The DOJ accused Zhao of allowing criminal activity to flourish on the crypto exchange. “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” Treasury Secretary Janet Yellen said in November.

The government accused Binance of refusing to comply with American sanctions and failing to report suspicious transactions related to drugs and child sexual abuse materials. Prosecutors said in court that Zhao had told Binance employees it was “better to ask for forgiveness than permission” while bragging that if Binance had obeyed the law, it wouldn’t be “as big as we are today.”

Under the plea deal’s terms, Binance agreed to forfeit $2.5 billion and pay a $1.8 billion fine. Zhao personally paid $50 million as part of the settlement.

Although the charges differed, Zhao’s sentence is dramatically shorter than the 25 years fellow crypto figurehead Sam Bankman-Fried received in March. SBF, as he’s often known, was convicted on seven counts of fraud and conspiracy for his role at the helm of the crypto platform FTX.

Zhao played an integral role in Bankman-Fried’s downfall — and the crypto industry’s broader decline in the last 18 months. The Binance founder tweeted in November 2022 that his company would liquidate its holdings in FTX’s de facto token. He said “recent revelations that have came[sic] to light” while citing “ethical concerns” and “regulatory risks.” The posts not only crushed FTX but the crypto world at large. (They likely helped attract the government’s attention as well.) When FTX’s wells dried up following the platform’s rapid collapse, Zhao briefly agreed to buy the company but quickly backed out.

Prosecutors said Zhao’s crime carried a standard federal sentence of 12 to 18 months but argued for a three-year term, describing his crimes as being “on an unprecedented scale.” But Judge Richard A. Jones saw it differently, sentencing him to a measly one-twelfth of the government’s suggested term.

“This wasn’t a mistake — it wasn’t a regulatory oops,” Kevin Mosley, a DOJ lawyer, reportedly said in court on Tuesday. “Breaking U.S. law was not incidental to his plan to make as much money as possible. Violating the law was integral to that endeavor.”

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There won’t be any upcharges for those paying with crypto, Ferrari’s Chief Marketing and Commercial Officer Enrico Galliera told Reuters, and BitPay will convert those payments to traditional currency at the time of the transaction to avoid any issues of volatility. Galliera said the move will help the company reach “people who are not necessarily our clients but might afford a Ferrari.”

Just last year, Ferrari announced a commitment to more sustainable operations, including reducing its environmental footprint, and embracing the notoriously energy-intensive cryptocurrencies would seem to go against that. But, the company insists this doesn’t get in the way of its mission. Galliera cited recent strides in improving crypto’s carbon footprint, like heavier reliance on renewable energy sources, and told Reuters, “Our target to reach for carbon neutrality by 2030 along our whole value chain is absolutely confirmed.”

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This isn’t solely directed at Gemini, as cryptocurrency firms Digital Currency Group (DGC) and Genesis Global Capital are also named in the suit. All told, the civil lawsuit alleges that the three companies collectively defrauded 230,000 investors to the tune of more than $1 billion, as reported by Axios. The AG also charged former Genesis CEO Soichiro "Michael" Moro and DCG founder and chief Barry Silbert for trying to conceal the true financial condition of its lending unit.

As for the Winklevoss twins and Gemini, the suit alleges that the digital asset platform didn’t properly disclose the financials of Genesis before partnering with the crypto exchange to form an investment platform called Gemini Earn in 2021. The suit alleges that Gemini announced that Genesis was a “trusted company” despite internal risk analyses to the contrary.

It goes on to allege that in February 2022, Gemini revised its estimate of Genesis’ credit rating, lowering it from the investment-grade BBB to the junk-grade CCC, all without publicly revealing this change to investors and continuing to advertise correlated investments as “low-risk.” Additionally, it’s been alleged that many of the company’s risk assessors took their own money out of Gemini Earn without informing investors.

There are even allegations that more than 60 percent of Genesis’ financials were tied to Sam Bankman-Fried’s disgraced hedge fund Alameda Research. To that end, the connection between Gemini and Genesis is eerily similar to the ties between FTX and Alameda Research, and we all know what happened there.

