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Powers On… The battle for digital asset supremacy and the consequences of U.S. capitulation

Why is the U.S. dragging its heels on crypto and blockchain regulation, as the rest of the world forges ahead with financial innovation?
Powers On… is a new monthly opinion column from Marc Powers, who spent much of his 40-year legal

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Why is the U.S. dragging its heels on crypto and blockchain regulation, as the rest of the world forges ahead with financial innovation?

Powers On... is a new monthly opinion column from Marc Powers, who spent much of his 40-year legal career working with complex securities-related cases in the United States after a stint with the SEC. He is now an Adjunct Professor at Florida International University School of Law, where he teaches a course on 'Blockchain, Crypto and Regulatory Considerations.'

Dear Readers: Here is my first opinion piece for Cointelegraph since my retirement a month ago from law firm practice (and prior to that, the SEC) after a 40 year career. It is an exciting opportunity for me, and hopefully an interesting one for you. The shackles of politically correct, business sensitive communications are now gone, and I no longer have to ‘pre-clear’ or worry about the potential of my words offending regulators, politicians, colleagues, or clients of my law firm.

You will be hearing my personal and (mostly) objective views, which will be free from material conflicts. I seek no business from you for this endeavor. I only seek to be read, and perhaps stimulate dialogue to influence the actions of others — whether regulators, businesses, or legislators — to promote the advancement and adoption of blockchain technology, its use cases for businesses and banked and unbanked populations, and the safe and responsible regulation of cryptocurrencies.

My first column is on where I see the United States in comparison to the rest of the world in its accommodation, acceptance and adoption of blockchain, Bitcoin and other cryptocurrencies.

I start on this important topic because I worry that the United States, and its institutions and regulators may, by their actions and inactions, and whether by design or otherwise, be undermining the development, use and availability of digital assets for citizens of this country. And this could be to the detriment of us all.

These actions include generally hostile Congressional hearings on blockchain and Facebook’s Diem, née Libra; as well as SEC enforcement actions which continue to target the ICOs of 2017 and 2018; and FinCEN regulations proposed the week before Christmas seeking to require regulated financial institutions and MSBs to disclose virtually all cryptocurrency transactions and information on the institution’s customers and counterparties involving unhosted digital wallets.

The only bright spots have been the thoughtful writings and speeches by SEC Commissioner Hester Peirce and actions by the recently departed acting Comptroller of the Currency, Brian Brooks, in allowing financial institutions to custody digital assets and use blockchains for financial transactions.

What most politicians and regulators in the U.S. fail to appreciate is that while we stifle blockchain advancement and the use of cryptocurrencies for capital formation, there are other countries and jurisdictions which welcome and embrace it. In failing to adapt, the U.S. faces the real risk that this new technology will be “owned” by other countries, some of which may be adversaries and competitors.

In China, there is the People’s Bank of China’s digital currency and electronic payments project. That pilot, using digital currency and wallets issued by China’s Central Bank, has reportedly processed over three million transactions totaling over $160 million as of last November.

In Switzerland, not only has the country encouraged blockchain adoption, but the city of Zug implemented blockchain for both government and residential use.

In Sweden and Georgia, land registries are on the blockchain.

Capital raising is the lifeblood of many developers, entrepreneurs and blockchain companies. It is essential for the health and expansion of blockchain projects and their communities. The mechanism of choice is often an offering of digital tokens. Yet, many U.S. politicians and regulators have a myopic and provincial view embracing the thought that all which occurs in blockchain transactions must be adopted by, or guided by, U.S. policy views.

But guess what? As many regular readers of this publication, or investors in Bitcoin and other cryptocurrencies know, every day there are financial transactions occurring worldwide over the internet and various blockchains, with no government oversight or approval. Immune to, and regardless of, what Congress, the SEC, CFTC, FinCEN and the U.S. Fed says or wants. These currencies represent living entities and businesses that have vibrant lives beyond these shores.

At the time of writing, CoinMarketCap lists thousands of cryptocurrencies on its platform. These tokens are traded on dozens of exchanges, many of which are not registered in or regulated by the United States. And while the U.S. equity markets primarily trade from 9:30 a.m. to 4:00 p.m. EST Monday through Friday, tokens never stop trading. They don’t know the difference between weekdays and weekends. They’re bought, hoarded, traded and shared between both sophisticated and unsophisticated investors and traders all around the world.

The U.S. has sought, and may continue to seek, to stop this with new laws and regulations: But this is an exercise in futility. The cat is not only out of the bag, it is feasting lavishly at the table.

In the process of attempting to stifle innovation, the U.S. will lose world dominance for the U.S. Dollar and the power and influence of its political and economic institutions. Acting Comptroller Brooks aptly wrote parting words and advice to the new Biden Administration in The Hill last month: “[i]f the United States focuses on the risks and not the benefits [of cryptocurrency and decentralized finance], we will fall behind as the global financial system is rewired.”

So, where does that leave us, with the new Biden Administration and Congress? What can we expect and what should Americans be doing to make sure the U.S. continues as the dominant player for capital formation, trading and world affairs?

