US Supreme Court Considers Limits on Government in Key Privacy Case

The U.S. Supreme Court signaled Wednesday it may be open to new limits on the government’s ability to track someone’s movements by accessing data on that person’s cellphone.

A case before the high court could result in a landmark decision in the ongoing debate over civil liberties protections in an era of rapid technological change.

At issue is whether law enforcement will be able to access cellphone data that can reveal a person’s whereabouts without having to first obtain a court-issued search warrant.

The case stems from the conviction of Timothy Carpenter for a series of robberies back in 2010 and 2011. Prosecutors were able to obtain cellphone records that indicated his location over a period of months, information that proved crucial to his conviction.

Get a warrant

On Wednesday, lawyers for the American Civil Liberties Union argued that law enforcement should be required to obtain a court-ordered search warrant before obtaining such information.

They also argued that allowing law enforcement to access the cellphone data without a warrant would violate the prohibition on unreasonable search and seizures contained in the Fourth Amendment to the U.S. Constitution.

“It is impossible to go about our daily lives without leaving a trail of digital breadcrumbs that reveal where we have been over time, what we have done, who we spent time with,” said ACLU attorney Nathan Freed Wessler, who spoke to reporters outside the Supreme Court following oral arguments. “It is time for the court, we think, to update Fourth Amendment doctrine to provide reasonable protections today.”

Some of the justices also raised concerns about privacy in the digital age.

“Most Americans, I think, still want to avoid Big Brother,” Justice Sonia Sotomayor, who often sides with the liberal wing of the court, said.

Chief Justice John Roberts, who often sides with conservatives on the court, said the central question was whether the cellphone information should be accessible to the government “without a warrant.”

Privacy versus security

Justice Department lawyers defended the process of obtaining the data without a court warrant, arguing that even though the technology has changed, the need to rapidly obtain such information for law enforcement has not. The government also argued that privacy rights are not at issue because law enforcement agencies can obtain information from telecommunications companies that record transactions with their customers.

Justices Samuel Alito and Anthony Kennedy indicated they were open to the government’s position in the case.

Legal experts say whichever way the court eventually rules could have an enormous impact on privacy rights in the digital age.

“I don’t think that this is a world that anybody anticipated a couple of decades ago,” Stanford University law professor David Alan Sklansky said via Skype. “These new data capabilities are rapidly increasing the things that government can do for good and for evil. And figuring out how we allow the government to make full use of these new capabilities, without endangering political liberties and endangering the privacy that is necessary for us to have the kind of flourishing democratic social life we want, is a huge ongoing challenge.”

Sklansky added that the United States “has historically been a leader in thinking about privacy rights, particularly with regard to privacy from the government.”

And he predicted that other countries will be closely following the high court case as they wrestle with similar conflicts. “This is a global problem. Countries around the world are trying to figure out how to deal with it. I think that people in all democratic countries should care about how the United States winds up resolving this question,” he said.

Past rulings

Twice in recent years the Supreme Court has ruled in major cases related to privacy and technology and both times ruled against law enforcement.

The court ruled in 2012 that a warrant is required to place a GPS tracking device on a vehicle. And in 2014, the high court ruled that a warrant is required to search a cellphone seized during an arrest.

A decision in the current case, known as Carpenter v. U.S., is expected sometime before the end of June.


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US Trial Threatens Funding for Turkey’s Dollar-dependent Banks

Turkey’s deteriorating finances are hurting the country’s banks whose reliance on dollar funding makes them vulnerable to the worst-case scenario: a sudden halt or reversal of foreign investment flows.

International investors are growing nervous about Turkey for a variety of reasons. But U.S. legal action against a number of Turkish individuals over alleged Iran sanctions busting – and the risk that some of the country’s banks might be sucked into the case – lies at the heart of the latest concerns.

Since Turkey’s financial crisis in 2000, its banks have earned a reputation as being among the best-run in emerging markets, holding capital reserves far above those required by global rules.

