Nym security consultant Chelsea Manning and Nym CEO Harry Halpin weigh in on the House Financial Services Committee recently approving a bill meant to prevent a central bank digital currency (CBDC) in the US.
Privacy is, of course, top of mind as the House Financial Services Committee recently approved a bill meant to prevent a CBD C in the US, Congressman Patrick mchenry said one of the reasons was to quote, protect Americans privacy. Joining us now to discuss the state of financial privacy in the US is NM security consultant Chelsea Manning along with NM CEO Harry Hain Chelsea. Wonderful to see you again. Harry. Welcome to the show. Thank you. Thanks for, thank you again, Jen. All right, let's dive into this Chelsea. I'm gonna direct this first question at you. Talk to us about the current state of financial surveillance here in the US and abroad. Oh, sure. Uh So basically, uh we have had these countervailing wins between, you know, the, the, the attempts at uh back back doors for encryption, you know, like this, this has been an ongoing debate since at least the 19 nineties and really ramped up in the, the 20 tens. Um But now it's involving, you know, um currencies and um particularly uh digital, digital assets and digital currencies. Um And so, so one of the things that we've seen is we've seen both a, you know, the, the push for the push towards, uh, you know, as a uh central uh central bank, uh back digital asset, um, you know, in, in particular places like the United States and uh more so in Europe. Um But we've also seen sort of the, the countervailing force against that, the push back against that. Um, you know, and we, you know, when, whenever it comes to, when, whenever, whenever it comes to privacy and surveillance, uh when and, and regulatory forces, you, you, you, you know, the, the sort of this, the, the, the, the, the, you know, the, the balance between, you know, I have nothing to hide and I have, I have to provide all this information to the IRS anyway versus, you know, the, the fact that, you know, some of the sometimes the stuff gets, gets used and abused um and especially with our transaction with sort of transactions being able to do, make predictions about things and, and be able to do, do things about the patterns of life and behaviors like this, like countervailing, you know, opinion, especially among, you know, privacy rights advocates who have, who have been warning people for years that, you know, we, we're gonna end up in a situation where, you know, and we are, we have been here for a while but you know, where transactions, you know, with credit with credit card or, you know, with credit card authorities and, and, and everything are, are, are used to essentially make life in debt or, you know, life changing decisions uh based on like where we, where we can work and what we can do. Um You know, but now it's a question of what, you know, is it is now, is it gonna be a federal, you know, bank authority who's gonna be able to go into a ledger and be able to track all of this stuff. Uh by default, Harry Chelsea just brought up uh CBD CS. We just mentioned um the Anti Surveillance Act Congressman mchenry, of course, saying that this is to protect Americans. Do you think that this is enough um from Congress to protect Americans? Well, I mean, just to be clear, you know, we at NM are of course, you know, skeptical of CBD CS, but just because you don't have a CBD C doesn't mean that your financial transactions aren't being surveilled, right? So as not having a CBD C just simply means they may not be centrally surveilled by, for example, the federal government. Uh but the fact essentially all financial transactions do go through uh currently uh banking level surveillance and any transaction on a Blockchain is effectively self surveilled and transparent unless your Blockchain is using some form of privacy enhancing technology. So of course, simply saying, oh CBD CS should not be used doesn't really tackle uh the core problem of financial surveillance and you know, the problem of financial surveillance is even if people believe that financial things can be used for good things. You know, we're already, for example, reporting all this information to the relevant tax authorities. It still actually borders on a national security problem because what could happen is for example, let's assume the United States made a CBD C or even banks start using Blockchain technology in general for trans payment rails. Uh If you're, for example, the US government, I would assume you would be very concerned that uh if these financial transactions were um a transparent ledger of any sort, centralized or decentralized, they could be easily um surveilled by, for example, the Chinese or Russian governments. So it's a real national security interest and the benefit to have privacy. The, the other thing which I think people often and aren't particularly aware of is that even if you're not using a Blockchain, even if you're not using a CBD C at all, the very fact uh that you're communicating, for example, over a web browser or an app or the internet, even with a certain encryption that releases metadata about when you're transacting who you're transacting with. And that information can be gathered regardless of a Blockchain. Uh And that's exactly what agencies like the NSA have been doing for a very long time. So uh let's look at the flip side of this uh right now uh in Russia's uh uh prosecuting a war in Ukraine that's costing hundreds of thousands of lives. Uh Many of them Russian actually, uh but also millions of refugees. Uh North Korea is pursuing nuclear capabilities. And in, in both cases, we know that these are governments that are active in the Cryptocurrency markets, they're active in, in money laundering using cryptocurrencies. The essentially these uh the value in in crypto is costing thousands of lives on, on a very real basis. What kind of safeguards um is in providing to prevent uh this kind of uh uh transfer of value that ultimately will cause bloodshed in a on a very real basis in the streets of uh of Ukraine right now. Uh I mean, just I'll give it to you, Harry and then yeah, yeah, yeah, I