Gemini took to the preferred social media platform for crypto-enthusiasts, X/Twitter, to refute the allegations, writing that it was simply the victim of fraud on the part of Genesis and DCG. It’s notable the firm didn’t comment on what they knew about Genesis’s poor financial condition and when they knew it, placing the onus of blame on Genesis CEO Moro and DCG founder Silbert.

“Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position,” Gemini wrote.

For his part, DCG founder Barry Silbert penned a statement that completely refuted his side of the allegations, writing that he is “shocked by the baseless allegations in the Attorney General’s complaint” going on to say that he intends to “fight these claims in court.” Cameron Winklevoss hasn’t issued his own statement, but did retweet Gemini’s post on the matter.

Genesis ceased all cryptocurrency trading last month, as reported by CoinDesk, after filing for bankruptcy protection back in January. Today’s lawsuit seeks to recoup the $1 billion in losses and hopes to ban all three companies from the financial industry in New York.

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The X, Twitter and Elon Musk fiasco

No “Losers in 2023” list is complete without mentioning the fiasco that is Elon Musk’s Twitter (or X). Last year, shortly after Musk acquired Twitter, some of us were asked to make predictions about how Musk’s new venture would fare. I felt that it was a high-risk, high-reward move that might work due to Musk’s combination of luck and smarts, based mainly on his previous success heading up Tesla and SpaceX.

However, I also said that Twitter might devolve into the most chaotic social media platform around, which is pretty much what happened. In hindsight, what I failed to account for was that unlike Tesla and SpaceX, Musk doesn’t seem to give a crap about running X like a business and has treated the company more as an expensive toy meant to call attention to the sins (at least in his mind) of social media. And when you combine his increasingly unhinged personality with shortsighted decisions, what you get is an organization in turmoil. So while not all of these things occurred in 2023, here are just a few of the dumbest things that Musk and X have done in the last 18 months.

A little over a year ago, Musk blew up Twitter’s verification system, which promptly led to fake accounts sporting seemingly legit handles doing things like posting an image of Mario flipping the bird, the pope spreading conspiracy theories and more. Then earlier this year in June, Musk decided to block users who weren’t logged in from seeing tweets, which caused Google and others to remove Twitter content from search results. That’s not a very smart move for a company that relies heavily on traffic to generate ad revenue, so it wasn’t a big surprise when Musk backtracked a week later.

But perhaps Musk’s biggest blunder was changing Twitter’s name to X in July, a move so silly that most people continue to pretend like the rebranding never happened. Oh and let’s not forget that the name change was commemorated with a sign that was mounted on the company’s HQ in San Francisco that blinded its neighbors and didn’t have proper permits, resulting in an installation that lasted barely more than a weekend. More recently, citing a rise in hate speech, major companies including Apple and Disney decided to pull ads from X, which later prompted Musk to tell Disney CEO Bob Iger to “Go fuck yourself.” Another clearly wise business move made by a very grounded individual. (That’s sarcasm, in case it’s not clear.)

At this point, it’s hard to imagine how much worse X can get, but given everything that’s happened in 2023, it’s plain that the company formerly known as Twitter hasn’t even hit rock bottom yet. — Sam Rutherford, Senior reporter

Microsoft’s Surface tablet

No offense to the Surface Laptop Studio 2, which is a mighty powerful and uniquely convertible laptop, but this year felt like a low point for Microsoft’s iconic Surface tablets. The Surface Pro 9 hasn’t been upgraded at all since last, so it’s still running either an older 12th-gen Intel chip. There is a 5G-equipped model with a custom ARM-based Microsoft SQ3 chip, but we recommend staying far far away from that thing. And beyond the Laptop Studio 2, we only got the Surface Laptop Go 3 for consumers(the tiny Surface Go 4 tablet is now firmly targeted as business users, it doesn’t even show up on the main Surface site).