They are still borrowing funds on international markets for lending on to domestic clients, and executives say they do not expect any significant future difficulties.

Nevertheless, borrowing costs are rising for the banks, which have accumulated dollar debt piles equal to a third of Turkey’s total foreign debt. Bank shares are down 20 percent since mid-August, outstripping a 5 percent fall on the broader Istanbul index in this period.

The lira has fallen more than 10 percent against the dollar and euro in the past three months alone, clocking losses of over 50 percent since the end of 2012 .

Several factors are at work, including fears that Turkey’s credit rating might be downgraded, government resistance to higher interest rates despite double-digit inflation, and tensions between Ankara and NATO ally Washington.

Now a Turkish-Iranian gold trader on trial in New York has pleaded guilty to conspiring to evade U.S. sanctions against Iran and will testify against a Turkish bank official charged with arranging illegal transactions involving American lenders.

Any possibility that Turkish banks themselves might become involved, landing the kind of huge fines slapped on others for sanctions-busting, would have severe consequences for the lenders and the wider economy.

“If [fines] do materialize, I would assume that all lending would stop until it becomes clear if institutions around the world can lend to Turkish banks or not,” said Alaa Bushehri, an emerging debt portfolio manager at BNP Paribas Asset Management.

Turkey’s bank regulator and government officials have denied reports in Haberturk newspaper that six unnamed Turkish banks could face fines worth billions of dollars.

But Turkish banks’ dollar bonds generally reflect investors’ nervousness, Bushehri said. On average, yields are 100 basis points above sovereign debt, whereas most big Turkish non-bank firms have lower funding costs than the government, she noted.

Turkish banks also trade with higher yields than similarly-or worse-rated banks in Russia, an emerging market peer which is directly subject to Western sanctions.

Adverse implications

U.S. prosecutors have charged nine people in the case, including the deputy general manager of Turkey’s Halkbank, who is also on trial in New York. He denies all charges.

A former Turkish economy minister is among the defendants, although he is not currently on trial and likewise denies all charges. Ankara says the case is politically motivated, while Halkbank has said all of its transactions have fully complied with national and international regulations.

“If the trial were to end with fines on Turkish lenders, economic implications for Turkey could be highly adverse,” TD Securities said in a note to clients.

Inflation hit a 9-year high of 11.9 percent in October, while Turkish bond yields have reached record levels above 13 percent. Ratings agency Standard & Poor’s said on Wednesday an insufficient response by the central bank would be an immediate concern for Turkey’s sovereign debt rating.

Deputy Prime Minister Mehmet Simsek has promised the government will do whatever is necessary if its banks are hit by the U.S. trial but Mehmet Emin Ozcan, CEO of state-owned Vakifbank, expects no negative impact.

“We didn’t face any problem with borrowing from international markets and I don’t think we’ll have a problem in the future,” he said this week.

Still, investors’ fears persist. While international sanctions on Iran were eased last year, U.S. measures remain and penalties for any infringements can be devastating – as a $9 billion fine on French bank BNP Paribas last year attests.

The potential damage of any fines on Turkish bank reserves has exaggerated the lira’s weakness, compounding the problems of the banks which have about $172 billion in external debt, according to Fitch ratings agency. Of this, $96 billion is due within the next year, the data showed at the end of September.

Health and growth

The issue is central to Turkey’s economic health and growth.

As in other countries with low domestic savings, it relies on foreign borrowing, with banks acting as the conduit for a major part of the flows. Any stop in the financing could wreak havoc.

Turkish banks have average capital ratios that are double the 8 percent minimum stipulated by Basel 3 global banking rules. Also, the lira’s depreciation should not compromise their ability to repay dollar debt as the regulator does not permit lenders to hold open, or unhedged, hard currency liabilities.

Fitch reckons banks can, if needed, access up to $90 billion over 12 months by tapping reserves they hold at the central bank and by unwinding currency derivatives positions. But a prolonged funding crunch will be a different story.

