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Will Hack For Nukes: Inside North Korea’s Cryptocurrency Extortion Ring

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Will Hack For Nukes: Inside North Korea’s Cryptocurrency Extortion Ring

The threat on the screen was clear and simple enough: I’ve encrypted your files — and if you don’t pay me within a week, you’ll never be able to recover them.

At noon on May 12, 2017, a red alert page popped up on the computer screens of more than 300,000 Windows users worldwide, asking them to transfer approximately $300 worth of Bitcoin to recover their files.

The virus was later named “WannaCry.” Victims thought it was an ordinary cryptocurrency ransomware incident, but the U.S. government later said that Lazarus, a hacking group owned by the North Korean government, was behind the worst-ever cryptocurrency ransomware cyberattack, which eventually swept through more than 150 countries.

In North Korea, less than 1% of the population has access to the country’s Intranet service, which is called Kwangmyong, but the country’s government has still produced some of the best hackers in the world, on par with superpowers like the U.S, China and Russia.

In recent years, the Pyongyang government has taken advantage of the decentralized nature of cryptocurrencies and has used its two-decade-old cyberwarfare capabilities to raise money to fund nuclear weapons research through large-scale financial extortion like WannaCry — and it has been very successful.

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Bangladesh bank hack

The international community first truly recognized North Korea’s cyber warfare capability during the Bangladesh Bank hack in Jan. 2015. At the time, several employees of the bank received what appeared to be a standard job application email. But the attached resume and cover letter contained a virus that, when downloaded, connected to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.

Posing as the Central Bank of Bangladesh, the virus sent multiple instructions to illegally transfer $1 billion in funds from the Federal Reserve Bank of New York through the SWIFT system. Fortunately, one of the instructions attempted to transfer funds to a bank branch located on Jupiter Street in Manila, Philippines, and the word “Jupiter” happened to be the name of a sanctioned Iranian vessel, which drew the FBI’s attention to the request and led to the suspicious transaction being put on hold. Five transactions still went through, and the hackers got away with $81 million in stolen funds.

The attack showed that North Korea had clearly developed a much more sophisticated strategy than previous attacks. In this case, hackers lurked in the banking system for a year, gathering information and buying time before taking action.

The West realized that North Korea’s cyber forces were more powerful than imagined.

The hackers took advantage of the weekend in Bangladesh, the time difference in New York and the Filipino Lunar New Year holiday to get more time to send the money. After receiving the funds, they chose to transfer the money to a bank account in Manila, the capital of the Philippines, then transferred most of the amount to a casino, where they laundered the money at the gaming tables before transferring it back to North Korea.

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This Bangladesh bank heist forced the West to realize that North Korea’s cyber forces are more powerful than imagined. And the heist also strengthened North Korea’s resolve to steal cryptocurrencies: although North Korea got away with $81 million, this was just one-tenth of the targeted $1 billion.

At the same time, North Korea went through an elaborate money laundering process that wrote off another 90 percent of the targeted funds. After this operation, North Korea learned how labor-intensive and time-consuming the requirements of traditional financial institutions can be.

But with the rise of cryptocurrencies, North Korea saw the decentralized technology – an open financial system without the need to go through banks or government-regulated financial institutions – as a way to bypass sanctions, skip the money laundering process and put the proceeds directly into its nuclear weapons program.

Image of North Korean soldier working on a nuclear weapon.

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Midjourney

North Korea’s cyber history

The Pyongyang government’s ambitions for cyber attacks date back to the 1990s. In the Gulf War, which began in 1990, the U.S.-led coalition used electronic equipment in addition to conventional weapons to assist in taking down Iraq. The Chinese Communist Party at the time saw the potential of electronic warfare and set up a research group dedicated to exploring “electronic intelligence warfare.”

According to a book published by the Korean People’s Army (KPA), after then-Supreme Leader Kim Jong Il saw the report, he said “If the Internet is like a gun, a cyber attack is like an atomic bomb,” before directing KPA General Staff to develop an “information warfare” capability in order to support its nuclear weapons program.

