OpenAI is facing what appears to be its first defamation lawsuit over false information generated by its ChatGPT model, against someone.

The lawsuit was filed by Mark Walters, a radio host in Georgia, who claims that ChatGPT produced inaccurate information stating that he had been involved in defrauding and embezzling funds from a non-profit organization.

The information was generated in response to a request from journalist Fred Riehl. Walters filed the case on June 5th in Georgia’s Superior Court of Gwinnett County, seeking unspecified monetary damages from OpenAI.

“ChatGPT’s allegations concerning Walters were false and malicious, expressed in print, writing, pictures, or signs, tending to injure Walter’s reputation and exposing him to public hatred, contempt, or ridicule,” the lawsuit said.

Walters alleges that the chatbot provided false information to Fred Riehl, the editor-in-chief of the gun publication AmmoLand. Riehl had requested a summary of the case Second Amendment Foundation v. Ferguson, which involved accusations against Washington State’s Attorney General Bob Ferguson for allegedly suppressing the activities of a gun rights foundation, per Bloomberg.

However, according to the lawsuit, the chatbot provided Riehl with a summary that falsely stated Walters was being sued for “defrauding and embezzling funds” from the Second Amendment Foundation as its chief financial officer and treasurer. The lawsuit emphasizes that every statement regarding Walters in the summary is untrue.

Walters clarifies that he is not involved in the Ferguson case and has never been employed by the Second Amendment Foundation. Furthermore, the case itself has no connection to financial accounting allegations against anyone.

The incident adds to the growing concerns surrounding the truthfulness and reliability of AI chatbot outputs. Recent controversies have highlighted instances of chatbots providing confidently inaccurate responses.

In April, an Australian mayor announced his intention to sue OpenAI over false claims generated by ChatGPT, suggesting he had been imprisoned for bribery. Additionally, a New York lawyer who used ChatGPT to draft legal briefs potentially faces sanctions after referencing non-existent case law.

In Riehl’s request to ChatGPT, he had asked for the complete text of the Second Amendment Foundation’s complaint. However, the chatbot allegedly generated a completely fabricated summary that bore no resemblance to the actual complaint, including an erroneous case number.

The legal implications of holding a company accountable for false or defamatory information generated by AI systems are unclear. In the US, Section 230 traditionally shields internet firms from liability for third-party content hosted on their platforms. It remains uncertain whether these protections extend to AI systems, which not only link to data sources but also generate new information, including false data, according to The Verge.

Although OpenAI includes a small disclaimer on ChatGPT’s homepage acknowledging that the system may occasionally generate incorrect information, Walters’ defamation lawsuit in Georgia could serve as a test case for this legal framework.

The Verge quoted Eugene Volokh, a law professor specializing in AI system liability, as saying that while he believes libel claims against AI companies are legally viable in principle, this particular lawsuit may be challenging to sustain.

Volokh pointed out that Walters did not notify OpenAI about the false statements, denying them an opportunity to rectify the situation, and there were no actual damages resulting from ChatGPT’s output. Nevertheless, the outcome of this case remains of interest.

The Nigerian Securities and Exchange Commission (SEC) has issued a clear statement declaring that Binance Nigeria is not registered or regulated by the SEC. This pronouncement effectively renders the operations of Binance, the popular global cryptocurrency exchange, within Nigeria illegal.

In an official statement published on its website, the SEC specifically noted that Binance Nigeria Limited, a subsidiary of Binance, has been actively promoting its web and mobile-enabled platforms to the Nigerian public. However, the regulator firmly emphasized that such activities are in direct violation of Nigerian law.

This announcement by the SEC comes in the wake of recent developments involving Binance US, the United States subsidiary of the global exchange. The U.S. SEC has filed a lawsuit against Binance, alleging that the exchange is operating an illegal securities exchange.

The move by the U.S. SEC is believed to have triggered global scrutiny on Binance operations.

Binance is one of many crypto exchanges with a huge consumer base in Nigeria. Although like other exchanges, it is not regulated. This is due to the government’s previous stance on digital assets.

In early 2021, the Central Bank of Nigeria (CBN) declared cryptocurrencies illegal, forbidding regulated financial institutions from engaging in any kind of transaction involving the digital asset. The development forced a shift to Peer-to-Peer (P2P) platforms, which provided the needed alternative to traders.

Major exchanges including Binance also began to offer P2P services.

But in its statement, the SEC strongly cautioned Nigerians to exercise prudence and refrain from engaging with unregistered and unregulated platforms, specifically mentioning Binance Nigeria as one such platform to avoid.

Many of the P2P operators in Nigeria are not registered because of the CBN’s stance on digital assets.

The SEC’s statement

“The attention of the Securities and Exchange Commission (the Commission) has been drawn to the website operated by Binance Nigeria Limited, soliciting the Nigerian public to trade crypto assets on its various web and mobile-enabled platforms.

“Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal. Any member of the investing public dealing with the entity is doing so at his/her own risk.

“As the regulator with the statutory mandate of investor protection, the Commission urges Nigerians to be wary of investing in crypto-assets, and crypto-asset-related financial products and services if the service provider/its platform is not registered or regulated by the Commission.

“Nigerian investors are hereby warned that investing in crypto-assets is extremely risky and may result in total loss of their investment.

“By this circular, Binance Nigeria Limited is hereby directed to immediately stop soliciting Nigerian investors in any form whatsoever.

“The Commission shall provide updates on further regulatory actions concerning the activities of Binance Nigeria Limited, and other similar platforms and shall work with other regulators in Nigeria to provide further guidance on this matter.”

