BVNK co-founders (L to R) Donald Jackson, Jesse Hemson-Struthers and Chris Harmes, at the company’s San Francisco Office.
BVNK
Citi has invested in stablecoin infrastructure company BVNK, the startup told CNBC on Thursday, as big U.S. banks ramp up their presence in the cryptocurrency and digital asset space.
Stablecoins are a type of digital asset pegged to a fiat currency and backed by real-world assets like bonds. The two biggest are USDC and Tether, which issues USDT.
BVNK’s core technology is effectively a payments rail to facilitate transactions in stablecoins globally, allowing customers to move money from fiat into the cryptocurrency and back.
The company declined to disclose the sum that Citi invested or its current valuation. But Chris Harmse, co-founder of BVNK, told CNBC in an interview that its valuation is higher than the $750 million that was publicly disclosed at its last funding round.
The investment was made by Citi Ventures, the venture capital arm of Citigroup.
Stablecoins, once just a tool for people to trade quickly in and out of other cryptocurrencies like bitcoin, are now being seen as a potential key tool for cross-border transactions due to the speed to send and receive them, the low cost and 24/7 settlement.
There were nearly $9 trillion worth of stablecoin transactions over the last 12 months, according to Visa, while the current valuation of all stablecoins in existence stands at over $300 billion, Coinmarketcap data shows.
U.S. growth
BVNK’s Harmse said the company is seeing momentum, especially in the U.S., which has been its fastest-growing market over the last 12-18 months thanks to what is seen by the crypto industry as a more favorable regulatory environment.
Earlier this year, the U.S. passed the GENIUS Act, a bill designed to regulate and bring more clarity to the stablecoin market.
“You are seeing with the GENIUS Act coming through, and regulatory clarity, an explosion of demand for building on top of stablecoin infrastructure,” Harmse told CNBC.
BVNK’s technology can be used by customers to pay suppliers, contractors or merchants in other countries. The company is looking to expand its customer base, including to digital-only banks or neobanks that may use stabelcoins for their core checking account, Harmse said.
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The co-founder declined to get into the specifics of the company’s work with Citi as it’s “too early to announce” but noted the Wall Street bank has been bolstering its cross-border payment services.
“U.S. banks at the scale of Citi, because of the GENIUS Act, are putting their weight behind … investing in leading businesses in the space to make sure they are at forefront of this technological shift in payments,” Harmse said.
Citi signaled its step up into crypto this year. CEO Jane Fraser said in June that the company is considering issuing its own stablecoin and is interested in offering custodian services for crypto assets.
BVNK has “dipped in and out of profitability” as the company has invested in growth, Harmse said, adding that the company is on track to be profitable next year. BVNK is also backed by Coinbase and Tiger Global.
The startup is playing in a highly-competitive space with other newcomers like Alchemy Pay and TripleA and established players like Ripple trying to get a slice of the cross-border digital money pie.
Wall Street welcomes crypto
Citi isn’t alone in embracing digital assets when it comes to major U.S. banks and financial institutions.
JPMorgan Chase launched its own stablecoin-like token called JPMD this year. The bank also made the decision this year to allow clients to buy bitcoin.
Banks have been looking at how to use blockchain, a technology originally developed to underpin bitcoin, to lower the cost and speed up transactions of many kinds. Part of this involves “tokenization” which broadly means the idea of issuing a digital token that represents something such as a deposit.
Bank of New York Mellon, for example, is exploring tokenized deposits. HSBC has already launched a tokenized deposit service.
An illustration photo shows Sora 2 logo on a smartphone.
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The Creative Artists Agency on Thursday slammed OpenAI’s new video creation app Sora for posing “significant risks” to their clients and intellectual property.
The talent agency, which represents artists including Doja Cat, Scarlett Johanson, and Tom Hanks, questioned whether OpenAI believed that “humans, writers, artists, actors, directors, producers, musicians, and athletes deserve to be compensated and credited for the work they create.”
“Or does Open AI believe they can just steal it, disregarding global copyright principles and blatantly dismissing creators’ rights, as well as the many people and companies who fund the production, creation, and publication of these humans’ work? In our opinion, the answer to this question is obvious,” the CAA wrote.
OpenAI did not immediately respond to CNBC’s request for comment.
The CAA said that it was “open to hearing” solutions from OpenAI and is working with IP leaders, unions, legislators and global policymakers on the matter.
“Control, permission for use, and compensation is a fundamental right of these workers,” the CAA wrote. “Anything less than the protection of creators and their rights is unacceptable.”
Sora, which launched last week and has quickly reached 1 million downloads, allows users to create AI-generated clips often featuring popular characters and brands.
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OpenAI launched with an “opt-out” system, which allowed the use of copyrighted material unless studios or agencies requested that their IP not be used.
CEO Sam Altman later said in a blog post that they would give rightsholders “more granular control over generation of characters.”
Talent agency WME sent a memo to agents on Wednesday that it has “notified OpenAI that all WME clients be opted out of the latest Sora AI update, regardless of whether IP rights holders have opted out IP our clients are associated with,” the LA Times reported.
United Talent Agency also criticized Sora’s use of copyrighted property as “exploitation, not innovation,” in a statement on Thursday.
“There is no substitute for human talent in our business, and we will continue to fight tirelessly for our clients to ensure that they are protected,” UTA wrote. “When it comes to OpenAI’s Sora or any other platform that seeks to profit from our clients’ intellectual property and likeness, we stand with artists.”
In a letter written to OpenAI last week, Disney said it did not authorize OpenAI and Sora to copy, distribute, publicly display or perform any image or video that features its copyrighted works and characters, according to a person familiar with the matter.
