You may not know it yet, but there is a force greater than commercial AI that has the power to challenge the tech giants. It is known as decentralized AI, although not many people are aware of its existence or benefits.
While OpenAI, Google, and Anthropic build their AI empires using sprawling data centers and supercharged GPUs housed under one roof, a growing movement is proving that power can be dispersed, and still pack a punch.
How Decentralized AI Models Are Catching Up
One standout player is 0G Labs, whose DiLoCoX framework allows training of gargantuan models over slow, standard networks. And we are talking huge numbers here: 100 billion parameters or more.
By creatively layering pipeline parallelism, gradient compression, and staggered synchronization, this startup is teaching AI to thrive beyond the data center walls. In fact, DiLoCoX claims it trains “about 357 times faster” in some cases, while delivering performance that’s “almost as accurate” as its centralized peers.
Meanwhile, Flower AI and Vana joined forces to launch Collective-1, a 7-billion-parameter language model trained across hundreds of PCs connected via the internet. Again, no data center required.
And that’s just the beginning. Plans are already underway to scale up to 100 billion parameters and include multimodal inputs like text, image, and audio.
Decentralized AI Benefits
Democratizing AI Power
Leveraging spare GPUs in gaming PCs, university labs, or offices can drastically lower barriers, letting smaller teams compete with big tech.
Privacy & Control
Federated learning and edge computing keep sensitive data local and private, which is ideal for regulated industries or personal devices.
Resilience & Security
Decentralized systems are robust by design. They do not have a single point of failure and they have far better opportunities for increased transparency through blockchain-based protocols.
The Roadblocks Still Standing
Despite the promise, challenges are inevitable for a large-scale implementation. Consensus mechanisms can slow things down, while coordination overhead and fragmented compute resources make latency and speed real concerns for high-demand, real-time applications.
Yet, startups and researchers continue to refine protocols to address these issue, and the early results are quite promising.
Decentralized AI may still be under the radar, but it’s no longer second fiddle. As frameworks like DiLoCoX and Collective-1 prove their mettle, the playing field could shift from walled gardens to open-source innovation hubs. And in that world, the next AI breakthrough could originate from a home office, a university network, or even the GPU in your gaming rig, not just the biggest data centers.
Simply sign up to the Global Economy myFT Digest — delivered directly to your inbox.
The world’s largest economies will lack the workers they need to power growth and keep prices stable in the coming decades unless they attract more foreigners, top central bankers warned.
Speaking at an annual gathering of leading policymakers in Jackson Hole, Wyoming, the heads of the Bank of Japan, European Central Bank and Bank of England all sought to highlight the challenge to economic growth posed by ageing populations.
Kazuo Ueda, BoJ governor, told the Kansas City Federal Reserve’s annual symposium that his country’s rapidly ageing society had made labour shortages one of the country’s “most pressing” economic issues.
While foreign workers accounted for just 3 per cent of the labour force in Japan, Ueda said, they had been responsible for half of the recent rise in labour force growth. “Further increases will surely require a broader discussion,” he said.
Across rich economies birth rates are at historically low levels, while people are living much longer. That has raised so-called dependency ratios, meaning that a far higher share of the population is no longer of working age.
ECB president Christine Lagarde said an influx of foreign workers would play a “crucial role” in countering the negative impact of demographic trends on economic growth.
Lagarde noted that without an influx of foreign workers, the euro area would by 2040 have 3.4mn fewer people of working age.
The Eurozone’s labour market came through the pandemic in “unexpectedly good shape”, partly because of more older workers, but “even more” importantly due a rise in the number of foreign workers, she said.
“Although they represented only around 9 per cent of the total labour force in 2022, foreign workers have accounted for half of its growth over the past three years,” Lagarde said. “Without this contribution, labour market conditions could be tighter and output lower.”
BoE governor Andrew Bailey said that the “acute” challenge that demographics and declining productivity posed to the UK economy had not been emphasised enough.
Attracting workers to fill labour shortages will be essential in keeping growth on track in the coming decades, economists believe — despite the rising pressures of populism and public sentiment souring on immigration.
Central bankers predict population ageing will not only lower output but also risks pushing up inflation, as workers would be able to demand higher wages in an environment where labour shortages were widespread.
By 2040, 40 per cent of the UK population will be older than the standard working age group of 16 to 64, Bailey added.
The UK has also been hit by a fall in labour force participation rates, driven by a rise in the number of people defined as “long-term sick” and a significant drop in young people in work — two factors that Bailey suggested might be intertwined.
