added in 5.9.1, and as soon as the rest of the Winamp users (there are dozens of us!) get around to testing it for me, I’ll go ahead and download it. After all, it really still whips the llama’s ass.

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The Eve 6 Guy Advises Two People Who Hate Their Lives

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The thing I’m most grateful for is that those early years of success, and even the rudderless floundering that followed, are what facilitated (and subsidized) my eventually becoming an artist many years after my band’s commercial success. I still balk at using the term “artist” self-referentially, but here’s what I mean by it. Today, I make songs with my bandmate Jon Siebels without any delusion that they will be commercially successful, simply because I want and need to make rock. The composition is about the transcendent thrill of the moment — nothing more, nothing less. Whether I end up digging the recording a few months later or not doesn’t matter. I don’t identify with it; it’s of a particular moment.

It’s one thing to hear a line like “You are not your work” and be like, Yeah, sure, OK, sounds kinda sorta abstractly true. It’s another thing entirely to really, genuinely know it. In my experience, you can’t just make a decision to assimilate this belief into your consciousness. There’s an old cliché — “You can act yourself into a new way of thinking but you can’t think yourself into a new way of acting.” That said, I’m going to wax philosophical for a moment before I give you a list of actions to take.

Who am I? What really matters to me? I am as I exist in relationship to others. Friends and family. To people I love who love me. Yeah, yeah, I know we live in a society, but for the purposes of this conversation I think it’s OK to be a little reductive. Do I really need people who know me merely by a designation (former sorta rock star) to confirm or deny my feelings about myself? No. Being overly concerned with the way others may or may not perceive you is a great way to become beholden to status and lose your creative true north.

I realized that I could jettison all preconceived notions about myself, my band, my career, and create my own avant-garde world free from the shackles of association.

Well, these days you can’t be a self-help guru without having numbered steps (plus I’m writing for BuzzFeed now, and you guys fucking love lists), so here are Eve 6 ways to shift your perspective through simple, if not always easy, action:

  1. Call at least one friend or family member per day to check in on how they’re doing. Call, not text.
  2. Read great fiction. Reading literature will help you get to know yourself. I find truths about the human condition to be best revealed in stories. We also live in a time when the limits of real imagination are felt acutely. Fiction is important.
  3. Find your “third place”: a destination point that is neither home nor work where you will be tricked into community in spite of yourself. For me, this is the public pool where I swim for miles with other masochists. We check in with each other. We ask each other how quitting smoking is going and stuff. Your third place can be anything from a rec center to a recovery group — it doesn’t matter. Just find a way to see familiar, honest faces and talk to them outside of work.
  4. I could’ve worked this into step 2 or 3, but there need to be six steps to adhere to the gimmick. Anyway: Host a movie night. This might sound corny, and it probably is, but do it anyway. This is something a friend of mine did when we were in early recovery together, and now my girlfriend and I do it. One or two friends is all you need. Provide refreshments and a Criterion selection. Art and community are the antidote to loneliness and atomization.
  5. Take the social risks necessary to find your people. What this amounts to really is being willing to say hello and ask people questions about themselves. Don’t throw your work acquaintances out with the bathwater. There may be coworkers whom you have more in common with than you realize. If not, though, that’s OK — just go back to step 3.
  6. Summon a gentle perspective toward yourself and others. Be quick to catch your mind in its knee-jerk judgments of people you come into contact with on a given day. Cultivating an equanimous view toward others, even those who might annoy you on the surface, is a good way to learn to offer yourself a similar grace. Our egos want to maintain the illusion that we are separate from our fellow human beings. Counter this by choosing to see good in people when you can. Choose to see the good in others, and you will more readily see it in yourself.

I want to commend you for starting to see a therapist and for getting on medication to help with your depression. This is awesome and shows you’re willing to advocate for yourself. As for your studies, I’m not going to tell you whether you should quit, and thankfully you didn’t ask me to. But before you make a final decision in that regard, try going through the steps outlined above to the best of your ability. And please report back to eve6guy@buzzfeed.com in a couple months.