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As early as 2008, the North Korean government established Bureau 121, also known as the Electronic Reconnaissance Department or Cyber Warfare Guidance Department, within the Reconnaissance Bureau of the KPA General Staff. It was tasked with conducting cyber attacks and cyber espionage and collecting intelligence on overseas politics, economy and society.

In 2009, North Korea merged all of its intelligence and internal security services into the Reconnaissance General Bureau (RGB) of the General Staff of the Korean People’s Army, which includes Bureau 121.

Bureau 121 now has an estimated 3,000 to 6,000 employees in various countries, including China, India, Malaysia and Russia. Its sections include “APT 37” and “Kimsuky,” which specialize in political cyber espionage, while “Lazarus,” which launched the WannaCry attack, focuses on financial blackmail.

The first cyberattack coincided with the country’s second nuclear test.

In 2012, Kim Jong-un came to power and inherited his father’s ambition to develop cyber warfare. The year after he came to power, Kim Jong-un publicly declared that cyber warfare, nuclear weapons and missiles are all the same: “an all-purpose sword” with their “ruthless targeting capability,” North Korea’s military can be invincible. This declaration set the stage for North Korea’s cyber attack-centric strategy to date.

North Korea’s earliest documented cyber attack was Operation Troy, against South Korea in 2009. In the early days of discovering the power of cyber warfare, the Pyongyang government aimed to demonstrate its cyber capabilities on the international stage. The attack also coincided with the country’s second nuclear test, when North Korea took an uncompromising stance on military policy and cyber strategy, with no fear of retaliation.

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Between 2013 and 2016, North Korea’s cyber activities increasingly aimed to gather information, and the country repeatedly launched distributed denial-of-service attacks (DDoS) on its main enemies, South Korea and the U.S., which briefly disrupted or even paralyzed the operations of government agencies, electrical infrastructure, military systems and more. Cyber espionage was also common during this period, with at least six major espionage attacks against South Korea alone.

North Korean hackers gradually improved their skills, and gradually the attacks were no longer limited to South Korea and the U.S., nor were the means limited to DDoS. After 2015, North Korea shifted away from attacking traditional banks and financial institutions to stealing decentralized cryptocurrencies, which it used to continue funding major nuclear tests.

Blockchain data

North Korea’s rapid nuclear development is due to the Kim Jong-un government’s use of the “all-purpose sword” of cyberattacks – a year-long focus on training a cyber army of hackers to steal large sums of money through cyberattacks targeting government agencies, financial institutions and even the general public.

Kim Jong-un ordered an increase in weapons-grade nuclear material to boost the country’s nuclear arsenal, and North Korea launched a record number of at least 90 missiles in 2022 alone. The U.S. and South Korean governments believe preparations for a seventh nuclear weapons test have been completed.

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U.S. Deputy National Security Advisor Anne Neuberger estimates that about one-third of the cryptocurrency stolen by North Korea was used for its weapons program. The UN report also said the cryptocurrency stolen by North Korea through cyberattacks is an “important source of revenue” for Pyongyang’s nuclear and ballistic missile programs.

Citing a UN report that is nor publicly available, Reuters reported that North Korea stole a record haul of cryptocurrencies in 2022 — $1.7 billion, according to an analysis of publicly available transaction data by blockchain analysis firm Chainalysis. Compared to North Korea’s total exports of just $142 million in 2020, it is clear that cryptocurrency hacking has become a major source of revenue for the North Korean treasury.

Decentralized Finance

In the traditional financial industry, fiat currencies such as the U.S. dollar and the Hong Kong dollar are issued by centralized institutions and rely on financial institutions to make money transactions, such as withdrawing and depositing fiat currency through banks. In contrast, cryptocurrencies are built on block-refining technology, are not issued by any central authority and can be used to create “wallets” to receive and send funds anonymously, without relying on banks to verify transactions.

When users transfer cryptocurrency funds, the transactions are recorded in a “distributed ledger technology” (DLT), which is not held by a single institution but is distributed on a peer-to-peer (P2P) network, where each individual copies and stores an identical public copy of the ledger.

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The “anonymity” and “decentralized” nature of cryptocurrencies means that the theft of cryptocurrencies would not mimic the Bangladesh Bank incident – that is, there would be no Federal Reserve to prevent them from withdrawing $851 million.

