Sustainable development

ESMA sets guidance for crypto perpetuals and CFDs

The European Securities and Markets Authority (ESMA) has clarified that many crypto-perpetual contracts, including those for Bitcoin and Ether, are likely to be classified as contracts for difference (CFDs).

Due to their leverage, complexity, and risk, these products should target a narrow audience, with distribution strategies aligned accordingly.

The announcement came as Kraken launched perpetual futures for ten tokenised assets, including major indices, gold, and top tech and crypto stocks. ESMA warned that mass marketing or promotions targeting inexperienced investors are inappropriate under its guidance.

Firms must ensure that derivatives falling within the CFD category comply with product intervention requirements. Requirements include leverage limits, risk warnings, margin close-outs, negative balance protection, and a ban on incentives or benefits.

Non-advised services must include an appropriateness assessment to protect investors from unsuitable offerings.

ESMA also emphasised the importance of identifying and managing conflicts of interest arising from these products. The statement seeks to ensure firms market and distribute leveraged crypto products responsibly.

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Microsoft backs Australia’s next phase of digital government with new AI and cloud agreement

Australia’s rise to second place in the OECD Digital Government Index signals renewed momentum for national digital transformation.

A shift that comes as Microsoft signs a new five-year Volume Sourcing Arrangement with the Federal Government, designed to underpin modernisation across public services and create a secure, future-ready foundation for responsible AI adoption.

The agreement led by the Digital Transformation Agency gives agencies access to Microsoft Copilot, Azure, Microsoft 365, Dynamics 365 and a strengthened security and compliance framework instead of continuing reliance on ageing systems.

The arrangement sets clearer strategic pathways for innovation, procurement and skills development through an enhanced governance structure.

It recommits both sides to national security requirements, including the Security of Critical Infrastructure legislation, the Cloud Hosting Certification Framework and IRAP.

These measures allow agencies to expand AI use while retaining control of data and meeting the expectations placed on government institutions.

A successful Copilot trial in 2024 already demonstrated personal productivity gains of around one hour per day for participating staff.

Microsoft is also establishing a $1.55 million training fund for the Australian Public Service to support capability building in ethical AI use and modern cloud operations.

The company emphasises that Australia’s partner ecosystem will gain new opportunities because the agreement simplifies how local firms engage with government agencies. Such an approach forms an important part of the wider public sector reform agenda announced last year.

The new deal aligns with national priorities set out in the Whole-of-Government Cloud Computing Policy and the National AI Plan.

Australia now enters a pivotal period in which digital transformation is guided not only by technological capacity but by the frameworks of trust, resilience and public benefit that shape how government services evolve.

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AI misuse exposed as OpenAI details global disinformation and scam networks

OpenAI said criminal and state-linked groups misused ChatGPT for disinformation, scams and covert influence. Its latest threat report details coordinated account bans and highlights how AI tools are embedded within broader operational workflows rather than used in isolation.

One investigation linked accounts to Chinese law enforcement engaged in what were described as ‘cyber special operations’. Activities included planning influence campaigns, mass-reporting dissidents and drafting forged materials, with related efforts continuing through other tools despite model refusals.

The report also outlined a Cambodia-based romance scam targeting young men in Indonesia through a fake dating agency. Operators combined manual prompting with automated chatbots to sustain conversations and facilitate financial fraud, leading to account removals.

Separately, accounts tied to Russia’s ‘Rybar’ network used ChatGPT to draft and translate posts distributed across multiple platforms. OpenAI noted that campaign impact depended more on account reach and coordination than on AI-generated content alone.

Across China, Russia and parts of Southeast Asia, actors treated AI as one tool among many, alongside fake profiles, paid advertising and forged documents. OpenAI called for cross-industry vigilance, stressing the need to analyse behavioural patterns across platforms.

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Meta AI flood of unusable abuse tips overwhelms US investigators

Investigators in the US say that AI used by Meta is flooding child protection units with large volumes of unhelpful reports, thereby draining resources rather than assisting ongoing cases.

