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AI May 15, 2023

EU Reportedly Plans to Include NFTs and Foreign Companies­­­ in Crypto Tax

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EU Reportedly Plans to Include NFTs and Foreign Companies­­­ in Crypto Tax

The European Union is reportedly planning to include non-fungible tokens (NFTs) and foreign companies in the upcoming crypto tax, reported Coindesk.

The EU has prepared a draft text, known as the eighth directive on administrative cooperation (DAC8), which would require crypto companies to share details of their clients’ holdings with tax authorities.

The draft bill, based on an Organization for Economic Cooperation and Development OECD model, is expected to be approved by finance ministers in the coming week and will enable the sharing of data among EU member states.

Also Read: EU Green Lights Comprehensive Crypto Regulation Framework

The proposed law aims to prevent EU residents from hiding their cryptocurrency assets abroad to evade taxes.

Crypto asset definition in DAC8

According to the prepared draft text, DAC8 applies to “crypto-assets service providers regulated by and authorised under Regulation XXX and to crypto-asset operators that are not.”

These entities are referred to as “reporting crypto-asset service providers” as they are obligated to report under the directive.

The draft also states that the definition of crypto-assets is “very broad” and includes “those crypto assets that have been issued in a decentralised manner, as well as stable coins, including e-money tokens as defined in Regulation XXX and certain non-fungible tokens (NFTs).”

Furthermore, it specifies that “crypto-assets that can be used for payment or investment purposes are reportable under this Directive.”

Therefore, reporting crypto-asset service providers need to assess on a case-by-case basis whether crypto-assets qualify as non-reportable, taking into account the exemptions provided in Regulation XXX, particularly with respect to limited network and certain utility tokens.

Impact on overseas crypto firms

The bill aligns closely with proposals put forward by the European Commission in December 2022 and would necessitate the establishment of a register of crypto asset operators by December 2025.

The Commission is required to “establish a Crypto-Asset Operator register” by December 31, 2025, which will contain the information to be reported and communicated as specified in Section V of Annex VI, and be “accessible to competent authorities of all Member States,” as stated in the 85-page draft.

The rules outlined in DAC8 would come into effect from January 1, 2026. It is noteworthy that the law encompasses platforms for trading NFTs used for payment or investment, as well as providers from outside the EU that have European clients.

Overseas crypto firms would be allowed to report to foreign authorities that adhere to EU norms.

EU is concerned about AI too

Now, in parallel to its efforts in crypto regulation, the EU is actively developing regulations for the governance of emerging technologies, particularly generative AI tools.

The proposed AI Act aims to safeguard individuals from the potential risks associated with advanced technology.

It classifies AI tools based on their perceived risk levels and imposes strict ethical and legal standards. A recent addition to the proposal requires businesses using generative AI to disclose any copyrighted material employed in their systems.

The EU’s approach to both crypto and AI regulation highlights its commitment to responsible and transparent technology governance, ensuring innovation while protecting individuals’ rights and interests.

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Image credits: Shutterstock, CC images, Midjourney, Unsplash.

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Judge Orders All AI-Generated Research To Be Declared in Court

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Judge Orders All AI-Generated Research To Be Declared in Court

A Texas federal judge has ordered that AI-generated content should not be used to make arguments in court, and that such information must be declared and verified by a human.

Judge Brantley Starr’s ruling comes after one attorney, Steven Schwartz, last week allowed OpenAI’s ChatGPT to “supplement” his legal research by providing him with six cases and relevant precedent. All the cases were untrue and completely “hallucinated” by the chatbot.

Also read: ChatGPT’s Bogus Citations Land US Lawyer in Hot Water

The debacle received wide coverage, leaving Schwartz with “regrets.” Other lawyers who may have been contemplating trying the stunt now have to think twice, as Judge Starr has put an end to it.

Judge Starr also added a requirement that any attorney who appears in his courtroom declare that “no portion of the filing was drafted by generative artificial intelligence,” or if it was, that it was checked “by a human being.”

Judge Starr lays down the law

The eminent judge has set specific rules for his courtroom, just like other judges, and recently added the Mandatory Certification Regarding Generative Artificial Intelligence.

This states that: “All attorneys appearing before the Court must file on the docket a certificate attesting either that no portion of the filing was drafted by generative artificial intelligence (such as ChatGPT, Harvey.AI, or Google Bard) or that any language drafted by generative artificial intelligence was checked for accuracy, using print reporters or traditional legal databases, by a human being.”

A form for lawyers to sign is appended, noting that “quotations, citations, paraphrased assertions and legal analysis are all covered by this proscription.”

According to a report by TechCrunch, summary is one of AI’s strong suits and finding and summarizing precedent or previous cases is something advertised as potentially helpful in legal work. As such, this ruling may be a major spanner in the works for AI.