It almost seems like Microsoft’s dream of creating a true tablet/laptop hybrid is dead – or at the very least, it’s on pause as the company focuses on shoving its AI Copilot into all of its products. Let’s face it: While the Surface business has earned a bit of money for Microsoft, it’s a pittance compared to what the company sees from its Azure cloud revenue. Instead, the Surface devices proved that Microsoft could produce high-end Windows hardware that occasionally pushed the PC industry forward.

It’s been 11 years since Microsoft announced its first Surface devices, but it turns out most consumers didn’t want to replace their laptops with tablets. Simpler 2-in-1 convertible devices, like HP’s Spectre x360 16, are far less common these days (and notably, they also work best in their notebook modes). And it doesn’t help that Windows 11 is still far from tablet friendly. If you really want to get work done on a slate, it simply makes more sense to get an iPad and a keyboard case instead.

With Microsoft’s Surface visionary, Panos Panay, now at Amazon, there doesn’t seem to be much hope left for the company’s tablet concept. But who knows, maybe the Surface Neo will finally make a return as a true foldable some day. (Remember the Surface Duo, another failure?) A Windows user can only dream. — Devindra Hardawar, Senior reporter

Amazon’s Halo hardware products

Speaking of dreams, mine were dashed by Amazon in July this year when the company pulled support for its Halo line of health-related hardware products. In fact, my sleep itself might have been affected, since I had just gotten used to checking my Halo app each morning to see the amount of rest I got the night before.

Amazon’s Halo division has been plagued with controversy since it launched the screenless Halo wearable in 2020. The device was a barebones activity tracker, but stood out for an opt-in feature that used onboard mics to listen to you speaking and tell if you sound stressed, upbeat or emotional. This caught a lot of attention, with people saying this was akin to Amazon trying to police your way of speaking. Many other reviewers, myself included, were more critical of the fact that, though the Tone feature did flag times when wearers sounded happy or sad, it did not present enough information for that data to be useful.

The Halo app also offered a way for you to use your phone’s camera for a body composition scan. You’d have to enter your height and weight, before stripping down to your underwear and posing for four pictures, showing your front, back and sides. The app would then tell you how much of your body is fat or muscle.

If it sounds dubious, it’s probably because it is. Though Amazon said its “Halo body fat measurement is as accurate as methods a doctor would use—and nearly twice as accurate as leading at-home smart scales.” Spoiler: It wasn’t. I used the Body feature every few months for about two years, comparing it to the bio-electrical impedance analysis (BIA) sensor on Samsung’s Galaxy Watch when that became available. Over time, as my body composition changed, I also got BIA scans at the F45 gym I go to, which uses a more sophisticated machine. Amazon’s scans were wildly off, while the Samsung watch came closer to the data gleaned from the machine at my gym.

All that is to say that Amazon’s Halo products haven’t been great. But that seemed to start to change when the company launched the Halo Rise bedside sleep tracker this year. I loved it for the way it accurately detected when I fell asleep, calculated the different stages I was in (REM, Deep, Light etc) and more importantly how it did all that without requiring me to wear something to bed or install a new mattress. I finally had a feasible way to track my sleep and use that to figure out how hard or easy I should take each day’s workout, along with other activities and stresses.

Alas, that joy was short-lived. Despite Amazon acquiring healthcare companies and clearly investing more into becoming a pharmaceutical provider, it gave up on the Halo business this year. Maybe that’s not such a bad thing, since one good product doesn’t an entire profitable endeavor make. Amazon not having access to my sleep, heart rate, steps and tone is probably for the best, as we contemplate a future where the online shopping giant is also our doctor and pharmacist. — Cherlynn Low, Deputy editor

E3

For as long as I can remember, I’ve been reading and talking about games, but the internet expanded my horizons beyond the confines of the UK magazine industry. In the late ‘90s, at age 13, I started writing (very badly) for a popular game site, covering release dates, special editions and other unimportant things.

Within a couple of years I’d lost interest in writing, but I still hung out in the same IRC channels talking about games with likeminded people. IRC started my obsession with E3 and the Tokyo Game Show; weeks where I’d talk about these huge events with a weird milieu of fans and industry professionals.

