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Cheaper, faster, riskier — The rise of DeepSeek and its security concerns

Opinion by: Ahmad Shadid, CEO of O.xyz

The DeepSeek saga made it abundantly clear that cheaper AI models can offer breakthrough advantages. DeepSeek challenges traditional investments with low-cost, high-performance technology. Yet its rise brings serious risks. 

The most concerning aspects of such models are data privacy and security issues. The fact that such advanced models can be developed at a fraction of the standard expense does boost innovation and investment prospects, but at what cost?

Cost-cutting AI models can create dangerous vulnerabilities, even if they democratize AI development. A recent Cisco study found that DeepSeek’s R1 model had a 100% attack success rate. In simple terms, the model failed to block a single harmful prompt. Why does security take a backseat during such innovation?

DeepSeek sparks AI frenzy in China 

DeepSeek developers claim that its R1 chatbot costs a fraction of what rivals like OpenAI spend. Industry voices labeled this as the biggest AI chatbot story since November 2022. Microsoft and Amazon Web Services moved quickly to support DeepSeek.

This progress comes with risks. DeepSeek’s AI model stores user data on servers in China. Chinese law forces companies to share data with state agencies. This policy may allow the Chinese government to harvest US consumer data.

OpenAI raised concerns over DeepSeek in a letter to the US government. The 15-page letter highlighted that DeepSeek’s advancements, particularly with its R1 model, are narrowing the US lead in AI. 

From a financial viewpoint, DeepSeek’s announcement triggered a global panic. Tech stocks dropped sharply. Nvidia, a leader in chip manufacturing, lost nearly 17% in a single day. Investors reevaluated the cost and competitiveness of the AI industry. The loss in market value reached hundreds of billions of dollars. 

As risk sentiment spread, the shockwaves moved quickly into other sectors like crypto. The fast and hasty reaction itself is a critical concern. If AI developers want to cash in on this low-cost development trend, we might see more models like DeepSeek emerge that sacrifice user privacy for the sake of rapid deployment. 

The spillover effects on crypto

The DeepSeek saga revealed a more concerning trend for the crypto industry. Cryptocurrencies have grown closely linked with tech stocks. When DeepSeek hit the headlines, the crypto market was not spared. Bitcoin (BTC), the most prominent digital asset, fell below $100,000. 

Analysts also noted that Bitcoin’s six‐month rolling correlation with the Nasdaq Composite rose to about 0.5. This indicates that risk assets like Bitcoin follow suit when tech stocks falter. So, future developments that damage the mainstream tech market can also take a toll on the crypto market. 

Critics, including Jean Rausis of Smardex, maintain that DeepSeek’s technology “has nothing to do with Bitcoin” on a fundamental level. The prevailing market fear, however, meant that any shock in the tech sector transmitted quickly to the crypto market. Many Bitcoin miners had moved into AI data center operations and saw shares decline by 13%–18%. This drop added to the overall uncertainty in the market.

Another concern is the increasing avenue of scams. Several DeepSeek-themed or even fake AI-themed tokens emerged and captured investors’ attention. New investors would know very little about trading on decentralized exchanges and identifying pump-and-dump or rug-pull schemes. 

Security risks that can’t be ignored 

Security researchers pointed out that the DeepSeek R1 iOS app uses outdated encryption. Such flaws expose users to the risk of cyberattacks and data breaches. 

This cost-cutting can leave the system vulnerable to manipulation and misuse. The possibility that a low-cost AI model might serve foreign state interests casts a long shadow over its adoption.

Recent: OpenAI expects to 3X revenue in 2025 but Chinese AI firms are heating up

Security risks of this nature require urgent attention from companies and regulators alike. US officials worry about the storage of sensitive consumer data on Chinese servers. Regulators may impose stricter data protection standards to safeguard market confidence. Industry experts also debate the long-term influence of DeepSeek. Some argue that its cost-efficiency could push the entire AI sector forward. 

They see lower training costs as an opportunity to drive innovation and increase competition. This could lead to broader adoption of AI tools and lower costs. Yet the security shortcomings remain unresolved. The risk that cheaper models expose users to data breaches and cyberattacks overshadows potential benefits.

What’s ahead? 

As regulators and industry leaders step in to examine these issues, the future of AI depends on how well we manage these security risks. We must demand higher standards for data protection, even as we push for innovation. 