That would risk “pressures on foreign currency reserves, the exchange rate, interest rates and economic growth”, Fitch warns.

That’s because the lenders’ capital buffers held with the central bank – totaling just over $60 billion – are a major part of authorities’ $117 billion reserve war chest, and any depletion of this would leave the lira dangerously exposed.

“Usable” reserves – excluding gold and bank reserves – are around $35 billion, analysts estimate. That means the central bank will have no option but to raise interest rates sharply to counter any lira selloff, with damaging consequences for economic growth.

So far, the banks have avoided refinancing stress; Turkish lending is lucrative for European banks which may be unwilling to risk those long-standing ties.

Indeed, external debt rose around $9 billion in the first half of 2017, Fitch data showed, while Garanti Bank last week announced a $1.35 billion syndicated loan, with 38 banks participating.

But costs are rising – Garanti paid 1.25 percent above LIBOR on a one-year loan, while in 2016 and 2015 it paid 1.10 percent and 0.75 percent above LIBOR respectively.

Huseyin Aydin, chairman of the Banks Association of Turkey, told Reuters he had not observed any low appetite for taking Turkish risk. However, he added: “Foreign borrowing interest rates increased around 50-60 basis points in a tough year like 2017. It is possible that a limited increase will continue in

rates in 2018.”

Paul McNamara, investment director at GAM, has been among those who have warned for some time of trouble. He said he has sold all his Turkish debt because of the banks’ vulnerability.

“Local banks have borrowed an immense amount – north of $100 billion – abroad and lent that money on locally,” he said. “Any stress on Turkish bank syndications and this goes bad very fast.”

 


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Things You Might Not Know About Bubbly Bitcoin

Bitcoin blasted past $11,000 to hit a record high for the sixth day in a row on Wednesday after gaining more than $1,000 in just 12 hours, stoking concerns that a rapidly swelling bubble could be set to burst in spectacular

fashion.

Here are some facts that you might not know about the largest and best-known cryptocurrency.

HOW MANY ARE THERE?

Bitcoin’s supply is limited to 21 million — a number that is expected to be reached around the year 2140. So far, around 16.7 million bitcoins have been released into the system, with 12.5 new ones released roughly every 10 minutes via a process called “mining,” in which a global network of computers competes to solve complex algorithms in reward for the new bitcoins.

ENERGY DRAIN

These mining computers require a vast amount of energy to run. A recent estimate by tech news site Motherboard put the energy cost of a single bitcoin transaction at 215 kilowatt-hours, assuming that there are around 300,000 bitcoin transactions per day. That’s almost enough energy as the average American household consumes in a whole week.

BITS OF BITCOIN

Bitcoin’s smallest unit is a Satoshi, named after the elusive creator of the cryptocurrency, Satoshi Nakamoto. One Satoshi is one hundred-millionth of a bitcoin, making it worth around $0.0001 at current exchange rates.

BITCOIN BILLIONAIRES

Bitcoin has performed better than every central-bank-issued currency in every year since 2011 except for 2014, when it performed worse than any traditional currency. So far in 2017, it is up around 1000 percent. If you had bought $1,000 of bitcoin at the start of 2013 and had never sold any of it, you

would now be sitting on $80 million. Many people consider bitcoin to be more of a speculative instrument than a currency, because of its volatility, increasingly high transaction fees, and the fact that relatively few merchants accept it.

EXCHANGE HEISTS

More than 980,000 bitcoins have been stolen from exchanges, either by hackers or insiders. That’s a total of more than $10 billion at current exchange rates. Few have been recovered.

