❤️ When you like your own social post from many accounts…

Blockchains are designed to let people see what transactions are taking place on a chain. But because crypto's pseudonymous (think: no real names required) one person can be on *both* sides of a trade. "Wash trading" — or repeatedly buying and selling the same crypto or NFT to yourself — can make it seem as if there's organic trading volume when none may exist. Some [investors say](https://www.cnbc.com/2023/01/12/mark-cuban-next-crypto-implosion-may-be-uncovering-wash-trading.html) wash trading on centralized exchanges could be crypto's next big scandal.

DEFI(NE)

Jennifer Cardenas

Heard on the Block: "wash trading"

__The AI suits are coming…__ [Generative AI](https://snacks.robinhood.com/newsletters/3WEG5SgBgeQScK91kmZwOc/articles/6gWjpZswZYcdRi0vcvZQos/) has blown up in the past year, with tools like ChatGPT and Stable Diffusion garnering mainstream headlines. Image generators including __OpenAI’s__ DALL-E and __Stability AI’s__ Stable Diffusion “create” images from text prompts (think: “a neon banana in the style of Vincent van Gogh”). But those AI-art tools are trained on billions of images scraped from the internet, many of which are copyrighted by the artists who created them. 

- __Artists sue:__ This week a group of artists [filed](https://www.polygon.com/23558946/ai-art-lawsuit-stability-stable-diffusion-deviantart-midjourney) a class-action suit against AI-art generators __Stability AI__, __Midjourney__, and __DeviantArt__, arguing that the companies “violated the rights of millions of artists” and profited by using copyrighted images to train their AI models. A similar suit was recently filed against __[Microsoft](https://robinhood.com/stocks/MSFT/)__, __GitHub__, and __OpenAI__.
- __Companies too:__ Also this week, __[Getty Images](https://robinhood.com/stocks/GETY/)__ [sued](https://www.engadget.com/getty-images-sues-the-maker-of-ai-art-generator-stable-diffusion-over-data-scraping-allegations-184502897.html) __Stability AI__, alleging it “unlawfully copied and processed millions of images protected by copyright” without a Getty license. A study conducted last year concluded that a sizable chunk of Stable Diffusion's data was likely pulled from Getty’s site (partly evidenced by the tool's habit of including the Getty watermark).

__It’s a legal gray area…__ So far there aren’t clear rules around the use of genAI because it’s such a new thing. But it’s growing at lightning speed and is top of mind for companies and artists. In September, Getty Images banned the inclusion of AI-generated images in its database over copyright concerns. But __[Adobe](https://robinhood.com/stocks/ADBE/)__ announced that it *would* sell images generated by AI tools like DALL-E and Stable Diffusion (so did __[Shutterstock](https://robinhood.com/stocks/SSTK/)__). 

Michelangelo would never (GraphicaArtis/Getty Images)

GenAI

__It’s a cart-before-horse scenario…__ Determining whether AI-art tools violate copyright law could be thorny, but the outcomes of lawsuits will likely set precedents for how to handle such cases. Artists have already started sharing tools for determining whether their work was scraped by AI. Meanwhile, corporations are putting the AI cart before the horse: this week __Microsoft__ [announced](https://www.wsj.com/articles/microsoft-plans-to-build-openai-capabilities-into-all-products-11673947774) plans to integrate OpenAI’s generative AI tech into all its products.

AI-art lawsuits could set copyright precedents for titans like Microsoft and Stability AI

__Alexa, play “When the Party’s Over”...__ Halloween icon __[Party City](https://robinhood.com/stocks/PRTY/)__ has [filed](https://www.reuters.com/business/retail-consumer/party-city-files-chapter-11-bankruptcy-protection-2023-01-18/) for bankruptcy. As America’s largest party retailer with 850 stores, PC is a go-to for themed birthdays and last-minute costumes. But the festive chain has racked up $1.7B+ in debt, as everything from higher costs to helium shortages hit its bottom line. It’s lost money for the past three fiscal years, and said it was on track to lose nearly $200M this year. Now:

- __Exchanged:__ Party City shares have dropped 90%+ over the past year, and last month it said it was at risk of delisting from the New York Stock Exchange because its stock was too low.
- __Spirited away:__ PC’s struggled to compete with its meme-able rival __Spirit Halloween__, which uses vacant storefronts to launch its seasonal pop-up shops.

__Spooky szn…__ Party City is only the latest retail casualty, as historically high inflation and rising interest rates scare off consumers. This month, debt-laden __[Bed Bath & Beyond](https://robinhood.com/stocks/BBBY/)__ [said](https://snacks.robinhood.com/newsletters/7aN8BRAzCXDnsbfVDy7Wtq/articles/6YKevppGSztYU76NseEC9p/) it could also file for Chapter 11 as losses pile up. Meanwhile, US retail sales continued to fall last month, posting their biggest monthly drop since 2021 as shoppers cut back on holiday splurges. 

__Being a retailer is hard…__ but being a *seasonal* retailer is even harder. Online shopping is already crushing brick-and-mortar stores. Seasonal businesses that rely on a few holidays for most of their sales have it even tougher. As Americans spend more on essentials like groceries and rent, there’s less cash for balloons and Wednesday Addams wigs. Retailers without regular cash flow could find it even harder to keep the lights on.

Party City files for bankruptcy as celebratory spend cools, highlighting the chilly side of seasonal retail

AI-art lawsuits could set copyright precedents for titans like Microsoft and OpenAI

Heard on the Block: "wash trading"

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