A quick glance at Congress is hardly encouraging. On January 15th, House Speaker Nancy Pelosi named Representatives Alexandria Ocasio-Cortez and Rashid Tlaib to the important House Financial Services Committee, chaired by Representative Maxine Waters. Waters has not shown any obvious friendliness toward, or deep understanding of, blockchain, digital currencies and their useful applications. Ocasio-Cortez and Tlaib will likely have other issues which they will prioritize. In the U.S. Senate, neither Senators Mike Crapo nor Sherrod Brown of the Senate Banking Committee have been standouts for advancing cryptocurrencies. Although at least Brown had embraced a Central Bank digital currency and the maintenance of digital wallets for Americans at the onset of the pandemic as part of the relief bill.

The SEC will likely be under the leadership of former Goldman Sachs partner and CFTC Chairman, Gary Gensler. It is less apparent what will occur. Gensler has been a professor at MIT and has taught a class on blockchain, banking and cryptocurrencies in the business school. In reviewing some of his lectures and materials for the class, there is no question he has a full and helpful grasp on the subject matter and issues that arise from an evolving political and regulatory framework. He also wrote an opinion piece for CoinDesk a year ago on December 15, 2019, entitled “Even if a Thousand Projects Don’t Make it, Blockchain is Still a Change Catalyst.”

The Gensler writing concludes with some thoughts of encouragement:

“Though literally thousands of projects have yet to land on broadly adopted use cases, I remain intrigued by Satoshi’s innovation’s potential to spur change-either directly or indirectly as a catalyst. The potential to lower verification and networking costs is worth pursuing, particularly to lower economic rents and data privacy costs, and promote economic inclusion. Further, shared blockchain applications might help jumpstart multiparty network solutions in fields that historically have been fragmented or resilient to change.”

Yet, elsewhere in the piece he ruminates that “the question remains what uses will cryptocurrencies and blockchain have beyond acting as a catalyst of change? Beyond Bitcoin providing a scarce digital speculative store of value, and niche applications in digital exchanges, gaming, and gambling, what applications will be sustainable for cryptocurrencies as a new form of private money?”

Gensler also had a reputation as an aggressive regulator. While he accomplished much at the CFTC in fulfilling the mandates of Dodd-Frank, especially in the creation of a swaps exchange, he ruffled some feathers with other regulators and abroad. He also sued large financial institutions in enforcement actions. So it is not clear where he will set the priorities of the SEC as Chairman. One thing does seem certain, though. As an apparent believer in regulation and its enforcement, we can expect Gensler to seek broad regulation over as much of the blockchain ecosystem as his fellow Commissioners, the courts and Congress will allow.

From my point of view, over-regulation is not a good thing for blockchain and its adoption and broad acceptance. Nor is regulation by prosecution, a phrase coined many years ago in a book title by former SEC Commissioner Roberta Karmel. Reasonable and thoughtful regulation is needed.

Yes, I accept and agree that investor protection is important. But a major element in the development of blockchain technology and philosophy is to allow all people — sophisticated and unsophisticated, banked or unbanked, wealthy or poor — to interact, peer-to-peer, without government or other third-party interference.

I do not adhere to the philosophical belief which some regulators and Congressional staff have that most retirees are simple idiots and will blow their savings on cryptocurrency scams by foreign exchanges and issuers. We should not claim that for the protection of the few we must over-regulate and kill innovation in this nascent technology and industry, and thus become the enemy of the many. Smart regulation, and laws that stop crime, protect investors and businesses, and promote the best uses of blockchain technology seems right here.

In any event, education and disclosure are two of the important hallmarks of the Federal securities laws and best way to stop fraud. Not prohibiting the conduct entirely, or making it so difficult to proceed.

It will be interesting to see how things go in the coming year. Are we marching toward a coherent and sensible regulatory framework for this industry? Or toward a stifling environment that will drive innovation and economic growth overseas?

I know where I’m placing my hopes.

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Government

Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Government

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Spread & Containment

The Coming Of The Police State In America

The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now…

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The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now patrolling the New York City subway system in an attempt to do something about the explosion of crime. As part of this, there are bag checks and new surveillance of all passengers. No legislation, no debate, just an edict from the mayor.

Many citizens who rely on this system for transportation might welcome this. It’s a city of strict gun control, and no one knows for sure if they have the right to defend themselves. Merchants have been harassed and even arrested for trying to stop looting and pillaging in their own shops.

The message has been sent: Only the police can do this job. Whether they do it or not is another matter.

Things on the subway system have gotten crazy. If you know it well, you can manage to travel safely, but visitors to the city who take the wrong train at the wrong time are taking grave risks.

In actual fact, it’s guaranteed that this will only end in confiscating knives and other things that people carry in order to protect themselves while leaving the actual criminals even more free to prey on citizens.

The law-abiding will suffer and the criminals will grow more numerous. It will not end well.

When you step back from the details, what we have is the dawning of a genuine police state in the United States. It only starts in New York City. Where is the Guard going to be deployed next? Anywhere is possible.