The WannaCry attack successfully stole $625 million in cryptocurrency, making Lazarus even more determined to shift the focus of its attacks to cryptocurrency targets. Initially, their targets were primarily cryptocurrency exchanges. Although the hackers are no longer targeting traditional financial institutions, the tactics remain similar: phishing or social engineering to insert virus-infected files into a target company’s computers and gain access to information systems in order to transfer money from their digital wallets. When funds are moved to an address controlled by North Korea, the hackers begin the money laundering process.

With the rise of cryptocurrencies, a number of Centralized Exchanges (CEX) have emerged around the world to facilitate the purchase of cryptocurrencies using currencies such as the U.S. dollar. The exchange of one form of cryptocurrency for another, and the replacement of cryptocurrencies with fiat currencies.

North Korea still needs to devote resources to money laundering.

This also means that the centralized exchange, like a traditional bank, requires the customer to provide real name verification and the exchange holds all records of the money movement. So no matter how easy it is to steal cryptocurrencies, North Korea still needs to devote resources to money laundering.

It is not difficult to hack a cryptocurrency exchange; the real challenge is in converting the cryptocurrency into cash to purchase nuclear weapons material.

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What warrants international attention and concern is not who is the target of North Korea’s attack, but rather North Korea’s increasingly sophisticated money laundering methods – how to hide as much of the record of money flow on the block refinery as possible before converting it to legal tender, making it impossible for investigators to trace the source of these funds.

In the first few attacks, Lazarus laundered money by writing automated scripts to execute peel chains. A “peel chain” refers to the transfer of large amounts of stolen money to different cryptocurrency addresses in small transactions, avoiding the attention of the trading platform. At the same time, hackers have also started using mixers. The purpose of a cryptocurrency mixer is to reduce the likelihood of a third party discovering the source of a transaction by mixing a cryptocurrency transaction with another transaction.

However, there are still loopholes in the money laundering process, as North Korea has repeatedly used the same coin mixer, making it easier for investigators to deduce the organization’s money laundering patterns. In addition, former U.S. President Donald Trump expanded the scope of unilateral U.S. sanctions in 2017, freezing the assets of any person or company with business ties to North Korea in the United States.

Fearing the loss of access to the U.S. market, companies from various countries were inclined to stop trading with North Korea, effectively cutting off North Korea’s access to the global financial system and leaving the government in Pyongyang with the option of using “over-the-counter brokers” to move cash in stolen cryptocurrency funds into fiat currency.

In this attack, two Chinese nationals, Tian Yinyin and Li Jiadong, were sanctioned by the U.S. Treasury Department for assisting in the conversion of stolen cryptocurrency into fiat currency. Their assets in the U.S. were frozen, and Americans were banned from doing business with them.

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In Sept. 2020, hackers stole more than $280 million from Singaporean cryptocurrency exchange KuCoin, which was equal to more than half of all cryptocurrencies stolen in 2020.

Cryptocurrency regulations tighten

Despite North Korea’s continued improvements in money laundering and programming techniques, its cryptocurrency nuclear agenda remains unpredictable.

As North Korea has improved its cryptocurrency capabilities, law enforcement’s ability to track funds to crypto address networks has increased, and one by one, they have begun to recover stolen funds.

There is no time limit on tracing where the money goes.

Norwegian police seized $5.8 million worth of cryptocurrency stolen by North Korea from the Ronin Network attack in 2023. The FBI, in conjunction with cryptocurrency organizations, also investigated and traced the location of North Korea’s attempt to convert stolen funds into legal tender, and worked with law enforcement and industry sources to freeze more than $30 million in cryptocurrency.

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Because every crypto transaction is recorded in a public ledger, there is no time limit on tracing where the money goes, and it can be recovered years after the crime. This, combined with efforts by agencies like the U.S. Office of Foreign Assets Control (OFAC) to cut off the preferred money laundering services of hackers from the rest of the cryptocurrency ecosystem, suggests that these hacks will become increasingly difficult and fruitless over time.

