Good morning. A self-described Russian smuggler in China received a request from the manufacturer of the legendary AK-47 rifle. Russia’s largest maker of small arms, Kalashnikov Concern, needed electrical parts for drones that have been among the most effective weapons against Ukrainian armor.

The smuggler, Andrey Zverev, took the late 2022 order to a Hong Kong electronics distributor. The U.S. was trying to cut off such deals, and even sanctions-wary Chinese banks were blocking payments from Russia.

The solution: Zverev used tether, the cryptocurrency, to relay millions of dollars of funds from Kalashnikov to its supplier.

• What is it? Tether has emerged as one of the world’s default black-market payment methods. The digital currency says it is backed one-to-one by the U.S. dollar. But unlike government-issued dollars inside the banking system, authorities have limited ability to trace its use around the world.
   
• War in Ukraine. For Vladimir Putin’s war machine, tether has become indispensable. It helps Russian companies weave around Western sanctions and procure what is called dual-use goods that go into drones and other high-tech equipment. Importers working with such goods make transfers in rubles into Russian bank accounts operated by middlemen who convert the rubles into tether and pay out local currency to their foreign suppliers in places like China and the Middle East.
   
• Response by Treasury. The U.S. Treasury Department has pressed Congress to pass legislation that would grant it the ability to block transactions in U.S. dollar-denominated stablecoins like tether. Last week, the department blacklisted a Moscow company that had partnered with a sanctioned Russian bank to provide tether-based payments.

Google pledges to destroy browsing data to settle ‘Incognito’ lawsuit.

Google plans to destroy a trove of data that reflects millions of users’ web-browsing histories, part of a settlement of a lawsuit that alleged the company tracked people without their knowledge.

The class action, filed in 2020, accused Google of misleading users about how Chrome tracked the activity of anyone who used the private “Incognito” browsing option. The lawsuit alleged that Google’s marketing and privacy disclosures didn’t properly inform users of the kinds of data being collected, including details about which websites they viewed.

• Former employees and court data suggest that Temu parent PDD has wielded noncompete agreements with particular determination to thwart potential rivals.
   
• Authentic Brands Group, which owns Sports Illustrated, sued Manoj Bhargava on Monday, saying the 5-Hour Energy creator and the publisher he controls owe millions in missed payments.

The big problem for marijuana companies? What to do with all that cash.

Clayton Taylor recently received an urgent call: A marijuana distributor needed him to pick up $400,000 and move it across California.

Taylor isn’t a drug mule—he runs a company that provides security services to legal cannabis companies. A client’s bank account had been frozen, and the next day was payday. Could Taylor transport cash the company had stowed away so it could pay its roughly 100 staffers?

Though marijuana is now legal in some form in most U.S. states, many banks won’t do business with cannabis companies because the drug remains illegal at the federal level. Major credit-card networks such as Visa and Mastercard say they don’t process marijuana-related transactions for the same reason.

For data-guzzling AI companies, the internet is too small. 

Companies racing to develop more powerful artificial intelligence are rapidly nearing a new problem: The internet might be too small for their plans.

Ever more powerful systems developed by OpenAI, Google and others require larger oceans of information to learn from. That demand is straining the available pool of quality public data online at the same time that some data owners are blocking access to AI companies.

• Syria and Iran accused Israel of a missile attack on an Iranian diplomatic building in Damascus that killed a senior Iranian general, in a potential escalation of a shadow war between Israel and Iran that has intensified during the war in Gaza.
   
• World Central Kitchen, the biggest provider of food aid in the Gaza Strip after the United Nations, said Tuesday that it was pausing operations across the Middle East after seven of its workers including a U.S.-Canadian dual citizen were killed in what it said was an Israeli airstrike.
   
• The Florida Supreme Court allowed for the state’s ban on abortion after six weeks of pregnancy to take effect but also opened the door to voters greatly expanding the right to abortion in November.
   
• Demis Hassabis is tasked with keeping Google ahead on a technology that its CEO has called more profound than the invention of fire or electricity.
   
• Walt Disney has pulled ahead in its proxy battle against Nelson Peltz’s Trian Partners with more than half of all shares voted, according to people familiar with the matter.

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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