Officers in the Internet Crimes Against Children network told a New Mexico court that most alerts generated by the company’s platforms lack essential evidence or contain material that is not criminal, leaving teams unable to progress investigations.

Meta rejects the claim that it prioritises profit, stressing its cooperation with law enforcement and highlighting rapid response times to emergency requests.

Its position is challenged by officers who say the volume of AI-generated alerts has doubled since 2024, particularly after the Report Act broadened reporting obligations.

They argue that adolescent conversations and incomplete data now form a sizeable portion of the alerts, while genuine cases of child sexual abuse material are becoming harder to detect.

Internal company documents disclosed at trial show Meta executives raising concerns as early as 2019 about the impact of end-to-end encryption on the firm’s ability to identify child exploitation and support investigators.

Child safety groups have long warned that encryption could limit early detection, even though Meta says it has introduced new tools designed to operate safely within encrypted environments.

The growing influx of unusable tips is taking a heavy toll on investigative teams. Officers in the US say each report must still be reviewed manually, despite the low likelihood of actionable evidence, and this backlog is diminishing morale at a time when they say resources have not kept pace with demand.

They warn that meaningful cases risk being delayed as units struggle with a workload swollen by AI systems tuned to avoid regulatory penalties rather than investigative value.

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Conduent breach exposes data of 25 million people across US

More than 25 million people across the United States have had personal information exposed following a ransomware attack on government contractor Conduent. Updated state breach notifications indicate the incident is larger than initially understood.

Conduent provides printing, payment processing, and benefit administration services for state agencies and large corporations. Its systems support food assistance, unemployment benefits, and workplace programmes, reaching more than 100 million individuals, according to the company.

US State disclosures show Oregon and Texas account for most of the affected records, with additional cases reported in Massachusetts, New Hampshire, and Washington. Compromised data includes names, dates of birth, addresses, Social Security numbers, health insurance information, and medical details.

Public information from Conduent has been limited since the January 2025 attack. An incident notice published in October carried a ‘noindex’ tag in its source code, preventing search engines from listing the page, which critics say reduced visibility for affected individuals.

The breach ranks among the largest recent ransomware incidents, though it is smaller than the 2024 Change Healthcare attack that affected 190 million people. Regulators and affected users continue seeking clarity on the Conduent case and its security failures.

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Anthropic faces data theft claims from Musk

Elon Musk, CEO of Tesla and xAI, has publicly accused Anthropic of stealing large volumes of data to train its AI models. The allegation was made on X in response to posts referencing Community Notes attached to Anthropic-related content.

Musk claimed the company had engaged in large-scale data theft and suggested that it had paid multi-billion-dollar settlements. Those financial claims remain contested, and no official confirmation has been provided to substantiate the figures.

Anthropic, known for developing the Claude AI model, was founded by former OpenAI employees and promotes an approach centred on AI safety and responsible development. The company has not publicly responded to Musk’s latest accusations.

The dispute reflects a broader conflict across the AI industry over how companies collect the text, images and other materials required to train large language models. Much of this data is scraped from the internet, often without explicit permission from rights holders.

Multiple lawsuits filed by authors, media organisations and software developers are testing whether large-scale scraping qualifies as fair use under copyright law. Court rulings in these cases could reshape licensing practices, impose financial penalties, and alter the economics of AI development.

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CarGurus data leak surfaces as ShinyHunters publishes archive

The ShinyHunters extortion group has published a 6.1GB archive, which it claims contains more than 12 million records stolen from CarGurus, a US-based automotive platform. Have I Been Pwned listed the dataset, reporting that roughly 3.7 million records appear to be new.

The exposed information includes email addresses, IP addresses, full names, phone numbers, physical addresses, user account IDs, and finance-related application data belonging to CarGurus users. Dealer account details and subscription information were also reportedly included in the archive.

CarGurus has not issued a public statement confirming a breach. However, Have I Been Pwned said it attempts to verify the authenticity of datasets before adding them to its database, suggesting a level of validation of the leaked material.

