The Pope and U.S. authorities caution against the dangers of AI: Legal Analysis

Currently, there is widespread discourse regarding artificial intelligence (AI) and its associated risks. Pope Francis, the leader of the Catholic Church, has cautioned humanity about the potential hazards of AI and outlined necessary measures for its regulation. He advocates for an international treaty to govern AI development and usage ethically. Without such oversight, he warns of the danger of descending into a “technological dictatorship.” The peril of AI emerges when developers prioritize a “desire for profit or thirst for power” over the fundamental need for freedom and peace, he noted.

A similar sentiment was echoed by the Financial Stability Oversight Council (FSOC), which consists of leading financial regulators and is chaired by U.S. Treasury Secretary Janet Yellen. In its annual report, the body highlighted that AI presents particular risks, including cybersecurity and model risks. It recommended that companies and regulators improve their understanding and capabilities to oversee AI innovation and usage while identifying emerging threats. The report indicates that certain AI tools are highly technical and intricate, creating difficulties for institutions in explaining or monitoring them effectively. It cautions that without a thorough understanding, companies and regulators might miss biased or erroneous outcomes.

Judges in the United Kingdom are also contemplating the implications of utilizing AI in their judicial processes. Four senior judges in the U.K. have released judicial guidance concerning AI, focusing on its “responsible use” within courts and tribunals. The guidance identifies potentially beneficial applications of AI, particularly in administrative tasks such as summarizing documents, drafting presentations, and composing emails. However, much of the guidance advises judges to be cautious of misinformation generated through AI searches and summaries and to remain alert to any inaccuracies produced in their name. The use of AI for legal research and analysis is particularly discouraged.

Tether collaborates with FBI to showcase compliance

Tether, the issuer of the stablecoin Tether (USDT), has shared letters addressed to U.S. lawmakers responding to requests for intervention from the Department of Justice (DOJ) regarding the illicit use of its stablecoin. The letters aim to address concerns raised by Senator Cynthia Lummis and Representative French Hill in October, urging the DOJ “to carefully evaluate the extent to which Binance and Tether are providing material support and resources to support terrorism.”

Tether asserted that it has implemented a Know Your Customer program, a transaction monitoring system, and a “proactive approach” to detect suspicious accounts and activities. Furthermore, Tether indicated that client reviews extend beyond initial registration and claimed it employs surveillance monitoring tools to continuously track client activity. The company also revealed that it has onboarded the Federal Bureau of Investigation (FBI) to its platform as part of its collaboration with law enforcement.

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KuCoin to prohibit New York residents

The cryptocurrency exchange KuCoin has consented to pay $22 million to the State of New York and to prohibit state residents from accessing its platform, as per a stipulation and consent order filed in the New York Supreme Court. Additionally, KuCoin “admits that it represented itself as an ‘exchange’ and was not registered as an exchange in accordance with New York State laws.” The company has committed to closing the accounts of all users residing in New York within 120 days and to prevent New York residents from creating accounts in the future. Furthermore, it will limit access to withdrawals to only within 30 days, allowing the remaining 90 days for users to withdraw their funds.

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Four cryptocurrency crimes among IRS’s top cases in 2023

The criminal investigation division of the U.S. Internal Revenue Service has identified four cryptocurrency-related cases among the top 10 of its “most significant and high-profile investigations” for 2023. Four notable cases this year involved the seizure of cryptocurrency, fraudulent activities, money laundering, and other schemes. Ranking as its third most high-profile investigation in the past year was OneCoin co-founder Karl Sebastian Greenwood, who received a 20-year prison sentence in September for his involvement in marketing and selling a fraudulent crypto asset.

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