Hilary J. Allen

@profhilaryallen.bsky.social

1.3K followers 300 following 470 posts

Law professor at the American University Washington College of Law (but all views expressed here are my own); author of Fintech Dystopia and Driverless Finance; mythbusting crypto, AI, and other fintech

Internet serial: fintechdystopia.com .. more

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Hilary J. Allen @profhilaryallen.bsky.social · Aug 29

"Let's Get Skeptical," the final chapter of Fintech Dystopia, has dropped
fintechdystopia.com/chapters/cha...
Covering
- How much the abundance agenda and VC output suck
- Silicon Valley subsidies we can take away
- How to laugh our way into Silicon Valley skepticism
- A plan to actually fix finance

A picture of Olivia Newton-John with the caption "Let's Get Skeptical"

Hilary J. Allen @profhilaryallen.bsky.social · 3d

💯 I can’t tell you how many academic conversations I’ve had where I’ve been told “they wouldn’t do that; it doesn’t make financial sense.” But for some, the money is a means to power, not an end.

Another way the rational actor economic paradigm doesn’t always hold up….

Marietje Schaake @marietjeschaake.bsky.social · 3d

When will we look at the power case over the money case? Twitter was a good deal for influence, not profit. DOGE was a cover for data access, not efficiency >> How Did DOGE Disrupt So Much While Saving So Little? ↘️ www.nytimes.com/2025/12/23/u...

How Did DOGE Disrupt So Much While Saving So Little?

www.nytimes.com

Reposted by Iñaki Aldasoro, Hilary J. Allen

Marietje Schaake @marietjeschaake.bsky.social · 3d

How Did DOGE Disrupt So Much While Saving So Little?

www.nytimes.com

Hilary J. Allen @profhilaryallen.bsky.social · 4d

As per usual with fintech, dodging existing laws - rather than new technological capabilities - are what makes the business model (also as per usual, Andreessen Horowitz is backing a key player in this EWA industry)

fintechdystopia.com/chapters/cha...

For example, the Andreesen Horowitz-backed earned wage access fintech Earnin makes advances to its customers based on estimates of how much they earn (these estimates are generated by monitoring customers’ bank accounts, and for some products, by tracking customers’ location to see if they go to work – surveillance is part of the deal). As with both BNPL and payday lenders, there is no assessment of the borrower’s other financial obligations and their impact on the borrower’s ability to repay. Instead, Earnin is pre-authorized to deduct repayment amounts from customers’ bank accounts on their paydays. If there are insufficient funds in their account at the time of the withdrawal, customers can incur fees from their banks (in 2021, Earnin settled a class action from customers alleging that it had misled them about the risk of bank fees, which were incurred when Earnin debited customer bank accounts even though it could see they had insufficient funds).

Earnin doesn’t charge an explicit fee for its services – instead, it uses a seemingly voluntary tip structure. However, some researchers and consumer advocates have questioned how voluntary these tips really are. In a report based on 2021 data, financial regulators in California found that tip-based EWA companies succeeded in using design features and psychological nudges to push consumers to tip 73% of the time: the average APR (representing the total cost of using the service) for these tip-based companies was 334%. More specifically pertinent to Earnin, law professor Nakita Cuttino explained that “Earnin has encouraged its users to pay a $9 tip for a one-week loan of $100, which would amount to an APR of 469%... illegal in Washington, D.C. and fifteen of the states where Earnin currently operates.” Once again, the business model is not just about an app or webpage (or achieving efficiencies by cutting out customer service costs). The business model works because (at least in some states) it avoids laws that have been put in place to protect the economically precarious from predatory lending, and because of the economic precarity of its user base.

Reposted by Kevin O’Sullivan, Hilary J. Allen

m. r. sauter @oddletters.bsky.social · 5d

a required skill for being able to use an LLM in any professional capacity is discernment, essentially already being an expert in the field so you know when (and why) its outputs are incorrect.

now, LLMs are being deployed to non-expert groups in a way that ensures they will never *be* experts

Faine Greenwood @faineg.bsky.social · 5d

suspect a big reason why many academics and others who work in areas where getting facts RIGHT is key are disinterested in using LLMs for research:

they’ve tried it, they keep noticing major errors in output, and they conclude that having to verify all that doesn’t actually save them time.

Hilary J. Allen @profhilaryallen.bsky.social · 7d

I'd love to see a draft when it's ready!