Disney also wrote that it did not have an obligation to “opt-out” of appearing in Sora or any OpenAI system to preserve its rights under copyright law, the person said.
The Motion Picture Association issued a statement on Tuesday, urging OpenAI to take “immediate and decisive action” against videos using Sora to produce content infringing on its copyrighted material.
Entertainment companies have expressed numerous copyright concerns as generative AI has surged.
Universal and Disney sued creator Midjourney in June, alleging that the company used and distributed AI-generated characters from their movies despite requests to stop. Disney also sent a cease-and-desist letter to AI startup Character.AI in September, warning the company to stop using its copyrighted characters without authorization.
People walk past a billboard advertisement for YouTube in Berlin, Germany, on Sept. 27, 2019.
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YouTube is offering creators who were banned from the platform a second chance.
On Thursday, the Google-owned platform announced it is rolling out a feature for previously terminated creators to apply to create a new channel. Previous rules led to a lifetime ban.
“We know many terminated creators deserve a second chance,” wrote the YouTube Team in a blog post. “We’re looking forward to providing an opportunity for creators to start fresh and bring their voice back to the platform.”
Tech companies have faced months of scrutiny from House Republicans and President Donald Trump, who have accused the platforms of political bias and overreach in content moderation.
Last week, YouTube agreed to pay $24.5 million to settle a lawsuit involving the suspension of Trump’s account following the U.S. Capitol riots on Jan. 6, 2021.
YouTube said this new option is separate from its already existing appeals process. If an appeal is unsuccessful, creators now have the option to apply for a new channel.
Approved creators under the new process will start from scratch, with no prior videos, subscribers or monetization privileges carried over.
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Over the next several weeks, eligible creators logging into YouTube Studio will see an option to request a new channel. Creators are only eligible to apply one year after their original channel was terminated.
YouTube said it will review requests based on the severity and frequency of past violations.
The company also said it will consider off-platform behavior that could harm the community, such as activity endangering child safety.
The program excludes creators terminated for copyright infringement, violations of its Creator Responsibility policy or those who deleted their accounts.
YouTube’s ‘second chance’ process fits with a broader trend at Google and other major platforms to ease strict content moderation rules imposed in the wake of the pandemic and the 2020 election.
In September, Alphabet lawyer Daniel Donovan sent a letter to House Judiciary Chair Jim Jordan, R-Ohio, that announced the platform had made changes to its community guidelines for content containing Covid-19 or election-related misinformation.
The letter also claimed that senior Biden administration officials pressed the company to remove certain Covid-related videos, saying the pressure was “unacceptable and wrong.”
YouTube ended its stand-alone Covid misinformation rules in December 2024, according to Donovan’s letter.
Google’s former CEO Eric Schmidt spoke at the Sifted Summit on Wednesday 8, October.
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Google‘s former CEO Eric Schmidt has issued a stark reminder about the dangers of AI and how susceptible it is to being hacked.
Schmidt, who served as Google’s chief executive from 2001 to 2011, warned about “the bad stuff that AI can do,” when asked whether AI is more destructive than nuclear weapons during a fireside chat at the Sifted Summit
“Is there a possibility of a proliferation problem in AI? Absolutely,” Schmidt said Wednesday. The proliferation risks of AI include the technology falling into the hands of bad actors and being repurposed and misused.
“There’s evidence that you can take models, closed or open, and you can hack them to remove their guardrails. So in the course of their training, they learn a lot of things. A bad example would be they learn how to kill someone,” Schmidt said.
“All of the major companies make it impossible for those models to answer that question. Good decision. Everyone does this. They do it well, and they do it for the right reasons. There’s evidence that they can be reverse-engineered, and there are many other examples of that nature.”
AI systems are vulnerable to attack, with some methods including prompt injections and jailbreaking. In a prompt injection attack, hackers hide malicious instructions in user inputs or external data, like web pages or documents, to trick the AI into doing things it’s not meant to do — such as sharing private data or running harmful commands
Jailbreaking, on the other hand, involves manipulating the AI’s responses so it ignores its safety rules and produces restricted or dangerous content.
In 2023, a few months after OpenAI’s ChatGPT was released, users employed a “jailbreak” trick to circumvent the safety instructions embedded in the chatbot.
This included creating a ChatGPT alter-ego called DAN, an acronym for “Do Anything Now,” which involved threatening the chatbot with death if it didn’t comply. The alter-ego could provide answers on how to commit illegal activities or list the positive qualities of Adolf Hitler.
Schmidt said that there isn’t a good “non-proliferation regime” yet to help curb the dangers of AI.
AI is ‘underhyped’
Despite the grim warning, Schmidt was optimistic about AI more broadly and said the technology doesn’t get the hype it deserves.
“I wrote two books with Henry Kissinger about this before he died, and we came to the view that the arrival of an alien intelligence that is not quite us and more or less under our control is a very big deal for humanity, because humans are used to being at the top of the chain. I think so far, that thesis is proving out that the level of ability of these systems is going to far exceed what humans can do over time,” Schmidt said.
“Now the GPT series, which culminated in a ChatGPT moment for all of us, where they had 100 million users in two months, which is extraordinary, gives you a sense of the power of this technology. So I think it’s underhyped, not overhyped, and I look forward to being proven correct in five or 10 years,” he added.
His comments come amid growing talk of an AI bubble, as investors pour money into AI-focused firms and valuations look stretched, with comparisons being made to the dot-com bubble collapse of the early 2000s.
Schmidt said he doesn’t think history will repeat itself, however.
“I don’t think that’s going to happen here, but I’m not a professional investor,” he said.
“What I do know is that the people who are investing hard-earned dollars believe the economic return over a long period of time is enormous. Why else would they take the risk?”