The certification requirement includes a pretty well-informed and convincing explanation of its necessity.

It states that: “These platforms are incredibly powerful and have many uses in the law: form divorces, discovery requests, suggested errors in documents, anticipated questions at oral argument.

“But legal briefing is not one of them. Here’s why.

“These platforms in their current states are prone to hallucinations and bias,” reads part of the certification.

It further explains that on hallucinations, AI is prone to simply making stuff up – even quotes and citations. While another issue relates to reliability or bias.

Chatbots don’t swear an oath

The certification further notes that although attorneys swear an oath to set aside their personal prejudices, biases, and beliefs to faithfully uphold the law and represent their clients, generative AI is the programming devised by humans who did not have to swear such an oath.

In the case of Schwartz, he said in an affidavit that he was “unaware of the possibility that its (ChatGPT) content could be false.”

He added that he “greatly regrets” using the generative AI and will only “supplement” its use with absolute caution and validation in future, further claiming he had never used ChatGPT prior to this case.

The other side of ChatGPT

Launched last November, ChatGPT is a large language model developed by OpenAI. The AI-powered chatbot is trained on billions of data sets from the internet and can perform a variety of tasks such as generating text and translating languages.

Despite going viral and provoking a fierce AI race, ChatGPT has its downsides – it can hallucinate and has misled Schwartz, who was representing Roberto Mata in a lawsuit against Colombian airline Avianca. Effectively, the chatbot provided citations to cases that did not exist.

Yet when Schwartz asked ChatGPT if one of the supposed cases was a real case, it responded “yes, (it) is a real case.” When asked for sources, the chatbot told Schwartz the case could be found “on legal research database such as Westlaw and LexisNexis.”

The matter came to light after the opposing counsel flagged the ChatGPT-generated citations as fake.

US District Court Judge Kevin Castel confirmed six of them as non-existent and demanded an explanation from Schwartz.

“Six of the submitted cases appear to be bogus judicial decisions with bogus quotes and bogus internal citations,” wrote Judge Castel in a May 4 order.

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Nvidia Debuts AI Tools in an Era Where “Anyone Can Be a Programmer”

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Nvidia Debuts AI Tools in an Era Where “Anyone Can Be a Programmer”

The world’s most valuable chip maker Nvidia has unveiled a new batch of AI-centric products, as the company rides on the generative AI wave where anyone can be a programmer.

Nvidia announced a new supercomputer and a networking system, while the company also aims to make video game characters more realistic.

The wide range of products include robotics design, gaming capabilities, advertising services, and networking technology, which CEO Jensen Huang unveiled during a two-hour presentation in Taiwan on Monday.

Also read: Google Claims its AI Computer Outperforms Nvidia’s A100 Chip

Most notable of the new products is the AI supercomputer platform named DGX GH200 that will help tech companies create successors to OpenAI’s ChatGPT.

According to the company, the new DGX GH200 supercomputers combine 256 GH200 superchips that can act as a single graphics processing unit (GPU). The result is a system that boasts nearly 500 times the memory of a single Nvidia’s DGX A100 system.

“Generative AI, large language models, and recommender systems are the digital engines of modern economy,” said Huang.

“DGX GH200 AI supercomputers integrate Nvidia’s most advanced accelerated computing and networking technologies to expand the frontier of AI.”

So far, Microsoft Corp., Meta Platforms Inc., and Alphabet’s Google are expected to be among the first users, according to Nvidia.

The DGX GH200 supercomputers are expected to be available by the end of 2023.

The GH200 superchips which power the new supercomputer work by combining Nvidia’s Arm-based Grace GPU and an Nvidia H100 Tensor Core GPU in a single package.

The chipmaker also revealed that it’s building its own supercomputer running four DGX 200 systems at the same time to power its own research.

Nvidia also released its ACE generative AI model for video games, enabling gaming companies to use generative AI for large games with multiple non-player characters, giving them unique lines of dialogue and ways to interact with players that would normally need to be individually programmed.

Easy ad content

Alongside the hardware announcement, the company said it has partnered with advertising giant WPP to create a content engine that uses its Omniverse technology and generative AI capabilities to help build out ad content.

The move is intended to cut down the time and cost of producing ads by enabling WPP’s clients to lean on Nvidia’s technology.

Electronics manufacturers such as Foxconn, Pegatron, and Wistron are using Omniverse technology to create digital twins of their factory floors, so they can get a sense of how best to lay them out before making any physical changes.

A new computing era

Presenting at the forum, Huang acknowledged that advancements in AI are ushering in a new era in computing. He says anyone can be a programmer simply by speaking to the computer.

According to the Nvidia boss, gone are the days when programmers would write lines of code, only for it to display the “fail to compile” response because of a missing semicolon.