Hilary J. Allen @profhilaryallen.bsky.social · 8d

The sooner the crash, the more limited the blast radius, so technically an earlier date is the more optimistic position...

But point well taken

Hilary J. Allen @profhilaryallen.bsky.social · 8d

I think I'm off on the date - the combined AI/crypto financial crisis I describe in the book will probably be with us sooner than 2030. But otherwise it's looking pretty prophetic. It sure does suck to be a Cassandra!

Anyway, here's the book link: driverlessfinancebook.com

Driverless Finance

driverlessfinancebook.com

Hilary J. Allen @profhilaryallen.bsky.social · 8d

Coinbase soon to incorporate "A new AI-driven wealth management advisory service"!

After reading @polphilpod.bsky.social's excellent article about Cassandras, I couldn't help reflecting on my 2022 book that previewed the financial crisis of 2030.

Hilary J. Allen @profhilaryallen.bsky.social · 8d

In case you hadn't seen this and wanted more receipts:

www.sciencedirect.com/science/arti...

Analyzing voting power in decentralized governance: Who controls DAOs?

We empirically study the state of three prominent DAO governance systems on the Ethereum blockchain: Compound, Uniswap and Ethereum name service (ENS)…

www.sciencedirect.com

Hilary J. Allen @profhilaryallen.bsky.social · 9d

This is a tough one, but I want to make the case for Marc Andreessen. He is about as bad as Altman on AI, and is also the reason we have a crypto industry (and most other predatory fintechs). He ended up being villain #1 of Fintech Dystopia

fintechdystopia.com/chapters/cha...

In 2009, Andreessen founded his own VC firm with Ben Horowitz (son of David Horowitz, the anti-immigration activist who mentored Trump advisor Stephen Miller). Fast forward a few years and Andreessen Horowitz – often abbreviated to “a16z” – was funding and supporting almost every fintech business model we’ve talked about in this book, as well as a slew of AI startups. Since 2020, Marc Andreessen has been uniquely influential in spreading ideas among the Silicon Valley elite by virtue of being the epicenter of so many group chats. One article described the culture of these group chats as “male-dominated, time-consuming, and veering between silly and brilliant, windy and addictive,” and noted their “substantial” influence, with participants often spending all their waking hours on the chats.

In addition to influencing the current Silicon Valley elite, Andreessen is able to use his position as a leading VC to select for and imprint his values on startups seeking funding (i.e. the Silicon Valley elite-in-training). And then the cycle continues: Andreessen Horowitz’s first crypto investment was in the crypto exchange CoinBase led by Brian Armstrong, which then spawned its own fund CoinBase Ventures. Tokens issued by the crypto projects funded by CoinBase Ventures can be sold to the public through the CoinBase exchange, so Armstrong can exert influence through offering funding on the front end, as well as offering an exit path on the back end if he likes the cut of a project’s jib.

Reposted by Hilary J. Allen

Americans for Financial Reform @ourfinancialsecurity.org · 9d

The separation of banking and commerce isn’t some outdated relic. It’s about having a financial system that serves the public good, not one that merely subsidizes the most rapacious practices of Wall Street and Big Tech.

Hilary J. Allen @profhilaryallen.bsky.social · 10d

It's on my list to read!

Hilary J. Allen @profhilaryallen.bsky.social · 10d

A poor sucker who will be the designated "accountability sink" aka person to sue

(I thought the "accountability sink" concept was an important one: doctorow.medium.com/https-plural...)

Reverse centaurs are the answer to the AI paradox

Not what the machine does, but who it does it to.

doctorow.medium.com

Hilary J. Allen @profhilaryallen.bsky.social · 10d

DoNotPay is a case in point:

(from fintechdystopia.com/chapters/cha...)

Andreesen Horowitz, for example, has funded an AI-driven lawyer replacement called DoNotPay. Because of course it has. A techno-solution dressed up in the typical rhetoric of “democratization” and having the usual fraught relationship with legal requirements (in this case, state rules governing the unauthorized practice of law), DoNotPay is a chatbot that provides legal services to those who can’t afford lawyers. Like so many of the fintech techno-solutions we saw in previous chapters, DoNotPay helps relieve political pressure to address a very real social problem (in this case, access to justice) by overclaiming that it can solve that problem.