This increased scrutiny may make it more difficult for North Korea to convert stolen currency into cash. The U.S. Treasury Department, for example, has expanded the targeting of sanctions from the government of Pyongyang to include coin blenders. In 2022, the U.S. Treasury Department ordered the freezing of assets of Tornado Cash and Blender.io, common North Korean blenders, and banned U.S. citizens from using the platforms.

The uncertainty of cryptocurrency prices has also created uncertainty for North Korea’s nuclear weapons plans, with the value of cryptocurrencies suddenly plummeting in mid-2022 and the cryptocurrency industry becoming more unpredictable with the demise of exchange FTX, which declared bankruptcy in 2022.

According to Chainalysis, a blockchain analysis firm, the value of unwashed cryptocurrencies among the funds stolen by North Korea in 49 hacks between 2017 and 2021 has dropped from $170 million to $65 million since the beginning of 2022.

Chainalysis has also seen an increase in attacks on non-cryptocurrency platforms by North Korean hackers, most likely due to tightening sanctions and seizures of stolen funds.

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Still, Luke McNamara, chief analyst at Google’s Cyber Security, says that North Korea’s cryptocurrency attacks will likely continue: “Despite the huge volatility of the cryptocurrency market, there are business opportunities and there are investors. North Korea is seeing this as the soft underbelly behind the various project systems. So as long as new block-refining projects continue to emerge in the market, cryptocurrencies will remain very attractive to North Korea.”

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Dogwifhat Price Prediction: After 39% Pump, Are WIF and STARS Next to Explode Like Dogecoin? – Branded Spotlight Bitcoin News

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Dogwifhat Price Prediction: After 39% Pump, Are WIF and STARS Next to Explode Like Dogecoin? – Branded Spotlight Bitcoin News
For meme coin investors, this week has been nothing short of euphoric. Dogecoin has led the way by doubling in price, but smaller meme coins are taking over. Dogwifhat has pumped 44% today – can it continue gaining, or is viral presale Crypto All-Stars a better investment? Coinbase Listing Sparks WIF Gold Rush Investors are […]
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1 Top Cryptocurrency to Buy Before It Soars 16,939%, According to MicroStrategy Chief and Billionaire Michael Saylor | The Motley Fool

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1 Top Cryptocurrency to Buy Before It Soars 16,939%, According to MicroStrategy Chief and Billionaire Michael Saylor | The Motley Fool

Michael Saylor is a perennial crypto bull.

Bitcoin (BTC 3.44%), the world’s largest cryptocurrency, has been on a great run this year and has roughly doubled — well ahead of the bull market and hitting new all-time highs. The token has benefited from the creation of spot Bitcoin exchange-traded funds (ETFs), lower interest rates, and a growing view that the token could be a hedge against inflation.

However, Bitcoin may just be getting started, according to MicroStrategy Executive Chaiman and billionaire investor Michael Saylor, who says he thinks the token is going to soar.

Going all-in on Bitcoin

In September, Saylor, a perennial Bitcoin bull, said on CNBC he thinks Bitcoin could hit $13 million by 2045, which implies 16,939% upside from its current price (as of Nov. 9) of roughly $76,296:

My long-term forecast is that [Bitcoin’s] going to go to $13 million over 21 years… Bitcoin is 0.1% of the capital in the world right now–I think it’s going to go to 7% of the capital.

Saylor also pointed out that Bitcoin has had an annual rate of return (ARR) of 46% for the past four years, which is why he is assigning a risk-free return of 50%. He said his central case forecasts 29% annual returns for Bitcoin during the next two decades.

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Saylor has every reason to be bullish. His company MicroStrategy, whose stock has soared roughly 400% this year, is the largest public owner of Bitcoin, holding 1% of all tokens outstanding.

Saylor is also putting his money where his mouth is. MicroStrategy recently announced plans to raise $42 billion over the next three years, half through equity sales and half through debt. The proceeds will be used to buy more Bitcoin.

MicroStrategy President and Chief Executive Officer Phong Le said in the company’s recent earnings release, “As a Bitcoin Treasury Company, we plan to use the additional capital to buy more Bitcoin as a Treasury reserve asset in a manner that will allow us to achieve higher BTC yield.”

Can $13 million really happen?

