Investors pulled money out of US Bitcoin exchange-traded funds
On November 2, former Binance CEO Changpeng Zhao warned that crypto scammers were in “overdrive,” circulating screenshots of fake recompense schemes that promised $150 in free compensation for withdrawal suspensions after the $6.3 billion hack of Binance, the world’s largest cryptocurrency exchange. Binance confirmed the information was false and said the screenshots were digitally altered. The Guardian reported that the hack also spooked traditional financial markets, with investors pulling funds out of Bitcoin exchange-traded funds in the US.
Binance response and user protection
The warning came as Binance worked to contain the damage from a breach late last week that The Guardian described as the world’s largest online theft. More than $2.5 billion of the $6.3 billion was taken in one transaction alone, after a Binance engineer’s laptop was infiltrated, which in turn allowed attackers to drain wallets. Binance later added that there were “additional points of breach” in its systems. On X, the exchange said it would “cover all losses” and that “user funds are safe”. It also said it had frozen about half of the funds targeted in the hack, stopping the thieves from making off with that tranche of cryptocurrency.
The Guardian reported that the company faced fallout from “angry, scared users” as it worked to contain the damage. On Sunday afternoon, Binance announced it had processed $4.6 billion in withdrawals and $1 billion in deposits — a net outflow of about $3.6 billion, representing 2.1% of its $171 billion in total assets under management.
Most customers would have no legal protection for such a loss. Crypto users in the US, UK and Australia are not covered by formal deposit protections and would not be reimbursed by their governments if an exchange was hacked or went bankrupt. In Australia, users can claim a capital loss on their tax return if they can offer proof that a crypto asset was lost or stolen.
Yi He, Binance’s co-founder and longtime partner of Zhao, said the company’s top priority was to “ensure the environment is secure, after which users can withdraw their funds and Binance can resume operations.” Alongside a proof of its reserves, Binance tweeted: “Our commitment is unchanged: Binance will absorb the financial impact of the stolen funds, not our users.”
Attribution for the theft remained tentative. Experts cited by The Guardian said the breach was likely the work of North Korean hackers. The Guardian wrote: “The name Binance was already associated with crime before the hack.” Zhao pleaded guilty to violating US anti-money laundering laws in 2023 and stepped down as CEO. The Guardian added: “It’s no FTX, but the company faces an uphill battle to save its brand from $6.3bn worth of permanent damage.”
Lula’s WhatsApp mobilization in Brazil
The same TechScape issue turned to Brazilian president Luiz Inácio Lula da Silva’s political mobilization on WhatsApp. Less than two weeks before the newsletter appeared, Lula was accusing Meta of suppressing his posts on Instagram and Facebook and attempting to derail his campaign. His opponent Flávio Bolsonaro, the son of the previous president, had all the momentum after the country’s first round of elections, and The Guardian described Lula’s supporters as feeling they “would be crushed under the rightwing wave sweeping over Latin America.” Meta denied bias but acknowledged technical failures in response to Lula’s accusations.
The Guardian cautioned that the full truth of what Meta did or did not do for Lula may never be known. It said individual algorithmic moderation mistakes — usually a few egregious ones among millions of otherwise unobjectionable choices — seem like bias in times of heightened political tension, and that Meta says this is what happened in Brazil. The Guardian said that raging against those errors makes for engaging posts, which outsizes the glitches’ significance. It called the history of accusations against Meta of political interference “arcane and complicated,” said the motives of everyone involved were suspect, and noted that independent studies conducted after the 2020 US election showed that rightwing content traveled further on social media than leftwing posts. The Guardian said that small data point indicates it may not have been “the heavy thumb of Meta on the political scales in Brazil.”
During the second-round runoff, Lula, 81, bought a smartphone for the first time and assembled WhatsApp groups of millions of supporters who mobilized in response to the threat of yet another Bolsonaro. WhatsApp is owned by Meta. At the helm of these channels was André Janones, the captain of “Lula’s army” and a federal deputy from the state of Minas Gerais. Janones issued daily social media challenges to the supporters he called his “soldiers.”
The successful campaigning via WhatsApp bore out a prediction that Meta CEO Mark Zuckerberg made in 2019: that the “digital living room” of private direct messaging and group chats would eclipse the “town square” style of public social media feeds. Lula’s supporters gathered in channels full of friendly faces to participate together in on-the-ground canvassing. Janones was not posting to convert the general populace to his side; he was motivating the base with online communication to pursue IRL action. Members of “Lula’s army” explicitly instructed supporters to neither share nor respond to posts from the opposition, displaying an understanding that any engagement boosts algorithmic reach in public social media.
Lula won the Brazilian election by 5 million votes, securing an unprecedented fourth term. The Guardian said that, after Janones’s innovative use of WhatsApp, Lula’s accusations seemed like “politicking borne of desperation,” and noted that Lula plays into longstanding conflicts between Brazil and tech giants like Meta. The newsletter also linked a further Guardian read on how the streets and social media drove Lula to a historic comeback in Brazil.
Brazil’s technology and court disputes
A decade ago, Brazil’s supreme court suspended WhatsApp, the app Lula rode to victory, in a fight over end-to-end encryption. The court has also ordered investigations into Google and Telegram executives. In 2024, a supreme court justice banned Elon Musk’s X from the country after Musk refused to ban accounts threatening democracy, and the justice froze the financial accounts of Musk’s satellite internet company Starlink.
The Guardian said a common enemy helps galvanize a base of supporters. In Lula’s case, it said the enemy was an easy target: a foreign tech company accused of interfering in Brazil’s democracy, an accusation also made by Jair Bolsonaro, Lula’s longtime foe. According to Guardian colleague Jonathan Watts, among the most popular chants of Lula supporters was “Hey Meta, vai tomar no cu!” — “Hey Meta, go take it up the arse!”
Cybersecurity and public safety
The TechScape newsletter also linked Guardian reports on cybersecurity and public safety. Polymarket temporarily suspended trading on its international platform because of a security incident. A separate report examined how crypto hacking funds North Korea’s isolated nuclear programme. Another linked report described a second suspected cyber-attack that hit supermarket freezers across Europe, while hackers sent a fake nuclear threat alert to a Ukraine emergency app.
Artificial intelligence, work and daily life
Other links examined how AI is haunting the search for the supernatural, how psychics pushed back against AI-generated readings, how chatbots are transforming dating and what it is like to work when employees’ co-workers are AI agents. A Guardian report said Palantir AI technology went unused or little used by 29 NHS trusts said to be benefiting from it, and a review read Anthropic’s 92-page risk factor document. Another piece assessed that Google search has gone from being “very handy to useless,” while a labor report described electrocutions, disease and unpaid work as hazards facing workers in Europe’s datacenters.
In a separate calendar note, the newsletter’s author said they would moderate panels at Web Summit in Lisbon the following week on open-source AI and human agency in the age of AI agents.
Election spending and technology
The election-related links included a Guardian visualization of the $446 million Elon Musk has spent on the US midterms. A profile traced how a union leader’s “crazy” idea became the defining issue in California’s midterms, and another linked report said the ultra-rich are spending one million dollars a day fighting California’s proposed billionaire tax. Another linked analysis carried the title “How tech became the villain of the US midterms.”