In 2000, the fever around Metal Gear Solid 2’s E3 debut was out of this world. The first-person reports from the show were unbelievably positive. When the trailer finally became available to download a few weeks later, it quickly spread across the internet. I can still remember the mix of frustration and excitement as I downloaded it from an IRC bot at 7KB a second to finally get a glimpse of “next-gen” gaming.

MGS2 was peak E3 for me, and in hindsight it was also the moment E3 began to die: Why did I need to read a 1,000-word breakdown of a trailer when I could just download and watch it myself? Why should Konami spend big money on a booth when it could just release a trailer directly to its potential customers?

Back then, I was the only person I knew IRL who was “extremely online.” Now, everyone is. By the 2010s, when I started to attend E3 myself, the role of press and the show had shifted. Nintendo E3 Directs were in full swing, and the big shows from Sony, Microsoft, Bethesda, Ubisoft and EA were all beamed live to fans. Sure, I got to play some games and interview some developers, but that’s something that happens throughout the year now.

E3 remained one of the highlights of my calendar, and there were always some memorable moments — the PS4 and Xbox One reveals were probably the highlight of my in-person years — but by 2019, my excitement was more tied to seeing farflung colleagues and old industry friends than it was the event itself. When the pandemic canceled the 2020 event, it was obviously it would never recover. We’d written about how the industry didn’t need E3 years before.

Summer Game Fest will happen again next year. It will never hit the scale of the show it’s replacing, but I hope that it becomes a strong enough brand to keep the idea of E3 going. There’s still something exciting for fans, and journalists, about a week of gaming announcements to predict and dissect. If more companies spread their events throughout the year, that last bit of E3 magic will be gone. — Aaron Souppouris, Executive Editor

Cryptocurrencies and finance in tech

Much as we pretend mathematics represents an immutable truth, we must remember it’s not without its loopholes. Centuries from now, historians researching crypto may assume humanity forgot that as it decided to substitute math for truth in its entirety. That the prodigies of this world sought to engineer out human fallibility between League of Legends sessions. Uncertain, wooly and hard-to-quantify concepts like “truth” and “trust” would be tossed out in favor of the certainty of pure math. That’s the PR line: The Bitcoin white paper describes the virtual currency as a “system based on cryptographic proof instead of trust.” It’s ironic, then, that so many high-profile people who hitched their mast to crypto are either in prison, or are awaiting trial for fraud.

Those same historians may wonder if crypto was merely a vehicle ripe for hijack by unethical types, or if its inherent fraudiness was written into its DNA. 2023 will offer plenty of material to scrub through given the number of figures who wound up face-to-face with law enforcement. Coinbase started the year accused of leaving gaps in its systems big enough to enable fraud, money laundering and drug dealing. Former Celsius CEO Alex Mashinsky was sued and later arrested — alongside the company’s chief revenue officer, Roni Cohen-Pavon. Not long after, Terraform Labs was charged by the SEC for securities fraud after it wiped out $45 billion or so. Bear in mind, this is a year-in-review story, and I’ve only managed to make it as far as February.

Binance, the world’s largest crypto exchange by volume, dominated headlines this year much as FTX had in 2022. Regulators accused it, and its founder Changpeng “CZ” Zhao of deliberately undermining its own controls and processes to not-so tacitly enable users to break the law. Zhou would plead guilty, step down as CEO and pay a hefty fine which enabled the company to keep running. Oh, and we should mention the Winklevoss Twins, their exchange and its partners, who were accused of defrauding investors to the tune of $1 billion. Ironic then, that Ferrari finally decided to try to appeal to the Lambo-and-Tendies demographic by opening up crypto purchases for its cars just as things started to get tough.

Of course, the real loser in all of this has to be Michael Lewis who, with an MA in Economics and experience as a bond trader for Salomon Brothers in one hand, and a ringside seat with Sam Bankman-Fried in the other, managed to miss what was going on at FTX. Lewis has doubled down in support of his latest muse but now that SBF has been found guilty of fraud, it looks like his reputation as the most credible financial journalist of the age is in tatters. — Daniel Cooper, Senior reporter

Reddit

I’ve been a longtime Reddit lurker, occasional poster and always a first-party app user. But when the drama about the company’s decision to start charging for API access started to unfold in April, my eyes were opened to the wonderful world of third-party Reddit clients. Too bad, though, that the company proceeded to then botch it all.