This statement by the SEC indicates that the Nigerian government is making a shift from its former stance on cryptocurrency. On Saturday, the Federal Inland Revenue Service (FIRS) published a public notice on the enactment of the Finance Act 2023. The Finance Act provides for a 10% tax on digital assets, including cryptocurrency.

Meanwhile for US, Binance.US has told its customers to withdraw their U.S. dollars, after its payment and banking partners “signaled an intent” to pause dollar fiat channels around June 13.

The news comes in the wake of an Securities and Exchange Commission crackdown on crypto trading giants Binance and Coinbase earlier in the week. Binance.US has said the SEC’s allegations are “unjustified” and that “we will continue to vigorously defend ourselves.” Crypto firms have lobbied U.S. lawmakers — unsuccessfully — to create industry-specific regulations; the Securities and Exchange Commission says existing securities rules apply to cryptocurrencies and crypto exchanges.

Binance and related entities moved about $70 billion through accounts at Silvergate Bank and Signature Bank from 2019 to 2023, according to a filing on Wednesday.

Some crypto exchanges are considering emphasizing their overseas operations — or exiting the U.S. entirely, The New York Times reports. (LinkedIn News)

My sincere apologies for deleting the post on the alleged arrest of Nigeria’s suspended governor of the Central Bank. I never really like to break news; I prefer to analyze broken ones. So, when I posted, many commented that it was not true. To avoid spreading non-factual news, I deleted it. But it has turned out that the he was indeed arrested:

“The Department of State Services (DSS) hereby confirms that Mr Godwin Emefiele, the suspended Governor of the Central Bank of Nigeria (CBN), is now in its custody for some investigative reasons,” Peter Afunanya, the spokesperson for the agency, said in a press statement he shared with PREMIUM TIMES.

Yet, early this morning, DSS denied he was arrested. But in the last few hours, they just confirmed they arrested him.  Many things in Nigeria are never straightforward.

So, I am returning my earlier comment: “I am not sure it is the best playbook: arresting the governor of an apex book. If the Nigerian stock exchange operates on data, the market could drop at scale on next trading day. But of course, who cares? That said, we need to modulate, and make sure that we do not criminalize being a bad “student”. I am never a fan of Emefiele but I also will not like him to be staged. He deserves all the due processes as written in the rule books.”

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has been taken into custody by Nigeria’s secret police, the State Security Service (SSS), hours after PresidentBola Tinubu suspended him from office.

“The Department of State Services (DSS) hereby confirms that Mr Godwin Emefiele, the suspended Governor of the Central Bank of Nigeria (CBN), is now in its custody for some investigative reasons,” Peter Afunanya, the spokesperson for the agency, said in a press statement he shared with PREMIUM TIMES.

Mr Afunanya did not provide details of when and how Mr Emefiele was arrested and where he is being kept. However, PREMIUM TIMES learnt the banker was picked up from his home in Lagos and then flown to Abuja guarded by a detachment of operatives. He was then driven to the SSS’ headquarters in the Asokoro District of the nation’s capital when sources said he was being quizzed.

There were speculations Friday night that the SSS arrested Mr Emefiele shortly after he was suspended. But the law enforcement agency tweeted Saturday morning, saying the top banker was not in its custody.

It is unclear why the SSS is holding the embattled official. But the office of the Secretary to the Government of the Federation said Friday that his office, the CBN, was under investigation.

The Governor of the central bank of Nigeria has just been suspended and immediately arrested and detained by the agents of the state security services (SSS). According to rumors making around the corner, the governor was arrested on ten allegations which include the following;

1. Funding of unknown gunmen, ESN and IPOB,

2. Mismanagement of Nigeria’s Social Investment program (NIRSAL) and the anchor Borrowers scheme,

3.  Illegal economic crimes of National security dimension,

4. Money Laundering,

5. Unwholesome activities through proxy,

6. Round Tripping,

7. Conferment of financial benefits to self and others,

8. Threat to national security,

9. criminal conspiracy to divert government resources and

10. Terrorism funding.

No doubt that Mr Emefiele’s hate and ordeal started with the naira notes redesign policy which coincidentally happened in the heat of political campaigns and this made some agents of the APC allege that it was his ploy to scuttle the campaign and backstage the electoral success of President Tinubu. It took court action to stop him from going on with that policy.

For the sake of legal argument, the issue that this suspension of the governor has posed again as it posed in 2014 when it first happened is whether the President can outrightly and unilaterally sack or suspend the governor of the central bank of Nigeria. According to S. 11(2)(f) of the CBN Act, 2007, the president can only sack the governor of the CBN if the sack was approved by a 2/3 majority of the Senate. This procedure was enshrined as a way of making the governor somehow independent of the Presidency so that he can execute his jobs without the fear of being outrightly or unilaterally sacked by the president anytime he wishes or wills.

Although there is an existing federal High Court judgment which tends to be the current authority on this matter; “whether the president has the power to sack or suspend the governor of the central bank unilaterally without recourse or approval from the senate”; Sanusi Lamido Sanusi v. President of federal republic of Nigeria & Ors.

Recall that this same thing playing out today played out in 2014 when the then governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi had a fallout with the then president Goodluck Jonathan, the president suspended him and also arrested and seized his International passport.  Sanusi Lamido Sanusi decided to go to court to enforce his rights and also hinging on the provisions of S 11(2(f) of the CBN act stating that the president has no such power to unilaterally remove or suspend him. The court held that although the president cannot remove the CBN Governor unilaterally as provided in S 11 of the CBN act, the president can exercise disciplinary control over the governor which includes suspension.

This matter was never appealed by the then governor hence this is the current rule on the matter; ie, although the president cannot unilaterally remove or sack the CBN governor as provided in s 11 of the CBN act, the president can lawfully exercise some disciplinary action over the governor by suspending him.