“This computer doesn’t care how you program it, it will try to understand what you mean, because it has this incredible large language model capability. And so the programming barrier is incredibly low,” said Huang.

“We have closed the digital divide. Everyone is a programmer. Now, you just have to say something to the computer,” he added.

Huang said his company has managed to bridge the digital gap, and the tech giant will continue to capitalize on the AI frenzy that has made Nvidia one of the world’s most valuable chipmakers.

Nvidia’s stock price is rising

Nvidia’s major announcements came as shares of the tech giant jumped last week on news that the company anticipated second quarter revenue above Wall Street’s expectations, based on the strength of its data center business.

The company hit the $1 trillion market cap just before the US markets opened on Tuesday. Its shares are trading at $407 in the pre-market, nearly 5% up from Monday.

Nvidia’s shares were up more than 165% year-to-date as of Friday afternoon, with the S&P 500 (^GSPC) just 9.5% higher in the same frame.

Rival chip maker AMD has experienced a similar boost in share price, rising 93%. However, Intel (INTC) is lagging behind with shares up just 8%.

According to Yahoo Finance tech editor Daniel Howley, while analysts see Nividia well ahead of its chip rivals in the AI processing space, how long that continues to be the case is anyone’s guess.

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ChatGPT’s Bogus Citations Land US Lawyer in Hot Water

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ChatGPT's Bogus Citations Land US Lawyer in Hot Water

A lawyer in the United States is facing disciplinary action after his law firm used popular AI chatbot ChatGPT for legal research and cited fake cases in a lawsuit.

Steven A. Schwartz, who is representing Roberto Mata in a lawsuit against Colombian airline Avianca, admitted to using OpenAI’s ChatGPT for research purposes, and that the AI model provided him with citations to cases that did not exist.

Mata is suing Avianca for a personal injury caused by a serving cart in 2019, claiming negligence by an employee.

Also read: Opera Unveils GPT-Powered AI Chatbot Aria

Bogus all the way

According to a BBC report, the matter came to light after Schwartz, a lawyer with 30 years experience, used these cases as precedent to support Mata’s case.

But the opposing counsel flagged the ChatGPT-generated citations as fake. US District Court Judge Kevin Castel confirmed six of them as non-existent. He demanded an explanation from Schwartz, an attorney with New York-based law company Levidow, Levidow & Oberman.

“Six of the submitted cases appear to be bogus judicial decisions with bogus quotes and bogus internal citations,” Judge Castel wrote in a May 4 order.

“The court is presented with an unprecedented circumstance.”

The supposed cases include: Varghese v. China South Airlines, Martinez v. Delta Airlines, Shaboon v. EgyptAir, Petersen v. Iran Air, Miller v. United Airlines, and Estate of Durden v. KLM Royal Dutch Airlines, none of which did not appear to exist to either the judge or defense.

Lawyer claims ignorance

ChatGPT is a large language model developed by OpenAI. Launched in November, the AI is trained on billions of data from the Internet and can perform a variety of tasks like generate text, translate languages, and even write poetry, and solve difficult math problems.

But ChatGPT is prone to “hallucinations” – tech industry speak for when AI chatbots produce false or misleading information, often with confidence.

In an affidavit last week, Schwartz said he was “unaware of the possibility that its [ChatGPT] content could be false.” He also said that he “greatly regrets” using the generative AI and will only “supplement” its use with absolute caution and validation in future.

Schwartz claimed to have never used ChatGPT prior to this case. He said he “greatly regrets having utilized generative artificial intelligence to supplement the legal research performed herein and will never do so in the future without absolute verification of its authenticity.”

The career attorney now faces a court hearing on June 8 after accepting responsibility for not confirming the authenticity of the ChatGPT sources. Schwartz was asked to show cause why he shouldn’t be sanctioned “for the use of a false and fraudulent notarization.”

ChatGPT’s confident lies

According to the BBC report, Schwartz’s affidavit contained screenshots of the attorney that confirmed his chats with ChatGPT.

Schwartz asked the chatbot, “is varghese a real case?”, to which ChatGPT responded “yes, [it] is a real case.” When asked for sources, it told the attorney that the case could be found “on legal research databases such as Westlaw and LexisNexis”.

Again, the attorney asked: “Are the other cases you provided fake?” ChatGPT responded “No”, adding that the cases could be found on other legal databases. “I apologize for the confusion earlier,” ChatGPT said.

“Upon double-checking, I found the case Varghese v. China Southern Airlines Co. Ltd., 925 F.3d 1339 (11th Cir. 2019), does indeed exist and can be found on legal research databases such as Westlaw and LexisNexis. I apologize for any inconvenience or confusion my earlier responses may have caused,” the chatbot replied with confidence.

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