I don’t know if $13 million for Bitcoin can ever happen. Bitcoin is still an incredibly volatile asset, and I think price predictions for Bitcoin are somewhat meaningless, especially those made two decades in advance. However, I think Bitcoin has several tailwinds that could propel it higher.

With the election over, Bitcoin and the entire crypto industry may get some regulatory relief. The new administration may take a different approach and institute new leadership at the Securities and Exchange Commission (SEC).

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SEC Chairman Gary Gensler has not been a friend of crypto. Not only does he seek to have more regulatory jurisdiction over crypto, but an SEC memo of his known as SAB-121 makes it difficult for banks to hold Bitcoin as a custodian because they have to include these assets on the balance sheet, which increases their capital and liquidity requirements. The potential removal of SAB-121 would make more financial institutions willing to custody Bitcoin.

Additionally, Bitcoin has caught on as a hedge against inflation. Recently, BlackRock‘s CEO Larry Fink called Bitcoin an alternative to gold. He also said this belief will become even more commonplace “if we can create more acceptability, more transparency, [and] more analytics related to these assets.” While inflation has come down, many expect the environment to remain inflationary long term due to fiscal spending and an unsustainable national debt situation.

Finally, interest rates are forecast to drop further, making riskier assets like Bitcoin more appealing because safer assets like U.S. Treasury bills and bonds yield less and are less likely to keep up with inflation.

No one knows if Bitcoin will hit Saylor’s target years from now, but there are signs that several forces are converging that seem bound to drive up Bitcoin’s price.

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Elon Musk's Dumb History With the 'Doge' Meme His Govt. Office Is Named After

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Elon Musk's Dumb History With the 'Doge' Meme His Govt. Office Is Named After

In a historic and embarrassing first, an old Reddit meme may become an actual government agency in Donald Trump‘s second term as president, thanks to Elon Musk. Months before Trump’s reelection, the Tesla CEO and Trump megadonor was riffing on X (formerly Twitter) about a possible administration role in something he called the Department of Government Efficiency, or DOGE. On Tuesday, the president-elect announced he was making that dream a reality, appointing Musk, along with businessman and failed presidential candidate Vivek Ramaswamy, to lead an agency of that very name, which would “pave the way for my Administration to dismantle Government Bureaucracy.”

With that action, Trump turned a more than decade-old meme into a bizarre and powerfully consequential reality for U.S. politics.

By internet standards, “doge” is an ancient artifact. In 2013, photos of Kabosu, a female Shiba Inu owned by a Japanese kindergarten teacher, started going viral on Reddit, typically with rainbow Comic Sans text that suggested the inner monologue of the dog — or “doge,” as a playful misspelling had it.

A cryptocurrency is born

That same year, two software designers had the idea to parody bitcoin, then gaining traction as the first decentralized cryptocurrency, with a joke coin that would feature the doge meme as its logo: Dogecoin, with the market code DOGE. Despite their satirical intentions, the currency found a dedicated community, which outlived the popularity of the cutesy meme itself, although it long traded at well under a cent. Still, the crypto bubble of 2017-2018 saw a surge in trading and drove the value of the coin to a new peak, and by 2019, Musk himself was tweeting about it. “Dogecoin might be my fav cryptocurrency,” he posted that April. “It’s pretty cool.”

From that point forward, Dogecoin’s fluctuations were unmistakably entangled with Musk’s comments on it. He holds an unspecified amount of the cryptocurrency — with some even speculating that he’s a “whale” who has bought up a huge percentage of the total coins in circulation — and routinely interacts with its main promoters online. The summer of 2020 saw another DOGE buying spree, encouraged by TikTok hype, but the coin really exploded during the GameStop “meme stock” craze of January 2021. Encouraged by tweets and memes from Musk (as well as Snoop Dogg and Gene Simmons), investors pushed it to a new high of $0.08 that February. Musk declared it “the people’s crypto.”