DeepSeek’s case reminds us that breakthroughs in efficiency must come with strong safeguards. The choices made now will shape the future of AI and consumer data protection. The debate over cheaper, faster but riskier technology is far from over and will continue to influence the tech and crypto space for years to come.

Opinion by: Ahmad Shadid, CEO of O.xyz.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Lawyer hopes Hashflare co-founders can ‘self-deport’ after sentencing

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<div>Lawyer hopes Hashflare co-founders can 'self-deport' after sentencing</div>

<div>Lawyer hopes Hashflare co-founders can 'self-deport' after sentencing</div>

A lawyer representing one of the co-founders of crypto mining service Hashflare has addressed how their criminal case may move forward after the pair received “self-deport” letters from the US Department of Homeland Security (DHS).

In an April 11 filing in the US District Court for the Western District of Washington, Hashflare co-founders Sergei Potapenko and Ivan Turogin reported they had received a DHS letter directing them to “leave the United States” as part of a push by the Trump administration to effect mass deportations. The government letter contradicted orders from Judge Robert Lasnik, who restricted travel for Potapenko and Turogin as part of their bail conditions.

In February, the Estonian nationals pleaded guilty to conspiracy to commit wire fraud as part of a deal with authorities. Between 2015 and 2019, the two were responsible for defrauding Hashflare users out of more than $550 million. They also raised $25 million from investors in 2017, claiming they would establish a digital bank called Polybius. The firm was never created.

Indicted in October 2022, Potapenko and Turogin were arrested and held in Estonia before their extradition to the US in May 2024. Both have been free on bail since July 2024 but could face up to 20 years in prison each at sentencing.

Ordered to leave, forced to stay

“[Potapenko and Turogin each] got letters from DHS to their personal email saying ‘deport immediately,’” Reed Smith partner and defense counsel Mark Bini told Cointelegraph. “It caused some angst because [our client and his co-defendant], their conditions of release include that they comply with the law. And here you have this letter saying if you stay in the country, you’re breaking the law. And of course, their bail conditions say they can’t leave the Seattle area.” 

Related: Russian Gotbit founder strikes $23M plea deal with US prosecutors

The DHS letters ordering certain people to “depart the United States immediately” were reportedly sent to thousands of immigrants who had used the government’s CBP One app to enter the country legally. However, some citizens reported receiving the same letter in US President Donald Trump’s attempts to effect deportations through his office.  

Bini initially thought it was a possibility that the US government was suggesting that Potapenko or Turogin “self-deport” to Estonia after the Justice Department issued a memo hinting it would change its enforcement policy in criminal cases involving crypto. The Hashflare co-founders had been expected to remain in the jurisdiction until at least Aug. 14 for their sentencing hearings.

“I have not encountered this situation before, where you have essentially two folks in the federal government telling you conflicting things,” said Bini. 

The attorney added that Potapenko or Turogin now carried letters with them at all times that stated DHS had deferred action on their “self-deportation” for one year in the event that authorities mistakenly tried to detain them and remove them from the country. Though the pair could still receive prison time, Potapenko, Turogin and Hashflare reported returning $400 million in crypto payments to users and “agreed to forfeit their interests in assets that the government froze in 2022.”

“We’re going to try and convince the judge to frankly side with DHS and let them self-deport to Estonia to their families because we believe that there was no actual financial harm to the customers of Hashflare,” said Bini. “It’s a weird [case] because for our clients, we want to be deported. Our clients are Estonian. Their families are Estonian.” 

Magazine: XRP win leaves Ripple and industry with no crypto legal precedent set

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League table of foreign criminals awaiting deportation and their offences set to be published

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League table of foreign criminals awaiting deportation and their offences set to be published

A league table of foreign criminals and their offences is set to be published for the first time.

The plans, due to be announced on Tuesday, will reportedly focus on those offenders awaiting deportation from the UK.

The latest data shows there were 19,244 foreign offenders awaiting deportation at the end of 2024, a rise from 17,907 when the Conservatives left office in July and 14,640 at the end of 2022.

Despite more offenders being deported since Labour came to power, the number waiting to be removed from the UK has been growing.

Factors are understood to include the early release of inmates due to prison overcrowding, instability and diplomatic problems in some countries and a backlog of legal cases appealing deportation.

Shadow home secretary Chris Philp said the decision to publish the nationalities of foreign criminals showed Labour had “buckled” under pressure from the Conservatives to disclose the data.

The latest government statistics show there were 10,355 foreign nationals held in custody in England and Wales at the end of 2024, representing 12% of the prison population.