Yours,
The Eve 6 Guy

Have a question for the Eve 6 Guy? Send it to eve6guy@buzzfeed.com. (Your anonymity is guaranteed.) By doing so, you acknowledge and agree that any use and/or reliance on any information obtained through your email is at your own risk.

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Apple to encrypt iCloud – The Washington Post

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After years of delay under government pressure, Apple said Wednesday that it will offer fully encrypted backups of photos, chat histories and most other sensitive user data in its cloud storage system worldwide, putting them out of reach of most hackers, spies and law enforcement.

Apple has benefited for more than a decade from a perception that it does more than other phone and computer companies to safeguard privacy, including its use of end-to-end encryption for iMessages between Apple devices. Those can only be read on the devices, not by Apple, a phone service provider or police with a warrant.

But most iPhone and Mac computer owners back up their iMessages, photos and other content to Apple’s iCloud, where the company can retrieve it for locked-out users or authorities. That has also left the material open to hackers that have tricked customers out of their passwords, increasing the potential for embarrassment and even extortion.

Apple representatives said those threats, and increasing attempts to breach cloud providers, made end-to-end encryption in the cloud the best option for those most concerned about security.

The FBI wanted to unlock the San Bernardino shooter’s iPhone. It turned to a little-known Australian firm.

The step is likely to draw protests from multiple governments, some of which could take legislative or court action or deny Apple access to their markets. Top law enforcement officials in the United States, Britain and other democracies have railed against strong encryption, and some have passed laws they could use to try to force companies to cooperate against their customers.

The encryption option will be available for public software testers immediately, for all U.S. customers by year-end, and for all other countries next year, Apple said.

Apple’s move follows similar ones by other companies and organizations that have caught up to it on privacy or gone further.

Facebook’s WhatsApp is the most-used fully encrypted messenger, and it began offering an encrypted backup a year ago. Signal, which develops the protocol used by WhatsApp and others, does not allow cloud backups to prevent improper access. Google offers encrypted backups, though it is unclear how popular the service is.

After hacks of cloud service providers, an increasing number of businesses are insisting on controlling decryption keys themselves. Apple will now provide that option to consumers as well.

That is likely to slow an especially effective law enforcement tool. In a six-month period covered in Apple’s most recent transparency report, the company said it had turned over users’ content for legal reasons 3,980 times, mostly in the United States and Brazil. It said legal requests for all types of account data, including just identifying information, had doubled in two years to more than 20,000.

In China, Apple has come under intensifying criticism for not doing more to protect iPhone users who are already heavily surveilled. During the recent wave of protests against harsh covid restrictions, Apple limited the use of AirDrop, which people were using to share videos and other large files at close range. The iCloud data in China is stored on servers under a local company’s control.

Apple had intended to introduce fully encrypted iCloud storage many years ago, according to FBI agents and Apple employees at the time. The FBI objected, and Apple shelved the idea rather than face a public fight.

Despite the hype, iPhone security no match for NSO spyware

Instead, it picked specific categories of data that would be walled off from outside prying, including passwords and payment and health data. Now, everything can be stored securely except for email, calendar and contacts functions that need to interoperate with multiple providers.

An FBI spokesperson did not respond to a request for comment.

Apple will require that users set up a recovery key or name another person who can get access in the event that they are locked out or are incapacitated.

In a second victory for privacy advocates, Apple said it was dropping a plan to scan user photos for child sex abuse images. The company had paused that plan shortly after its announcement last year, as security experts argued that it would intrude on user’s device privacy and be subject to abuse.

Apple also said Wednesday that it was making iPhones compatible with physical security keys that would connect to the phone so that consumers can require them for access to their accounts from new devices. That way, phishing attackers who steal passwords and user names would still be unable to get in.

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