Security experts warn that the availability of the data could increase the risk of phishing. Users are advised to remain cautious of unsolicited communications and potential scams that may leverage the exposed personal information.

ShinyHunters has recently claimed attacks against multiple large organisations across telecoms, fintech, retail, and media. The group is known for using social engineering tactics, including voice phishing and malicious OAuth applications, to gain access to SaaS platforms and extract customer data.

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EDPS and regulators unite to address misuse of AI imagery across jurisdictions

The European Data Protection Supervisor (EDPS) and authorities from 61 jurisdictions issued a joint statement on AI-generated imagery, warning about tools that create realistic depictions of identifiable individuals without consent. The move underscores concerns over privacy, dignity and child safety.

Authorities said advances in AI image and video tools, especially when integrated into social media platforms, have enabled non-consensual intimate imagery, defamatory depictions, and other harmful content. Children and vulnerable groups are seen as particularly at risk.

The EDPS and the other signatories reminded organisations that AI content-generation systems must comply with applicable data protection and privacy laws. They stressed that creating non-consensual intimate imagery may constitute a criminal offence in many jurisdictions.

Organisations are urged to implement safeguards against misuse of personal data, ensure transparency about system capabilities and uses, and provide accessible mechanisms for swift content removal. Stronger protections and age-appropriate information are expected where children are involved.

Authorities signalled plans for coordinated responses, including enforcement, policy development and education initiatives. The EDPS and fellow signatories urged organisations to engage proactively with regulators and ensure innovation does not undermine fundamental rights.

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EU AI Act enforcement begins, reshaping startup compliance landscape

The first enforcement provisions of the EU AI Act entered into force on 2 February 2025, marking a turning point for Europe’s AI startup ecosystem. The initial phase targets ‘unacceptable risk’ systems, including social scoring, real-time biometric surveillance in public spaces, and manipulative AI practices.

Under the regulation, penalties can reach €35 million or 7% of global annual turnover, whichever is higher. Although the current enforcement covers only prohibited practices, the move signals that Europe’s AI rulebook is now operational rather than theoretical.

Broader obligations for high-risk AI systems, such as hiring tools, credit scoring, and medical diagnostics, will apply from August 2026. Separate rules for general-purpose AI models are scheduled to take effect in August 2025.

Surveys from European SME groups indicate that many smaller technology companies feel unprepared. A significant share of reports have not conducted formal risk classification of their AI systems, despite this being a foundational requirement under the EU AI Act’s tiered framework.

While some founders warn that compliance costs could slow innovation, others point to long-term benefits from clearer governance standards. For startups, the coming months will focus on aligning products with AI Act risk tiers and strengthening documentation and oversight before stricter rules apply.

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Reddit hit with a major ICO penalty over children’s privacy failures

The UK’s Information Commissioner’s Office has fined Reddit £14.47 million after finding that the platform unlawfully used children’s personal information and failed to put in place adequate age checks.

The regulator concluded that Reddit allowed children under 13 to access the platform without robust age-verification measures, leaving them exposed to content they were not able to understand or control.

Although Reddit updated its processes in July 2025, self-declaration remained easy to bypass, offering only a veneer of protection. Investigators also found that the company had not completed a data protection impact assessment until 2025, despite a large number of teenagers using the service.

Concerns were heightened by the volume of children affected and the risks created by relying on inadequate age checks.

The regulator noted that unlawful data processing occurred over a prolonged period, and that children were at risk of viewing harmful material while their information was processed without a lawful basis.

UK Information Commissioner John Edwards said companies must prioritise meaningful age assurance and understand the responsibilities set out in the Children’s Code.

The ICO said it will continue monitoring Reddit’s current controls and expects online platforms to align with robust age-assurance standards rather than rely on weak verification.

It will coordinate its oversight with Ofcom as part of broader efforts to strengthen online safety and ensure under-18s benefit from high privacy protections by default.

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