More on Crime

The most common nationalities after British nationals were Albanian (11%), Polish (8%), Romanian (7%), which also represented the top three nationalities who were deported from the UK in 2024, according to Home Office figures.

Home Secretary Yvette Cooper is understood to have ordered officials to release the details by the end of the year, according to The Daily Telegraph.

The newspaper reported Ms Cooper overruled Home Office officials, who previously claimed it was too difficult to provide quality data on foreign criminals.

A Home Office source said: “Not only are we deporting foreign criminals at a rate never seen when Chris Philp and Robert Jenrick were in charge at the Home Office, but we will also be publishing far more information about that cohort of offenders than the Tories ever did.”

The source added that ministers wanted “to ensure the public is kept better informed about the number of foreign criminals awaiting deportation, where they are from and the crimes they have committed”.

In March, the government announced £5m in funding to deploy staff to 80 jails in England and Wales to speed up the deportation of foreign offenders.

Read more from Sky News:
‘Return hubs’ get UN backing
Sex offender allowed to stay in UK
Woman born in UK faces being deported

Foreign nationals sentenced to 12 months or more in prison are subject to automatic deportation, but the home secretary can also remove criminals if their presence in the UK is not considered desirable.

Shadow justice secretary Robert Jenrick welcomed the news, saying: “We will finally see the hard reality that mass migration is fuelling crime across our country… Frankly, the public deserved to know this [detail on foreign criminals] long ago.”

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Starmer and Zelenskyy discuss ending Russia’s ‘brutal war’ – as Putin says says he is open to bilateral talks on longer ceasefire

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Starmer and Zelenskyy discuss ending Russia's 'brutal war' - as Putin says says he is open to bilateral talks on longer ceasefire

Sir Keir Starmer and Volodymyr Zelenskyy spoke about ending Russia’s “brutal war” on Ukraine in their latest phone call on Easter Monday, as Vladimir Putin said he was open to bilateral talks.

The prime minister and Ukrainian president spoke on Monday afternoon, when Sir Keir “reiterated his iron-clad support for Ukraine“.

A Downing Street spokesperson added that the prime minister “said that the UK supports Ukraine’s calls for Russia to commit to a full ceasefire and that now is the time for Putin to show he is serious about ending his brutal war”.

“They discussed the latest developments on the Coalition of the Willing, and looked forward to further progress towards a just and lasting peace,” the spokesperson added.

Mr Zelenskyy later said on social media that he had a “good and detailed conversation” with the prime minister, and added Ukrainian officials will be in London for talks on ending the war with Russia on Wednesday.

“We are ready to move forward as constructively as possible, just as we have done before, to achieve an unconditional ceasefire, followed by the establishment of a real and lasting peace,” he added.

The Ukrainian president added that the 30-hour Easter truce, which both Kyiv and Moscow accuse the other of violating, showed that Russia “are prolonging the war”.

It comes as Mr Putin proposed bilateral talks with Ukraine on a longer ceasefire, which would mark the first time Russia held such talks since a failed peace deal soon after the invasion in 2022.

Speaking to a state TV reporter, the Russian president said: “We always have a positive attitude towards a truce, which is why we came up with such an initiative (the Easter truce), especially since we are talking about the bright Easter days.”

When asked about Mr Zelenskyy’s calls to extend the 30-hour ceasefire into a 30-day pause on civilian targets, he added: “This is all a subject for careful study, perhaps even bilaterally. We do not rule this out.”

The Ukrainian president said on Sunday evening that the Russian army had “violated Putin’s ceasefire more than 2,000 times” during the day, and accused Russia of “failing” to “uphold its own promise of a ceasefire”.

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From Saturday: Why Putin offered an Easter truce?

It also comes after Donald Trump has said he hopes Russia and Ukraine “will make a deal this week,” after he and his secretary of state Marco Rubio warned that the US will walk away from efforts to broker a peace deal unless there are clear signs of progress soon.

The US president said on his Truth Social platform that both countries would “start to do big business” with the US after ending the war.

Read more from Sky News:
Murder arrest after woman stabbed to death
Who could be the next pope?

Last month, Ukraine accepted Mr Trump’s proposal for a 30-day truce, but Mr Putin refused to back a full 30-day ceasefire, saying crucial issues of verification had not been sorted out.

He then said he would agree not to target Ukraine’s energy infrastructure. However, both sides have accused each other of breaking the moratorium on attacks on energy targets and at sea.

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