MYSTERY CREATOR

Despite many attempts to find the creator of bitcoin, and a number of claims, we still do not know who Satoshi Nakamoto is, or was. Australian computer scientist and entrepreneur Craig Wright convinced some prominent members of the bitcoin community that he was Nakamoto in May 2016, but he then refused to provide the evidence that most of the community said was necessary. It is not clear whether Satoshi Nakamoto, assumed to be a pseudonym, was a name used by a group of developers or by one individual. Nor is it clear that Nakamoto is still alive — the late computer scientist Hal Finney’s name is sometimes put forward. Developer Nick Szabo has denied claims that he is Nakamoto, as has tech entrepreneur Elon Musk more recently.

INFLATED CHINESE TRADING

Until earlier this year, it was thought that Chinese exchanges accounted for around 90 percent of trading volume. But it has become clear that some exchanges inflated their volumes through so-called wash trades, repeatedly trading nominal amounts of bitcoin back and forth between accounts. Since the Chinese authorities imposed transaction fees, Chinese trading volumes have fallen sharply, and now represent less than 20 percent, according to data from website Bitcoinity.

“MARKET CAP”

The total value of all bitcoins released into the system so far has now reached as high as $190 billion. That makes its total value — sometimes dubbed its “market cap” — greater than that of Disney, and bigger than the market cap of BlackRock and Goldman Sachs combined.

CRYPTO-RIVALS

Bitcoin is far from the only cryptocurrency. There are now well over 1,000 rivals, according to trade website Coinmarketcap. 

“SHORTING”

It is already possible to short bitcoin on a number of retail platforms and exchanges, via contracts for difference (CFDs), leveraged-up margin trading or by borrowing bitcoin from exchanges without leverage. But a number of big financial institutions — including CME Group, CBOE and Nasdaq — have

recently announced that they will offer bitcoin futures, which will open up the possibility of shorting the cryptocurrency to the mainstream professional investment universe.

Reporting by Jemima Kelly.


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Facebook to Give Relief Groups Data on Users’ Needs

Facebook is giving disaster-relief organizations such as the Red Cross access to data on what users need and where they are as part of an expansion of tools available for relief and charitable giving.

While Facebook users can already see individual pleas and offers for help during a crisis, relief groups will get a broader set of data similar to what Facebook sees. That includes real-time maps showing where people need help.

Facebook is also expanding its fundraising tools beyond the U.S. and eliminating the fees it had been charging for people using its service to raise money for various causes.

The company announced the new features Wednesday during its Social Good Forum in New York, a gathering for nonprofits and others using the site.

 


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India Unveils New Recommendations to Reinforce Strict Net Neutrality

India has strongly backed a free and open Internet, with its telecom regulator recommending stringent regulations on net neutrality – the concept of ensuring equal access to the web — saying it is important the Internet is not “cannibalized.”

 

India’s push for net neutrality comes at a time when the United States has unveiled plans to roll back regulations on it.

 “The core principles of net neutrality, non-discriminatory treatment of all content, we’ve upheld them,” R.S. Sharma, Chairman of the Telecom Regulatory Authority of India, TRAI, told reporters as he unveiled recommendations following a year-long debate.

These proposals seek to prohibit any service provider from blocking or offering preferential data speeds which essentially means that telecom providers cannot create “fast lanes” for higher paying customers or speed up or slow down websites and apps.

Equal access

Advocates of net neutrality, who have led an impassioned battle to ensure equal web access, welcomed the latest recommendations, saying that these would ensure that India is among countries with the strictest net neutrality rules in the world. Last year India put in place rules that prohibited telecoms from differential pricing.

India’s IT industry lobby, NASSCOM, in a statement, said the reaffirmation of net neutrality would be a “shot in the arm” for the country’s digital economy.

Nikhil Pahwa, one of the founders of Internet Freedom Foundation, which has campaigned for strict net neutrality, says open access to the Internet is critical for India.

“This is really, really essential. It is important for India because we are at the cusp of great Internet growth and innovation with lots of start-ups coming up and students and people developing things online,” he said.

India’s stand on net neutrality had last year effectively blocked efforts by Facebook to offer free but limited access to the web in the country’s fast growing Internet market.