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It continued to surge through April and hit an all-time high of $0.74 in May 2021, when Musk hosted an episode of Saturday Night Live and hawked the currency on Weekend Update — while admitting that crypto was a “hustle.” The price of Dogecoin fell significantly during and after the show. The same week, Musk announced that SpaceX would fund a moon mission entirely with Dogecoin. (That launch has been indefinitely delayed.) Musk continued to spam Twitter with Dogecoin memes and inane posts related to the currency, once typing out the lyrics to the children’s song “Baby Shark” as “Baby Doge, doo, doo, doo, doo, doo.” He also indicated that he had purchased some DOGE for his young son, X Æ A-Xii, and hinted that Tesla might start accepting the currency — it eventually did, though only for merchandise, and the option was later discontinued. Tesla has yet to accept payment for a car in Dogecoin.

After Dogecoin fell back to earth, hitting $0.07 in June 2022, Musk faced a lawsuit for $258 billion from investors who accused him of orchestrating a pyramid scheme by manipulating the price with his tweets, public comments, and the SNL appearance, arguing that these all contributed to a 36,000 percent increase in price before the crash. This complaint was amended several times in the following years to account for other Musk stunts — including the time in April 2023, when, as the new owner of Twitter, he briefly changed the site’s bird logo to the most recognized photo of the “doge” Shiba Inu. That little joke sent Dogecoin 30 percent higher. In August 2024, a judge finally dismissed the investors’ suit, calling Musk’s support of the meme coin “aspirational” rather than “factual.”

Elon pivots to Trump

By August, Musk was pumping millions of dollars into a Super PAC with the goal of electing Trump and attaining greater influence in Washington. He happened to be aligned with major crypto evangelists, who backed Trump in the belief that he would loosen regulations on the industry. It was at this critical point in the campaign that a Dogecoin enthusiast suggested on X that Musk’s role under a Trump administration should be in the “Department of Government Efficiency (DOGE).” Musk replied, “That is the perfect name.”

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It appears the Trump team agreed, or at least acquiesced to the request as they began preparations to assume the White House. Following the election, Dogecoin predictably spiked again — along with other crypto assets — climbing from $0.15 before Trump’s win to as high as $0.44 when the DOGE agency became official on Tuesday morning. Musk has expressed his own enthusiasm about the “merch” DOGE will sell and vowed: “All actions of the Department of Government Efficiency will be posted online for maximum transparency.” Given his record of broken promises, this one seems unlikely to be fulfilled. Musk previously declared that major changes to the X platform would always be voted on by users, only to do away with such polls and push whatever updates he wanted.

The silliness of the doge meme, and the cult cryptocurrency it spawned, belies the potential damage Musk’s Department of Government Efficiency could wreak on the political infrastructure of the U.S. Musk has spoken publicly about wanting to massively slash federal spending, admitting this would “involve some temporary hardship.”

While some observers have suggested that Trump is giving Musk a meaningless commission — or busywork that he cannot screw up — the world’s richest man has been participating in key meetings and diplomatic phone calls alongside Trump since Election Day. And if Republicans were to try to enact, say, major cuts to social programs, like Social Security, it could help them politically to rely on recommendations from a body or commission like this one.

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Musk’s possible future in the government

Then there’s the possiblity that, if Musk helms this department as an outside commission instead of an official government agency, he can likely avoid divesting from his various companies, which have significant government contracts and are also facing regulatory scrutiny on many fronts. By taking on this role, he will be free to preserve, protect, and boost his corporate interests, potentially by hobbling the federal agencies probing his businesses. The Department of Justice, for example, has spent the past two years investigating Tesla’s dubious claims about its “Full-Self Driving” technology. Between his DOGE job and a likely ally in prospective Attorney General Matt Gaetz, Musk may be in a position to make this costly headache go away.

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All of which makes for a strange and alarming new phase of the “doge” phenomenon. Once a harmless image celebrating our love of adorable furry friends, it is now the face of an impending assault on the government institutions that enforce financial and labor laws, keep our food and drinking water safe, manage the U.S. education system and conserve natural resources. This, in turn, is spurring a cryptocurrency boom that could cost investors tens of thousands of dollars if it turns into another bubble. It doesn’t seem fair that a beloved Shiba Inu should come to represent such political and economic dysfunction, but when Musk wrests control of something — whether a company, a presidential campaign, or a meme — he doesn’t often let go.

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