In 2024, the Federal Trade Commission filed a complaint against DoNotPay for deceptive conduct, noting that:

DoNotPay promised that its service would allow consumers to “sue for assault without a lawyer” and “generate perfectly valid legal documents in no time,” and that the company would “replace the $200-billion-dollar legal industry with artificial intelligence.” DoNotPay, however, could not deliver on these promises. The complaint alleges that the company did not conduct testing to determine whether its AI chatbot’s output was equal to the level of a human lawyer, and that the company itself did not hire or retain any attorneys.

If things keep trending this way, the result is likely to be a tiered system of legal services where rich people can get bespoke legal services from humans, and the rest are stuck with hallucination-riddled AI output. As Bender and Hanna put it in The AI Con, “there is exactly zero evidence that the fact that large language models can extrude text that reads as good-enough answers to [bar exam] questions establishes them as effective tools for lawyering, much less automated lawyers.”

Hilary J. Allen @profhilaryallen.bsky.social · 10d

Rumors of the death of the lawyer have been greatly exaggerated …

www.technologyreview.com/2025/12/15/1...

AI might not be coming for lawyers’ jobs anytime soon

Generative AI might have aced the bar exam, but an LLM still can’t think like a lawyer.

www.technologyreview.com

Hilary J. Allen @profhilaryallen.bsky.social · 10d

Their job has always been to tell stories of exponential growth. No reason for them to ever develop the skill set of running a real business for profit

Reposted by Ralf Michaels, Els Torreele, Ian Bruff , and 2 more Ralf Michaels, Els Torreele, Ian Bruff, Simon Lester, Hilary J. Allen

Quinn Slobodian @quinnslobodian.com · 10d

I had an interesting exchange with the chatbot issued to students by my university about the advisability of using it—at a university. It thought this was a terrible idea.

Hilary J. Allen @profhilaryallen.bsky.social · 11d

I didn’t get all the way there, but I touched on a lot of this in Fintech Dystopia, if you’d like to check it out: fintechdystopia.com

Fintech Dystopia

fintechdystopia.com

Merriam-Webster @merriam-webster.com · 11d

Merriam-Webster’s human editors have chosen ‘slop’ as the 2025 Word of the Year.

Reposted by Hilary J. Allen

Project Syndicate @projectsyndicate.bsky.social · 11d

ICYMI: We asked PS commentators to identify the biggest risks to economic and financial stability in the coming year. Read responses from Anat R. Admati, @profhilaryallen.bsky.social Allen, @simonhrjohnson.bsky.social, and others at the link. bit.ly/4pCNshx

Hilary J. Allen @profhilaryallen.bsky.social · 14d

It worked out great for the crypto industry, after all...

Hilary J. Allen @profhilaryallen.bsky.social · 15d

No, but I once gave a talk on campus at UT Laredo and they have javelinas

Hilary J. Allen @profhilaryallen.bsky.social · 15d

www.project-syndicate.org/onpoint/will...

Our financial system is beset with vulnerabilities. Leverage in many parts of the non-bank financial system is at historically high levels. Ponzi-like crypto assets, which are not backed by any productive capacity, have been folded into traditional financial markets. Investing in the stock market increasingly means betting on generative-AI tools, with their intractable accuracy problems and limited demonstrable productivity gains (despite the AI industry heavily subsidizing their use). A new wave of automation, growing dependence on shared infrastructure like cloud computing, and vulnerability to major weather events and cyberattacks also create new operational risks. In short, the global financial system is a tinderbox, and any number of events could spark a conflagration.1
The US is particularly poorly positioned to deal with a financial meltdown. The best way to build resilience in the financial system is to reduce leverage and enlist highly skilled regulators to monitor emerging risks. The US is moving in the wrong direction on both fronts, loosening existing limits on leverage and slashing the number of financial regulators and supervisors.

After a meltdown starts, the damage is typically mitigated with bailouts and interest-rate cuts. As the 2008 GFC amply demonstrated, this is never a complete solution. But it is likely to prove particularly inadequate today. Rate reductions will be limited by inflationary pressures – partly a result of Trump’s trade policies. And the Trump administration may well reserve bailouts and similar emergency measures for its preferred institutions and markets, rather than extending them to those that are most crucial to financial stability. Widening budget deficits, attacks on the Fed’s independence, and a general disregard for expertise may also undermine the credibility and effectiveness of any steps taken to address a panic.

Hilary J. Allen @profhilaryallen.bsky.social · 15d

The hypocrisy is the point 🤷‍♀️

Or, the point is speed running a financial crisis so that the oligarchs can buy up everything on the cheap in the aftermath

Or por que no los dos?