The company said it wanted to expand access to the net in poor, rural areas but digital rights activists had slammed the plan as “poor Internet for poor people” and said it would create a “walled garden” in which Facebook would control the content it offered users. A Facebook spokesperson at the time said the company was disappointed by the outcome but would continue its efforts to “eliminate barriers.”

80 million users

Supporters of an open Internet point out that India’s experience demonstrates that net neutrality rules are not hampering access to the Internet in a country where many people are still not connected to the web.

“In the last year alone we have added about 80 million Internet users. There has been a substantial increase in Internet access in the country and it is increasing rapidly despite net neutrality. So this notion that net neutrality is adversarial to growth of Internet access or to sustainability of mobile operators is incorrect,” said Pahwa.

India’s position on ensuring an open Internet is in contrast to the U.S., where last week the U.S. Federal Communications Commission unveiled plans to repeal net neutrality rules, saying they discourage Internet service providers from making investments in their network to provide better and faster online access.

India’s strict net neutrality rules have disappointed private telecom providers, who had hoped for some leeway in the latest recommendations.

In an oblique reference to the U.S. position, a statement from the telecom industry’s main lobby group, the Cellular Operators Association of India, said that at a time when, globally, countries are adopting a more “market oriented, and market driven approach to net neutrality in order to not stifle development, innovation, proliferation and growth of the Internet, we believe TRAI should have adopted a light touch approach to net neutrality.”


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India’s GES Conference Focuses on More Women Entrepreneurs

This week, more than 1,000 entrepreneurs, business executives and government officials are in Hyderabad India to discuss ways to empower people to start businesses and build networks. The focus of the 8th annual Global Entrepreneurship Summit is women, who still lag behind men when it comes to founding businesses and getting funding. Michelle Quinn reports from Hyderabad.


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Italian Carmaker Unveils New High-Tech Prototype

“Terzo Millennio”, or Third Millennium, is a new brand name in auto design from Italian carmaker Lamborghini. Company representatives introduced the design at the Massachusetts Institute of Technology. Evgeny Maslov reports from Cambridge, Massachusetts.


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US Ethanol Makers, Looking to Reduce Biofuel Glut, Call on Mexico, India

U.S. ethanol producers, looking to relieve a growing domestic glut, are hunting for new international fuel markets to replace China and Brazil after trade disputes slashed exports to those top buyers.

Without new markets, U.S. producers may have to pare output after spending hundreds of millions of dollars on biofuel production plants in recent years. Currently, the most promising potential destinations for U.S. fuel exports appear to be Mexico and India, industry executives said.

China and Brazil accounted for 41 percent of the 1.17 billion gallons the United States exported last year. Shipments to the two shriveled in September, making U.S. exports for that month the smallest in more than a year.

“There are only so many times you can replace your top market,” said Tom Sleight, president of the U.S. Grains Council, which officials said has been calling on potential buyers in Kenya, Ghana and Nigeria.

China’s demand plummeted by more than 100 million gallons this year after it removed a preferential tariff rate. Brazil’s imports tumbled after it put a quota on imports in September to protect its domestic producers.

Selling points

To drum up new customers, Illinois-based ethanol producer Marquis Energy has sent executives to India, China, Thailand and the Philippines, promoting the corn-based fuel additive as a smog- and oil-import fighter.

“I’ve had a lot of people over there almost nonstop over the last three months,” the company’s chief executive, Mark Marquis, said of the hunt for buyers in Asia. Archer Daniels Midland Co and Flint Hills Resources also have stepped up efforts to sell into Mexico, traders said.

U.S. ethanol prices have slid to nearly a two-year low as daily domestic production last week hit a record 45.1 million gallons, making the search for new export markets more urgent.

Output this year could reach about 16 billion gallons, nearly triple that of 2007.

U.S. exports fell since hitting 2.5 million gallons per day in the first eight months this year. Shipments to Brazil sank to 19 million gallons in September, the smallest monthly volume in more than a year. Exports to China through September were just 60,880 gallons, a precipitous drop from 198 million gallons a year earlier, according to U.S. Department of Agriculture data.

