By Ken Winterbottom
Theft drives former Bitcoin giant Mt. Gox into bankruptcy
Mt. Gox, a Bitcoin exchange based in Japan, filed for bankruptcy last week after the theft of 850,000 of its Bitcoins. The company, which started as an online Magic: The Gathering marketplace, once oversaw 70% of all Bitcoin trades, though its prominence had fallen significantly even before the theft.
Despite CEO Mark Karpeles offering a glimmer of hope for victimized customers in a Tokyo press conference, investors say that the lost Bitcoins, worth about $473 million and representing about 7% of the estimated global Bitcoin total, likely cannot be recovered. A class action lawsuit has already been filed against Mt. Gox in Illinois, alleging consumer fraud and negligence.
Bitcoin, the first of a growing number of unregulated digital cryptocurrencies, was originally lauded as a currency immune to theft, corruption, and counterfeiting. However, faith in the currency has been shaken by a series of setbacks, from the FBI shutdown of the Silk Road, an online Bitcoin-only black market, to reports of Bitcoin counterfeiting. Cryptocurrency supporters view events like these, including the Mt. Gox bankruptcy, as illustrating the importance of stronger security measures going forward, but remain confident in Bitcoin and in the cryptocurrency movement.
Lessig v. Liberation Music Settlement
Harvard Law School Professor Lawrence Lessig claimed a victory last week in his ongoing fight for fair use in copyright practices. Last summer, Professor Lessig used a snippet from the song “Lisztomania” by the French band Phoenix in a lecture video that he uploaded online. While the band itself came out strongly in support of Professor Lessig’s use of the song, Liberation Music, the Australian music label that owns the rights to “Lisztomania,” had the video forcibly removed. Not one to be bullied into submission, Professor Lessig decided to fight back. In collaboration with the Electronic Frontier Foundation (“EFF”), a digital civil rights group, he successfully challenged the takedown in federal court, arguing that he was well within his rights to use Phoenix’s music under fair use policies. Complaint, Lessig v. Liberation Music Pty Ltd, No. 13-cv-12028 (D. Mass. Aug. 22, 2013) hosted by EFF.
Although the full terms of the settlement agreement remain confidential, Liberation Music admitted that the use of the song was permissible under both U.S. and Australian law, and it agreed to update its copyright policies to respect fair use. The music label will also pay Professor Lessig an undisclosed amount of money, which will go toward supporting the work of the EFF. Professor Lessig, a co-founder of the Creative Commons, is a longtime supporter of open access software, the public domain, and reduced restrictions on copyright and trademark use. His book Republic, Lost, is available for free online. In a statement about the settlement, Professor Lessig said:
“Too often copyright is used as an excuse to silence legitimate speech. . . . Hopefully, this lawsuit will send a message to copyright owners to adopt fair takedown practices – or face the consequences.”
“Google Tax” scrapped in Italy
In December of last year, the Italian Parliament passed a law which would impose a de facto tax on web advertisements. The law arose in response to a widespread practice among web giants that run on advertising revenue – including Google, Yahoo, and Amazon – of transferring corporate taxable earnings to foreign havens, such as Ireland, Luxembourg, and Bermuda, allegedly costing Europe and the U.S. over $100 billion annually. The Parliament postponed enacting the law until July 2014.
Now, the government of new Italian prime minister Matteo Renzi, sworn in last weekend, has decided to cancel the so-called “Google Tax,” which many predicted would be found to violate European Union laws.
The idea of a “Google Tax” is not new: Israel has been considering a similar law for some time. The proposed Israeli law would apply specifically to search engines and would assess a straightforward 7% royalty. The Italian law, by contrast, required web giants to use Italian companies as middlemen in setting up advertisements. Meanwhile, Germany passed a law last year that would permit publishers to charge search engines royalties for using their news snippets.