The Information's TITV
00:31:58 · Joelle Pineau, Akash Pasricha
[00:31:58] S3: Yeah. I think we're very open to partnering with NeoClouds. They come in with an expertise, and for a company like Cohere at the stage of growth that we are, one of the risks is to get distracted and try to do too many things all at once. So, you know, the core of our technical expertise is really is in the model building. We've developed a lot of expertise in terms of building the harness, the governance layer and so on. Wouldn't say today our expertise is in building up data centers. There are others who do this really, really well. And so, you know, partnering with the right neo cloud is definitely something we're looking at. Partnering with some of the bigger players is also something that we've done in the past and will continue to do. By no means, the goal is to to do this alone over the over the next few years. And so we're going to we're going to have to see who's the right partners. Obviously, you know, with this, there's an expectation when we build some of that in Canada, eventually some of that in Germany. We will continue to partner with the big American players as well. So I I think what's most important actually is to have choice and optionality. And frankly, like the cost of compute and the rate at which it's been climbing gives an opportunity for some of these neo clouds to really come and disturb the market. [00:33:07] S0: Nice. Where in Canada are you gonna build the the facilities? Have you guys said yet? [00:33:11] S3: We haven't said that yet. No, no. But lots of good land and some clean energy, which frankly really matters.
00:33:11 · Joelle Pineau, Akash Pasricha, Yueqi Yang
[00:33:11] S3: We haven't said that yet. No, no. But lots of good land and some clean energy, which frankly really matters. [00:33:19] S0: Great. Okay, Joelle, I want to thank you for coming on. It was a great conversation as always. That is Joelle Pineau, the Chief AI Officer at Cohere here on TITV. Binance has suffered a $6,300,000,000 hack, which would make it the biggest crypto hack of all time. The exchange says that all losses will be covered as it works with other crypto companies to freeze the stolen funds. For more on this, I want to bring on The Information's Crypto Reporter, Yueqi Yang, and Nikhil Raghuveera, Co Founder and CEO at Predicate. Welcome to you both. It is great to have you here. Yueqi, how much sleep did you get last night? [00:34:02] S5: That's a great question. Right before I went to bed last night, I was still checking the Twitter update from Binance. And the last I saw was that Binance paused deposit and withdraw on the exchange as it works through security review after this massive historic hack. And there's more update coming out from Binance this morning. Like you mentioned, Binance confirmed that they were hacked for $6,300,000,000 which makes it the largest hack ever in crypto history. And they intend to use their own company fund to cover all the losses. [00:34:37] S0: And Yueqi, what do we know about who is behind this hack? How they did it? What do we know there?
00:34:37 · Akash Pasricha, Yueqi Yang, Nikhil Raghuveera
[00:34:37] S0: And Yueqi, what do we know about who is behind this hack? How they did it? What do we know there? [00:34:46] S5: So Binance said the initial investigation shows that an engineer's laptop was compromised and that allowed the hacker to gain access to submit unauthorized withdrawal request from the Binance wallets. And cybersecurity experts have pointed out that it is likely a state actor from North Korea just based on the pattern of hack. And Binance promised that they will put out more detailed review after they have a better understanding of the situation. [00:35:21] S0: Okay. So Nikhil, did you get any more sleep last night? What time do you go to bed? [00:35:26] S4: I think I went to bed around 4AM or so. [00:35:29] S0: Right. So you guys were maybe texting each other. So tell me, Nikhil, what's been the reaction from the rest of crypto sector? How have the stablecoin companies reacted? How have other exchanges reacted? Walk walk me through it.
00:35:29 · Akash Pasricha, Nikhil Raghuveera
[00:35:29] S0: Right. So you guys were maybe texting each other. So tell me, Nikhil, what's been the reaction from the rest of crypto sector? How have the stablecoin companies reacted? How have other exchanges reacted? Walk walk me through it. [00:35:45] S4: Yeah. I mean, this is pretty unprecedented in terms of both, obviously, the size and scale of the hack, but then also the response by industry, I would say. So in the past, you've seen... Like earlier this year, there were some large hacks as well, but the stablecoin issuers sometimes took time to respond or they didn't do much at all. And that was a pretty big frustration across the industry around should they do something? Should they not do something? This time around, you saw basically Circle and Tether very quickly within a span of, I believe, around forty minutes or so start freezing those wallet addresses so that those funds couldn't be moved. That's one of the fastest response times we've seen for any type of case of an exploit. And then you saw other issues as well. So the big ones, of course, were Circle and Tether. That was... They were the largest the largest assets, but there were other asset issuers as well who went and froze funds. And then, of course, you had some of the exchanges also responding and saying they're investigating, making sure that they don't receive those funds. And then I think you saw a few of the crypto protocols as well start executing various types of actions, including Aave and Arbitrum.
00:36:48 · Akash Pasricha, Yueqi Yang
[00:36:48] S0: Yueqi, I wonder if you can explain to us with the frozen funds here the part of the stablecoin. I mean, again, people have varying levels of sophistication with the crypto ecosystem. So when Circle decides or when Tether decides to freeze some amount of, I guess, is it redemptions? What exactly is happening here with these frozen assets? How does it sort of help prevent the issue from spreading? [00:37:19] S5: So Circle and Tether are able to freeze the asset on the blockchain level, and that means they will blacklist the tokens. And that's one way to prevent the hackers from continuing moving the tokens and turning them into other crypto tokens like Ethereum or Bitcoin that cannot be frozen by a centralized entity. And Nikhil can weigh in more on this, but it seems to me that typically, at least in the case of Circle, they will prefer to wait for a court order before taking this action, which can delay how quickly they will respond and act. But Circle CEO Jeremy earlier yesterday put out a tweet pretty quickly after the hack and said they have already frozen the assets that are encircled stablecoins in coordination with law enforcement. [00:38:16] S0: Nikhil, what do you make of... I mean, you were just saying that they've been... I guess the communities have wanted them to freeze assets earlier. So was this a direct response to that? And also, when do the assets become unfrozen, I guess, is the next question.
00:38:31 · Nikhil Raghuveera
[00:38:31] S4: Yeah. So to your first question around them executing a freeze, this is something that Circle has oftentimes been hesitant to go and take direct action without a court order. And the reason for that is the legal exposure. Right? So if the Clarity Act had passed, within the Clarity Act, there was actually a provision that provided a safe harbor for issuers to be able to execute some of this without concerns around potential legal implications. Circle, as a result, clarity didn't pass, and so Circle, as a result, doesn't usually execute any type of freeze unless there is an explicit court order. As you can imagine, court orders can take time. They're not responsive enough. They don't move fast enough in in the case of a major exploit. In this case, it looks like... I would imagine, and I can speculate here a little bit, it would be that Circle felt comfortable enough and confident enough that by executing a freeze here was directly related to North Korea, and so they don't face the same type of legal exposure of an incorrect freeze. Tether operates outside of The United States, and so they have slightly different approach and... Because of their jurisdictional requirements. So, yeah, that freeze speed is really fast. And usually how it's done is you need information on it, then you have to go and oftentimes an issuer has to go to their operations team and their engineering team to go and execute that for you. So there is a full process that happens here. It's usually not something that is quickly done while it can be done faster. And then, yeah, now on the question on what to do with those frozen funds, I think we'll have to see. We've actually never seen us... An instance this large, and so it'll be likely working across law enforcement with exchange, with regulators to kind of navigate that process. So we'll have to actually see how they how they go about it. And I think even a lot of the... Some of the crypto protocols that have also frozen are gonna have to navigate the same question too.