Daniel Barabander

@dbarabander

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Daniel Barabander

New piece: Why (good) AI needs crypto. TLDR: Closed AI is anti-competitive. Open source AI hits a “resource problem” (huge compute/data costs). Crypto fixes this by incentivizing resource contributions via ownership—unlocking bigger models & faster innovation. 🔗👇 https://variant.fund/articles/why-good-ai-needs-crypto/

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Daniel Barabander

This ruling reinforces that the CFAA is an anti-hacking law, not a broad data misappropriation tool. Crypto companies using/providing products/services to help users unlock their own data (or public data) without accessing those users’ credentials should not be considered to engage in “hacking” under any conceivable definition of that term and have a strong argument they do not violate the CFAA. None of the above is legal advice (as always) and this is an area of law in flux. You should discuss your situation with your legal counsel. For more details, check out the full breakdown: https://paragraph.xyz/@proofs-and-protocols/browser-extensions,-the-cfaa-and-user-control-5

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Daniel Barabander

Let’s quickly review the BrandTotal case to see why. BrandTotal was an analytics company that collected Facebook ad data using browser extensions used by end users and its own scraping services. Facebook really did not like this. It used contractual (TOS, cease and desist) and technical (CAPTCHAs, account bans) methods to block BrandTotal, but BrandTotal kept on collecting anyway. Facebook sued BrandTotal under the CFAA. In analyzing the claim, the court made key distinctions between different BrandTotal products/services. These products/services varied in whether they had access to user credentials. From the court’s reasoning, we can see a pattern emerge: whether BrandTotal violated the CFAA came down to whether it had access to user credentials. Here’s a summary table depicting this:

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Daniel Barabander

I wrote a long article about the CFAA back in August. In that article, I focus on a court case called BrandTotal (and test it against influential precedent). The TLDR of that article is that I believe that products/services that empower users to unchain their data from a Web2 platform without accessing their credentials have a strong argument that they do not violate the CFAA.

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Daniel Barabander

Obviously, Web2 companies do not like users controlling their own data. One of their favorite legal hammers to stop this is the Computer Fraud and Abuse Act (CFAA), which provides a private right of action against a person who “intentionally accesses a computer without authorization.” Specifically, Web2 companies love to sue products/services that empower users to export their data under the CFAA. Here's an example of X doing this against a scraping company: https://natlawreview.com/article/x-corp-lawsuits-target-data-scraping.

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Daniel Barabander

With the rise of agents that heavily interact with Web2 applications, primitives that help users unchain their Web2 data will become increasingly important. These primitives include account encumbrance using TEEs, zkTLS to prove something about a user account, etc. These primitives allow crypto companies to offer products/services that empower users to unlock their data without giving these companies access to users' credentials. Examples include Flashbot's Teleport (account encumbrance) and Pluto's Web Proofs (zkTLS).

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fun jamming with @dbarabander @jhackworth on these. our DMs are open if you're working on any variant of these, or something we didn't think of :) a few other relevant links below. https://warpcast.com/jesse/0xfe0fdd4a

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Daniel Barabander

One area I’m particularly excited about is using TEEs as a way to remove agent dev control @turnkey does amazing work on this front - you should talk to them @flashbots is also doing amazing work on TEEs

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Daniel Barabander

Crypto devs traditionally address this issue by using smart contracts/atomic transactions that never permit them to touch user funds I'm seeing way too many agent projects with unilateral control over user funds; projects should work with counsel to discuss relinquishing control

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Daniel Barabander

(2) Cybersecurity/negligence: Control over user funds likely implicates duty of care to exert reasonable efforts to protect the funds, relevant in a negligence action

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Daniel Barabander

(1) Money transmission: Control over user funds is crucial to the analysis if a party is a “money transmitter” and therefore must KYC/AML (here's 40 pages I co-wrote on why: https://edit.financialcrimelitigators.org/api/assets/cd682a1c-1cb0-4c99-a491-ac6155f4bdc2.pdf) (here's 16 more for good measure: https://edit.financialcrimelitigators.org/api/assets/b9fa10a1-5e91-4473-96f6-c240ff0761eb.pdf)

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Daniel Barabander

Agent devs need to grapple with the general rule crypto devs have had to deal with for years now: Custody user funds = increased liability risk Why? Control is the law’s lodestar for finding liability Two issues immediately come to mind

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Daniel Barabander

@hyperbolic has a GPU marketplace

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Daniel Barabander

You’re too kind!

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this issue of the @variant newsletter is a banger a lot of good stuff rounded up from the last month or so. https://blog.variant.fund/the-ai-and-daos-edition

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Daniel Barabander

I will continue to bang this drum - there is no lower hanging fruit for a crypto company to get right than strong/enforceable TOS. Check out the piece I wrote on enforceable TOS here: https://blog.variant.fund/enforceability-terms-of-service-ui https://x.com/jchervinsky/status/1880275786713944427

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Daniel Barabander

Thank you so much :)

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Daniel Barabander

As promised @yb - hope you enjoy! https://warpcast.com/dbarabander/0x30186311

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Daniel Barabander

You're too kind - it's actually off for publication right now but I will send when live - would love to hear your thoughts : )

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Daniel Barabander

I’ll see you there!

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