The marketing effort could pay off in Mexico, whose energy regulatory commission (CRE) is to vote soon to ease the flow of fuel imports through state-run Pemex facilities to several Mexican states bordering the United States.

If approved, significant new volumes of gasoline blended with 10 percent ethanol could begin flowing in 2018 into Chihuahua, Coahuila, Nuevo Leon and Tamaulipas states, CRE Commissioner Luis Guillermo Pineda told Reuters.

“The largest supplier is logically the United States, but it can be from anywhere,” Pineda said of the ethanol blend.

Import prediction

Ray Young, ADM’s finance chief, last month told analysts Mexico could be importing 200 million gallons annually by 2019.

U.S. ethanol exports to Mexico last year totaled about 30 million gallons.

U.S. inventories reached 920 million gallons in the week ended November 17, up 16 percent from a year earlier, the U.S. Energy Information Administration said. Ethanol futures have fallen to $1.36 per gallon on the Chicago Board of Trade, down 20 percent from their 2017 high in April.

U.S. producers are pitching China and India on ethanol’s smog-fighting potential. This month, United Airlines canceled flights to India’s capital, New Delhi, citing heavy smog as a public health emergency. China ordered Beijing and more than two dozen other cities to start meeting limits on airborne pollution starting this month.

Ted McKinney, a USDA official interviewed during a biofuel-promotion trip to India, expressed optimism that country could import much more U.S. ethanol for cars and trucks. But others were not so sure.

India’s government wants to promote biofuel production using its own agricultural waste, said Jai Asundi, research coordinator at a Bengaluru-based think tank, the Center for Study of Science, Technology and Policy.

“There is a potential for producing ethanol from locally available sources without depending on imports,” Asundi said.


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Trump Administration Permits ENI to Drill for Oil Off Alaska

Eni US could begin work on oil exploration in federal waters off Alaska as soon as next month after the Trump administration on Tuesday approved permits for leases the company has held for a decade, the Interior Department said.

The department’s Bureau of Safety and Environmental Enforcement, issued Eni US, a unit of Italy’s Eni, a permit to explore for oil from an artificial island in the Beaufort Sea. Eni is the first company allowed to explore for oil in federal waters off Alaska since 2015.

The approval is part of the Trump administration’s policy to maximize output of fossil fuels for domestic use and for exporting.

Scott Angelle, the BSEE director, said developing Arctic resources responsibly is a “critical component to achieving American energy dominance.”

Environmentalists say exploring for oil in the Arctic is dangerous.

“The Trump administration is risking a major oil spill by letting this foreign corporation drill in the unforgiving waters off Alaska,” said Kristen Monsell, the legal director for oceans at the Center for Biological Diversity nonprofit group.

Eni wants to drill into the Beaufort from the island using extended wells more than 6 miles (10 km) long. Eni US did not immediately respond to a request for comment about when it would start drilling.

In April President Donald Trump signed a so-called America-First Offshore Energy Strategy executive order to extend offshore drilling to areas in the Arctic and other places that have been off limits.

Eni’s leases, which were set to expire by the end of the year, were outside of an area protected by former President Barack Obama weeks before he left office. The company’s plan to move ahead with risky and expensive drilling in the Arctic comes despite years of low oil prices and plentiful sources of crude in the continental United States.

Royal Dutch Shell Plc quit its exploration quest offshore of Alaska in 2015 after a ship it had leased suffered a gash in mostly uncharted waters and environmentalists discovered an existing law that limited the company’s ability to drill.

Republicans are eager to drill elsewhere in Alaska. A tax bill passed by the Senate budget committee Tuesday contained a provision to open drilling in a portion of Alaska’s Arctic National Wildlife Refuge. Conservationists say the refuge is one of the planet’s last paradises.

The bill, which Republicans hope to pass in the full Senate this week, faces an uncertain future.


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