If the crime is bad enough, citizens will welcome it. It must have been this way in most times and places that when the police state arrives, the people cheer.

We will all have our own stories of how this came to be. Some might begin with the passage of the Patriot Act and the establishment of the Department of Homeland Security in 2001. Some will focus on gun control and the taking away of citizens’ rights to defend themselves.

My own version of events is closer in time. It began four years ago this month with lockdowns. That’s what shattered the capacity of civil society to function in the United States. Everything that has happened since follows like one domino tumbling after another.

It goes like this:

1) lockdown,

2) loss of moral compass and spreading of loneliness and nihilism,

3) rioting resulting from citizen frustration, 4) police absent because of ideological hectoring,

5) a rise in uncontrolled immigration/refugees,

6) an epidemic of ill health from substance abuse and otherwise,

7) businesses flee the city

8) cities fall into decay, and that results in

9) more surveillance and police state.

The 10th stage is the sacking of liberty and civilization itself.

It doesn’t fall out this way at every point in history, but this seems like a solid outline of what happened in this case. Four years is a very short period of time to see all of this unfold. But it is a fact that New York City was more-or-less civilized only four years ago. No one could have predicted that it would come to this so quickly.

But once the lockdowns happened, all bets were off. Here we had a policy that most directly trampled on all freedoms that we had taken for granted. Schools, businesses, and churches were slammed shut, with various levels of enforcement. The entire workforce was divided between essential and nonessential, and there was widespread confusion about who precisely was in charge of designating and enforcing this.

It felt like martial law at the time, as if all normal civilian law had been displaced by something else. That something had to do with public health, but there was clearly more going on, because suddenly our social media posts were censored and we were being asked to do things that made no sense, such as mask up for a virus that evaded mask protection and walk in only one direction in grocery aisles.

Vast amounts of the white-collar workforce stayed home—and their kids, too—until it became too much to bear. The city became a ghost town. Most U.S. cities were the same.

As the months of disaster rolled on, the captives were let out of their houses for the summer in order to protest racism but no other reason. As a way of excusing this, the same public health authorities said that racism was a virus as bad as COVID-19, so therefore it was permitted.

The protests had turned to riots in many cities, and the police were being defunded and discouraged to do anything about the problem. Citizens watched in horror as downtowns burned and drug-crazed freaks took over whole sections of cities. It was like every standard of decency had been zapped out of an entire swath of the population.

Meanwhile, large checks were arriving in people’s bank accounts, defying every normal economic expectation. How could people not be working and get their bank accounts more flush with cash than ever? There was a new law that didn’t even require that people pay rent. How weird was that? Even student loans didn’t need to be paid.

By the fall, recess from lockdown was over and everyone was told to go home again. But this time they had a job to do: They were supposed to vote. Not at the polling places, because going there would only spread germs, or so the media said. When the voting results finally came in, it was the absentee ballots that swung the election in favor of the opposition party that actually wanted more lockdowns and eventually pushed vaccine mandates on the whole population.

The new party in control took note of the large population movements out of cities and states that they controlled. This would have a large effect on voting patterns in the future. But they had a plan. They would open the borders to millions of people in the guise of caring for refugees. These new warm bodies would become voters in time and certainly count on the census when it came time to reapportion political power.

Meanwhile, the native population had begun to swim in ill health from substance abuse, widespread depression, and demoralization, plus vaccine injury. This increased dependency on the very institutions that had caused the problem in the first place: the medical/scientific establishment.

The rise of crime drove the small businesses out of the city. They had barely survived the lockdowns, but they certainly could not survive the crime epidemic. This undermined the tax base of the city and allowed the criminals to take further control.

The same cities became sanctuaries for the waves of migrants sacking the country, and partisan mayors actually used tax dollars to house these invaders in high-end hotels in the name of having compassion for the stranger. Citizens were pushed out to make way for rampaging migrant hordes, as incredible as this seems.

But with that, of course, crime rose ever further, inciting citizen anger and providing a pretext to bring in the police state in the form of the National Guard, now tasked with cracking down on crime in the transportation system.

What’s the next step? It’s probably already here: mass surveillance and censorship, plus ever-expanding police power. This will be accompanied by further population movements, as those with the means to do so flee the city and even the country and leave it for everyone else to suffer.

As I tell the story, all of this seems inevitable. It is not. It could have been stopped at any point. A wise and prudent political leadership could have admitted the error from the beginning and called on the country to rediscover freedom, decency, and the difference between right and wrong. But ego and pride stopped that from happening, and we are left with the consequences.

The government grows ever bigger and civil society ever less capable of managing itself in large urban centers. Disaster is unfolding in real time, mitigated only by a rising stock market and a financial system that has yet to fall apart completely.

Are we at the middle stages of total collapse, or at the point where the population and people in leadership positions wise up and decide to put an end to the downward slide? It’s hard to know. But this much we do know: There is a growing pocket of resistance out there that is fed up and refuses to sit by and watch this great country be sacked and taken over by everything it was set up to prevent.

Tyler Durden Sat, 03/09/2024 - 16:20

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