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CfA's January 12, 2024 Newsletter

With your support, Campaign for Accountability is working to expose corruption and hold the powerful accountable.

This Week's Updates:

Dean Phillips Campaign Propped Up by PAC with Ties to Sam Altman
For over a year, OpenAI CEO Sam Altman has been quietly looking for a Democratic candidate capable of primarying President Biden. He has appears to have spent little of his own money to support challengers, but has funded focus groups to test voter sentiment and has rallied a vast network of tech executives who are eager to write checks. In late 2023, Altman met with Rep. Dean Phillips (D-MN-3) to discuss his campaign for the nomination; it must have been a productive conversation, because a super PAC with close ties to Altman has spent over half a million dollars to boost Phillips.

Last week, CfA filed a Federal Election Commission (FEC) complaint regarding apparent coordination between the Phillips campaign and a separate super PAC, led by political strategist Steve Schmidt. Evidence compiled by CfA suggests that Schmidt and Phillips worked together to develop messaging, before Schmidt left the campaign to lead a PAC called Pass the Torch. Almost immediately, Pass the Torch began running ads in support of Phillips that echoed the campaign’s messaging. If this messaging was part of what Schmidt helped develop while still working directly with Phillips it could be considered illegally coordinated communications under FEC rules.

Why AI Companies Can’t Quit Journalism
On Wednesday, Senator Richard Blumenthal (D-CT) opened a Senate Judiciary Subcommittee hearing on journalism and AI with the observation that tech companies are not only responsible for the decline in local news, but have added insult to injury by cannibalizing those outlets to feed their AI models – often without compensation. Just days before, Sam Altman’s OpenAI made a statement declaring that it would be “impossible” to create AI tools without access to copyrighted material. While OpenAI has struck agreements with several media publishers, it is advocating for an intellectual property regime where these contracts would be a courtesy, rather than a requirement. Furthermore, as Condé Nast CEO Roger Lynch noted in his hearing testimony, not every media company has the resources to negotiate these agreements, which could prove an unreliable source of funding. AI developers are clearly interested in accessing the high-quality information produced by journalists, which could be used to train models that compete with news outlets. Actually paying for that data is another matter entirely.

Cold Weather Could Bring Windfall to Texas Crypto Miners
An Arctic cold front is coming to North America, and the Electric Reliability Council of Texas (ERCOT) has warned consumers that they could be facing high energy demands and low reserves. If temperatures drop enough, Texans will begin drawing an unsustainable amount of electricity to heat their homes, and powerplants won’t be able to keep up. ERCOT has promised to avert this outcome by deploying “all available tools,” which presumably includes a program that pays cryptocurrency miners millions of dollars to halt operations during demand surges. In 2022, CfA’s Tech Transparency Project (TTP) published a report on this special arrangement, which essentially allows crypto mining companies to engage in a form of energy arbitrage.

Recently, the New York Times reported on a Texas Bitcoin mine owned by Jerry Yu, a 23-year-old Chinese student studying in the United States. The facility itself was purchased with cryptocurrency via an offshore exchange, meaning that it would have been impossible to trace ownership back to Yu and his family. Yu’s connection to the mine was only revealed when his company was sued for failing to compensate workers and contractors. This case demonstrates the “black box” nature of many crypto operations, which are free to take money from ERCOT while revealing virtually nothing about their ownership or finances. CfA has urged Senators Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) to investigate the cryptocurrency company Circle for enabling similar transactions with links to terrorist groups.

What We're Reading
Biden announces fresh wave of early student debt cancellation for some borrowers
RFK Jr.’s presidential campaign questioned by FEC over payments to daughter-in-law
FTC settlement bars data broker from selling sensitive location info

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Be on the lookout for more updates about our work in the upcoming weeks. Thanks again for signing up to be a part of CfA!

Sincerely,

Michelle Kuppersmith
Executive Director, Campaign for Accountability

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