mean, just, just to be clear, uh the majority of our users uh are currently in Ukraine um because effectively what NM provides NIM is not a mixer like tornado cash, it does not uh make transactions, uh financial transactions, private. The way you want to think about NM is it's called a mixed net. I know it's confusing but a mixed net. You want to emphasize that the second part of that word, which means network and what a network is is a collection of servers similar to, for example VPN servers. And it sends packets to those servers, those servers mix the packets up like shuffling a deck of cards and then they send them to whatever the destination is. So what it means is that a adversarial third party cannot monitor that transaction. And then we allow the use of credentials, privacy enhanced authentication credentials for compliance purposes. For example, you can prove that you have a sign a phone number signal. You can prove that you are an American that you're not from North Korea. You can prove that you're not on the A list done KYC AM L compliance and so forth and so on. I mean, as a Swiss company, we have to be aware of these and operate in a large number of jurisdictions. So the way you want to think about it is that effectively uh nim is not a financial transfer rail. We make the existing financial transfer rails private, not between you and me between, I'm not hiding the trying to hide the money. I'm trying to make sure that third parties uh anyone uh who I haven't authorized or don't have authorized access to that data can't just observe it without me knowing. So for example, in the case of Ukraine, that's actually saving lives. It's very important because otherwise, uh we do have evidence with the New York Times recently that Russia is actually actively doing uh metadata analysis on the Ukrainian forces and military and financial transactions talks, who's in command, who's talking to who this is a very general purpose problem. It's much larger than the financial transactions. And that's why there's to our knowledge. We, we just did a train uh hackathon there two months ago. Uh That's why there's interest in mix net technologies and them you can also use for this very purpose, something like a VPN or Tor. But the problem particularly with VPN S is how do you trust the VPN, right? Because they're centralized. So the VPN knows exactly who and what you're doing. Uh And usually, for example, us government you would use for example, a CISCO VPN. Uh But that being said, you know, II I used to work for the French government. The French government has a Cisco contract but doesn't particularly trust Cisco perhaps to hand over since the French government or financial data uh to the US. So what we need in this space is a decentralized privacy enhanced mix that which is what we provide, that offers the ability to disclose your information, including, you know, ky ce mails information, whatever information to the relevant uh people that you choose but not basically just like random people intercept your data and monitor your data. And that is actually I think very coherent with national security concerns and will save lives rather than cause them to be, you know, hurt basically. Yeah, and just to clear up any confusion um you know, uh mix net, the the packets are agnostic about what is contained within the packets. So you know, this, we're not talking about specifically like transactions or anything like that like any kind of information um you know, uh mess like private messages, emails, um you know, it potentially even in the future like web traffic, you know, like uh like actual um you know, interacting over like an internet service, like, like with and VPN S are could be possible. Um So, you know, the, the underlying technology has a lot of um has a lot, has a broader range of possible uses. Um And I, and I think that, that I, I think that, that, that, that is, that is something that people intuitively understand at this point, you know, like that's why VP MS are popular. That's why, you know, uh uh tools like Tor um you know, uh rose in use in the 20 in the 20 tens. Uh is that people do care about privacy, they do, they do, they do care about um protecting their information. Um It's just the, the, the abilities of, you know, these large actors um to be able to, to decipher and disentangle this information have exponentially increased and have made those uh those existing privacy tools less effective than they have been previously as uh as Harry just cited. Uh you know, in, uh with that particular example, Chelsea, you very famously exposed human rights violations and ended up uh arrested for that in 2010 after providing data to wikileaks. If, if something like this existed back then, would that data have been untraceable? Could this help protect whistleblowers in, in the future? Um Yeah, it, it's hard to say. Uh you know, because obviously we're, we're, we're in a different, we, we, we're in a different era. Um you know, it was a lot easier, it was a lot easier then to uh uh to, you know, because the, the, the ability of, of, of surveillance actors um was less capable uh than it, than it is today. Um But I don't want to speculate on, you know, like, what, what, what is possible today. And uh you know, now, now we're just uh we're in a very different era where there's just so much information that it's actually disentangling, like whether or not information uh is accurate or not as opposed to like whether or not information can be made available to the public, like the public has access to information. But now we have so many different um uh we have a broad spectrum of information sources and it's very, it, it, it's become much, much more difficult to identify, you know, which one you know, which, which, which is the valuable information. We, we essentially have a needle and haystack problem that is exponentially increasing uh in complexity and difficulty over time. All right, Chelsea Harry, we are going to have to leave it there. Thanks so much for joining us this morning and unpacking the future of privacy. Thank you. That was n security consultant Chelsea Manning along with NM CEO Harry Halpin.