Because API access was no longer free, many apps like Apollo, RIF, BaconReader and Narwhal had to reconsider their pricing or shut down altogether. Reddit’s policy change didn’t just challenge these apps, which mostly offered superior browsing experiences to the company’s own. It also created problems for clients that were built for more accessible use, rendering them unusable unless their developers ponied up the fees, which could go up as much as tens of thousands of dollars (or, in Apollo’s case, an estimated $20 million a year).

While Reddit did eventually seem to concede that the API fees would shut out some users with disabilities and ended up working with some unnamed developers to give them free access, the company dug in its heels in the wake of public outrage and subreddit blackouts. In the second half of the year, subreddits all over the platform either stopped posting, changed their settings to private or NSFW or dedicated themselves to only putting up salacious images of Last Week Tonight host John Oliver.

Reddit didn’t just ignore the protests and carry on with its planned fees. It went as far as to forcibly take over some communities that went dark, while looking for volunteers to take over certain subreddits that it deemed to have violated its Moderator Code of Conduct.

According to internet analytics company Similarweb in June, Reddit saw a 6.6 percent drop in average daily traffic. We don’t have the latest statistics on how the company is doing now, but I can tell you from personal experience that the first-party app on iOS is a complete shitshow. Like many other Redditors have pointed out before, videos will autoplay unmuted out of nowhere for no reason, while I’ve encountered numerous infuriating bugs, including one where a video on a post was repeatedly going on and off mute while I was also trying to stream Spotify to a speaker. It just sucks.

After the mass subreddit blackouts spawned a bunch of duplicate communities with different moderators, the quality of posts have noticeably fallen, as well. Not to mention the company got rid of trophies and then attempted to bring them back again in a confusing format. Throw in the fact that the community now seems to be a mix of karma-farming bots and commenters who copy and paste the same jokes over and over again, the days of enjoyable Reddit scrolling seem to have come to an end in 2023. — Cherlynn Low

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GameStop’s NFT marketplace wasn’t around very long. It launched in July 2022 in a partnership with Immutable X and Loopring following rumors of the project at the beginning of that year. Now, it only has a few weeks left in operation. “Effective as of February 2, 2024, customers will no longer be able to buy, sell or create NFTs,” the notice states. “Your NFTs are on the blockchain and will remain accessible and saleable through other platforms.”

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Following the arrest of Kwon and his associate in Montenegro for traveling with forged passports last March, Kwon is currently still in jail until his extradition to the US — likely by mid-March, according to Bloomberg — where he will face securities fraud charges. The entrepreneur is also wanted in his home country, South Korea, for similar charges, which reportedly led to him, his family and some key Terraform Labs personnel fleeing to Singapore between April and May 2022. Shortly before Interpol placed him on the "red notice" list in September that year, Kwon denied that he was "on the run," but the eventual discovery of his fake passports would suggest otherwise.

Kwon will likely join the fate of other big names in the crypto downfall, namely Sam Bankman-Fried of FTX fame and former Celsius Network chief Alex Mashinsky. Meanwhile, Coinbase continues its battle against the SEC's accusation of illegally running an unregistered national securities exchange, broker and clearing agency. Bloomberg analyst Elliott Stein recently shared that Coinbase may likely win full dismissal as soon as this quarter, if not by the end of Q2.

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To that end, the EIA has targeted 137 “identified commercial cryptocurrency miners” working in the US. These operations account for around 2.3 percent of national energy usage. This breaks down to 90 terawatt-hours per year, which is more than Finland, Belgium and Chile use in that same time period. The world’s crypto miners used as much electricity in 2023 as the entire country of Australia. That's a whole lot of energy for Shiba Inu-branded internet money with no practical application.

The data collection started this week. The survey aims to get a sense of the industry’s growing demands and which parts of the country are the biggest crypto hotbeds, so as to refine policy later on. The EIA has already discovered that nearly 38 percent of all bitcoin is mined in the US, which is up from 3.4 percent in 2020.

