Can Generative A.I. Actually Turn a Profit?

Plus: Ledger Crashes Crypto Markets; SBF's lawyer can't shut up either; A.I. "art" that's actually good.

Good Morning.

One quick logroll: David has a review of Josh Davila’s book Blockchain Radicals in the U.K. magazine Red Pepper. You can get the print magazine here, and we’ll update when the story is online.

Below, some serious questions about the economics of generative AI/LLM systems. But first, some comment on:

• Ledger’s Code Stack Compromised

• SBF’s Lawyer (and Family Friend) Drags His Client

And in closing: some AI Art that’s Actually Good (but is it “art”?)

AI-assisted art by Tim Molloy, from his “Legend of the Golden Child” series.

Ledger Compromised (Again)

Crypto markets were lightly battered (but not fried) overnight and into this morning by revelations of a malicious vulnerability injected into Ledger’s “Connectkit” software library. In effect, this meant that for a stretch of a few hours, some decentralized apps built using Ledger’s backend library were able to drain users’ wallets. It’s an unfortunate lesson in the imporance of not keeping large amounts of funds in “hot wallets” like browser extensions.

Ledger hardware wallets were not themselves compromised. But this is the second serious compromise of Ledger’s systems, after a biiiig credential leak in 2020. And the new case seems to speak to serious failures with Ledger’s code update process.

According to Igor Imbardiev at Wintermute, the code compromise happened a bit before 5AM USEST, and Ledger announced a fix at about 8:30AM USEST. That doesn’t mean everything is totally safe yet, as the fix seemingly has to propagate and the malicious code needs to be cleared from caches.

But the market has already mostly bounced back from a brief fit of anxiety, reflecting the fact that however grim this compromise is, it’s not a threat ot the underlying crypto thesis per se.

Sam Bankman-Fried’s Lawyer Calls Him “the worst person I’ve ever seen do a cross-examination.”

David Mills is a Stanford law professor and friend of Sam Bankman-Fried’s parents, who acted as a go-between at trial and likely helped them get legal counsel for their son. Now he’s throwing SBF back under the same bus that already ran over him (that bus is the legal system, and also society at large).