Good morning. The role of cryptocurrencies in illicit finance has come under renewed scrutiny after The Wall Street Journal’s report that Hamas and other militant groups used the technology to raise millions of dollars ahead of their recent attacks in Israel.

• Pressure from Washington: Some lawmakers responded by calling for tougher rules to curb crypto’s utility for criminals and groups under U.S. sanctions. Crypto firms say they work to keep such users off their platforms and argue that digital tokens can help law enforcement track bad actors.
   
• Crypto's role in illict finance: The Wall Street Journal’s Paul Kiernan and Risk & Compliance Journal’s Mengqi Sun provide a primer on the topic, which looks at the questions raised by Hamas’s use of crypto, including what crypto firms are doing try to prevent illicit transactions, and how policy makers are responding to the threat.
   
• New alerts: The financial system as a whole is under increasing pressure to cut off streams of finance to groups like Hamas. The U.S. Treasury Department’s sanctions watchdog issued a special alert on Friday warning financial institutions to watch out for any potential funding streams for the group. The special alert urged banks, money-transfer businesses, cryptocurrency platforms and other financial services companies to be vigilant.

Supreme Court to review Biden administration communications with social media.

The Supreme Court is stepping into the debate over speech rights and misinformation online, agreeing Friday to review lower-court rulings barring White House aides and other officials from pressuring social-media platforms to take down content disfavored by the government.

The decision adds to a docket heavy with disputes involving the First Amendment and online speech. The Supreme Court is already set to decide when government officials can block citizens from following them on social-media accounts, and the degree to which state governments can regulate content-moderation practices on such platforms as Facebook and YouTube.

China Detains Current, Former GroupM Employees as Part of Commercial Bribery Case

Shanghai police detained one current and two former employees of GroupM, a unit of London-based advertising giant WPP, citing suspicions that they accepted bribes.

The detentions come as concerns grow broadly among foreign companies in China over police raids, detentions, moves to block employees from leaving the country and various investigations involving foreign firms. Part of the worries have been driven by China’s updated anti-espionage law enacted in July.

Meanwhile, Foxconn Technology Group, one of Apple’s biggest suppliers, said it is cooperating with Chinese authorities after Chinese state media said the Taiwan-based contract electronics maker, whose founder is seeking the Taiwan presidency, is subject to tax and land-use investigations across China.

• The U.S. and Europe failed to agree on a path for eliminating steel and aluminum tariffs ahead of a summit in Washington on Friday, leaving unresolved a trade dispute that risks becoming a growing irritant between the allied economies ahead of next year’s U.S. election.
   
• FTX founder Sam Bankman-Fried, known for his appetite for risky bets, is mulling perhaps his biggest gamble yet: testifying in his own defense.
   
• The Biden administration’s removal of an array of U.S. sanctions against Venezuela’s oil sector is designed to stabilize that country’s calamitous economy and, in time, reduce the huge outflow of migrants toward the American southwestern border, said people familiar with the negotiations that led to sanctions relief.
   
• Fei-Fei Li of Stanford University and the Commerce Department’s Alan Davidson agree that artificial intelligence has the potential to do a lot of good. But, they say, thoughtful regulation is crucial.

As U.S. debt surges, Europe brings its own under control.

Throughout the Covid-19 pandemic and then Russia’s invasion of Ukraine, both the U.S. and Europe borrowed heavily. Now with those emergencies in the rearview mirror, a divergence has emerged: Even as the U.S. continues to let deficits rip, Europe’s are on track to narrow significantly.

The contrast. This is in contrast to a decade ago, when deficits in the wake of the global financial crisis pushed some members of the euro area to the brink of default. The lessons of that episode, coupled with eurozone rules, have served to impose discipline on European governments that for now is entirely absent in the U.S.

Taking Gaza would be possible, sieges from Mosul to Mariupol show—but at a steep cost.

As Israel plans a ground operation in Gaza, aiming to eradicate Hamas, recent history elsewhere suggests that the goal can be achieved—but only at a tremendous cost, to Israeli troops and much more so, to Palestinian civilians caught in the middle.

“If Israel does what it says it wants to do—toppling Hamas and destroying Hamas military capabilities—we are talking about a Mosul all over the Gaza Strip,” said Michael Horowitz, head of intelligence at the Le Beck risk-management consulting firm. “And it means really extensive civilian casualties and really extensive damage.”

• Israel Intensifies Bombing on Multiple Fronts, Prepares for Gaza Ground Operation
• U.S. Deploys Missile Defenses to Middle East Following Recent Attacks
• Israel’s Dilemma: How Hostage Talks Could Bog Down Military Plans
• Americans Back Israel but Are Wary of Getting Pulled Into Conflict, WSJ-Ipsos Poll Finds

• A deepening selloff in the U.S. bond market drove the yield on the 10-year U.S. Treasury note to 5% for the first time in 16 years, extending a rout that has rattled stocks, lifted mortgage rates and fueled persistent fears of an economic slowdown.
   
• South Korea’s alliance with the U.S. has strengthened during the Biden presidency. But the country’s economy has fallen victim to the rapid rise in U.S. interest rates, showing how Federal Reserve decisions—and the uncertainty around them—can send ripples around the world.
   
• A Chinese coast guard ship collided with a Philippine vessel it was seeking to block in the South China Sea, the Philippines said, marking an escalation in tensions between Beijing and the U.S. ally in a volatile area.
   
• China is strengthening restrictions on exports of graphite, a key mineral needed for the production of electric-vehicle batteries and fuel cells, the latest move in an intensifying global tussle over the building blocks of critical technologies.
   
• When Ukrainian armored vehicles breached the main Russian defensive line in southeastern Ukraine last month, it raised hopes for a decisive breakthrough. It hasn’t happened.
   
• A warmer-than-average winter is predicted for much of the northern U.S. this year, capping an unusually warm 2023 that broiled some cities.

Cyberattacks intensify on Israeli and Palestinian human rights groups.

Hackers have stepped up efforts to take down the websites of Israeli and Palestinian humanitarian groups since Hamas attacked Israel on Oct. 7.

Civilian hacking during warfare between nations is also going on in conflicts between Russia and Ukraine and between Armenia and Azerbaijan, as well as in Sudan, said Tilman Rodenhäuser, a legal adviser at the International Committee of the Red Cross.

“Today we see an unprecedented number of civilian hackers and hacktivists taking part in armed conflicts,” he said.

• Nine Republican lawmakers are angling for the speaker job, jumping into the race before a Sunday deadline.
   
• Goldman Sachs veteran Luke Sarsfield, one of several executives to leave the bank recently, is set to become chief executive of asset manager P10.
   
• Lonely sidewalks and closed storefronts inspire proposals to recast office districts into neighborhoods where people live, work and raise families.
   
• A Russian court ordered an American journalist to be held in detention through at least Monday on charges that she failed to register as a “foreign agent,” according to her employer.
   
• There’s a new rivalry in tech: Amazon versus TikTok.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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