Hilary J. Allen @profhilaryallen.bsky.social · 15d

It's interesting to factor the government's interest in surveillance and defense capacities into the equation. Will noodle over this.

Hilary J. Allen @profhilaryallen.bsky.social · 16d

Agree but given the lack of transparency about actual inference costs, I think it's an open question whether the industry might be "too big to save" on an ongoing basis. The bailout might be enough to benefit the players but notsave the industry, or it might be enough to sustain a "zombie industry"

Hilary J. Allen @profhilaryallen.bsky.social · 16d

Absolutely! Also, how the Network State movement helps explain the obsession with Greenland.

Hilary J. Allen @profhilaryallen.bsky.social · 16d

Glad to see more people talking about the dangers of the Network State movement

fintechdystopia.com/chapters/cha...

Srinivasan’s idea is to build a community that first exists in the ether, with cryptocurrencies and passports and other services like property registration all done through the blockchain. But lest you think that this is just a plan for a glorified social network, he makes clear that “A key concept is to go cloud first, land last — but not land never — by starting with an online community and then materializing it into the physical world.” He says that this can create a new country without the “ugly” (his word) methods of election, revolution, or war, but I can’t see how a network state can become land-based without either taking land from people who don’t want to be involved in network states, or forcing those people to live in one against their will. Once the Network State’s land has been populated from the cloud, Srinivasan glosses over the niceties of secession from the relevant governmental authorities (I guess he's assuming that exiting from a country is as easy as a VC exiting from an investment – and, you never know, it just might be with President Trump on board) and yadda yadda yadda, the final step is for the network state to gain diplomatic recognition from real nation states.

The libertarian bona fides of the Network State movement are also established by the involvement of Patri Friedman, grandson of Milton, and therefore a member of libertarian royalty if ever there were one (Patri went to Prospera to get his Tesla key implanted in his hand – something that wouldn’t be legal very many other places).

Along with Prospera, another attempt to implement the Network State vision is Praxis, an online community you can join as a novitiate “Nomad” and then try to work up to “Steel Visa Citizenship” (yet another fun fact: in 2024, Praxis tried to buy Greenland to serve as a home base, in case you were wondering what might have inspired all of the sudden interest in Greenland). Funded by Andreessen, Srinivasan, Thiel, and Altman, among others, Praxis published a manifesto on the internet which begins, “[i]n this world, the primary contested space is not land, but the mind. All follows from the mind – the minds of the masses and the minds of those who control strategic assets,” and continues “[o]ur collective purpose is to restore Western Civilization and pursue our ultimate destiny of life among the stars.”

I’ve said this before, but when I read statements like this, I can’t help being reminded of my time in college listening to young dudes play-acting at sounding profound (often after having smoked a solid amount of pot). Most of those dudes grew out of it. But Peter Thiel still stands by the scathing Stanford Review articles he published in the 80s and 90s about changes to Stanford’s compulsory “Western Culture” course, bemoaning “multiculturalism” and its more modern incarnations “diversity, equity, and inclusion.” The grown men Elon Musk, Jeff Bezos, and Marc Andreessen still aspire to life among the stars (and at least one of them wants to get there in a rocket that looks a whole lot like a penis). And so these dreams of Praxis as techbrotopia, which to me seem juvenile and a convenient excuse for not fixing problems in the real world, have billions of dollars behind them. And because of those billions of dollars, when the Praxis manifesto lustily looks forward to the end of national governments – “as local communities dissolve and Nation States stumble;” “we’ll watch the flippening of Network States over Nation States in real time” – it’s more than a little disconcerting.

Hilary J. Allen @profhilaryallen.bsky.social · 16d

As a crypto critic who is a veteran of popped bubbles that didn't take down that industry, I worry that when the AI bubble pops and we all suffer the economic fallout, it still might not kill the current AI business model - especially with the Trump Admin poised to bail out key AI industry players.

Hilary J. Allen @profhilaryallen.bsky.social · 16d

+ keep jamming it into education

Aaron Bossig @aaronbossig.bsky.social · Dec 12

Keep an eye out!

As AI winds down while VC money runs out, they're going to continue following the same failed playbook Web3 used. They'll redirect the focus from big money (companies, entrepreneurs) to marginalized communities.

Prepare to see AI re-spun as a tool to empower women/POC/LGBT.

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