“As cryptocurrency mining has increased in the United States, concerns have grown about the energy-intensive nature of the business and its effects on the US electric power industry,” the EIA said in a report that offered further details behind the survey.

The EIA went on to note that large crypto mining operations could strain the electricity grid during peak periods, force higher energy prices for average consumers and negatively impact energy-related carbon dioxide emissions. Most of the electricity generated throughout the world comes from burning fossil fuels, and that process releases carbon dioxide into the atmosphere.

The clean energy advocacy group RMI estimates that US cryptocurrency mines release 25 to 50 million tons of CO2 into the atmosphere every year. That’s around the same amount as the yearly diesel emissions from the US railroad industry.

The biggest mining operations in the country are scattered throughout 21 states, but largely clustered in Texas, Georgia and New York. This is especially dangerous for Texans, as the state’s energy grid is already notoriously fragile. Ben Hertz-Shargel, who leads energy research consultancy firm Wood Mackenzie, told Ars Technica that crypto mining operations are not only placing a higher burden on the state’s energy grid, but increasing prices for consumers.

Energy costs in Texas are based on real-time demand, so Hertz-Shargel estimates that state residents see an increase of 4.7 percent in their monthly utility bills due to cryptocurrency mining. He also said that mining operations tend to open up shop next to pre-existing renewable energy facilities, which draws clean power away from nearby homes and businesses.

It’s not all doom and gloom in the crypto world. Back in 2022, Ethereum announced a software update to make mining ether more eco-friendly. The Ethereum Foundation claims this reduces the carbon emissions of its mining operations by more than 99 percent. However, ether accounts for just 17 percent of the global cryptocurrency market share.

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As posted by CNN, Bankman-Fried expressed regret for his actions and the people he harmed. “It’s been excruciating to watch,” he said. “Customers don’t deserve any of that pain.” He also acknowledged the serious time he was likely to spend behind bars. “My useful life is probably over,” he said. “It’s been over for a while now.”

Judge Kaplan laid out his reasoning for delivering such a harsh sentence to the one-time golden boy of the crypto community, suggesting that Bankman-Fried could be in “position to do something very bad in the future.” The sentence was issued “for the purpose of disabling him to the extend that can appropriately be done for a significant period of time.”

Bankman-Fried is expected to appeal the decision. His defense team asked for a sentence of five to 6.5 years, citing his “charitable works and demonstrated commitment to others.” The team also suggested lenience on the grounds that victims would be made whole, referring to a January bankruptcy court hearing showing that customers and creditors will get their money back. Prosecutors, on the other hand, wanted something much harsher. They asked for a sentence of 40 to 50 years “to reflect the seriousness of the defendant’s crimes,” US Attorney Damian Williams told the court earlier this month. The maximum possible sentence was 110 years.

SBF, as he’s now infamously known, was arrested in the Bahamas back in December of 2022. He faced seven charges, including wire fraud against FTX customers, wire fraud against Alameda Research lenders, conspiracy to commit wire fraud against both entities, conspiracy to commit securities and commodities fraud on FTX customers and conspiracy to commit money laundering. He was found guilty of all charges.

The trial lasted one month, with prosecutors arguing that he used FTX funds to keep sibling company Alameda Research afloat. Caroline Ellison, his one-time girlfriend and CEO of Alameda, confirmed this to be true and admitted that she committed fraud on behalf of Bankman-Fried. The defendant’s lawyers, on the other hand, tried to portray him as a hapless math nerd who wrestled with “forces largely outside of his control.”

Alameda borrowed more than $8 billion from FTX, money that was taken from accounts belonging to FTX customers. Bankman-Fried claims he only learned of this in 2020 but performed no actions to safeguard the funds. He took the stand during the trial and said that he deeply regrets “not taking a deeper look into” what was going on with both companies. FTX collapsed and filed for bankruptcy in 2022.

“Clearly, I made a lot of mistakes. There are things I would give anything to be able to do over again,” he told the New York Times before the trial started.

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