Mental health was the most common reason, he said, describing it as “a very concerning development”.
The BoE has become “much more focused on [measuring] inactivity” than on unemployment, Bailey said — although he acknowledged that labour force participation, and the reasons for its decline in the UK, were harder to measure than headline unemployment data.
While more older women continued to work, the same was not the case for men, he added.
The Pakistan Telecommunication Authority (PTA) has clarified that it has no plans to block Virtual Private Network (VPN) usage in the country. The disclosure was made during a Senate Committee on Information Technology meeting, addressing concerns over online access and digital privacy.
PTA officials stated that VPNs are widely used for legitimate purposes, including secure communication, data protection, and accessing restricted resources. They added that a blanket ban would be technically difficult, ineffective, and counterproductive for businesses relying on global connectivity.
Instead of restricting VPNs, PTA emphasized its focus on strengthening Pakistan’s IT ecosystem. The authority highlighted ongoing initiatives to attract investment, improve digital infrastructure, and support innovation.
The Pakistan Software Export Board (PSEB) also briefed the committee, noting that while Pakistan’s share in the global IT market remains below 0.04%, exports grew by 20% last year. To accelerate growth, the PSEB announced the launch of the eRozgar program, designed to create employment and equip young professionals with digital skills.
Analysts say that with IT exports crossing the $3 billion mark in 2023, Pakistan has significant potential to expand its footprint in the global tech economy, provided regulatory policies remain supportive and conducive to digital innovation.
We chose the Samsung Galaxy Active 2 for dataset collection since, at the time of the study (2021), it was one of the few devices that (1) allowed third parties to access raw PPG data through the development and embedding of a wearable application and (2) enabled convenient adjustment of the sampling rate of features via the app. In addition, prior studies had validated the measurement accuracy of this device18. Data collection began with an in-person orientation session where we explained experimental details, including the purpose and duration of the study, data collection methods, participation rewards, and instructions for using the wearable device. Participants were given a smartwatch and instructed to wear it on the wrist of their non-dominant hand at all times during the experimental period, except during sleep, when they were asked to charge the device. Although the wearable device is water-resistant, participants were advised to remove it during long baths or swimming.
Data collection
Procedure
Figure 1 illustrates the overall data collection workflow. The initial orientation was followed by four weeks of data gathering, concluding with device reclamation. A pre-survey was conducted at the outset to gather general demographics and lifestyle information from the participants. During the data-gathering period, participants completed a short online survey assessing their mental health three times (i.e., two-week intervals). We evaluated insomnia using the Insomnia Severity Index (ISI)19 questionnaire. We also surveyed mental health using PHQ-9 (Patient Health Questionnaire-9)20 and GAD-7 (General Anxiety Disorder-7)21 to assess depression and anxiety, respectively.
Application
We developed a wearable device application named “Heart+” to facilitate data collection. This application gathered three types of data: (1) activity, based on an accelerometer, gyroscope, gyroscope rotational vector, and pedometer; (2) physiological, including heart rate and PPG; and (3) environmental sensing, specifically recordings of ambient light. Built on the Tizen platform (https://www.tizen.org/)—Samsung’s operating system designed specifically for embedded programming—the application was configured to sample data at 100 ms intervals (i.e., 10 Hz).
PPG sampling frequencies vary widely in the literature, with studies using rates ranging from 5 Hz to 100 Hz and recent experiments sampling at 20–25 Hz22,23. We selected 10 Hz to balance temporal resolution against signal processing principles and practical constraints. More specifically, according to the Nyquist theorem, when sampling a continuous signal, the sampling rate should be at least twice the highest frequency to be captured. Since human heart rates range from 40–220 bpm (i.e., 0.67–3.67 Hz), a minimum sampling rate of 7.34 Hz (2 × 3.67 Hz) is theoretically sufficient to capture the maximum heart frequency24. Additionally, studies demonstrate that interpolation methods can enhance HRV accuracy from lower temporal resolution PPG signals, supporting our sampling frequency decision22.
In terms of practical considerations, adjusting sampling frequency is a key strategy for reducing computational load and power consumption due to limited system resources in wearable devices25. The selected sampling frequency enables continuous recording throughout the day while maintaining a battery life of up to 14 hours. Thus, 10 Hz provides an adequate margin above the theoretical minimum while minimizing battery consumption—a key consideration for uninterrupted 24/7 monitoring over four weeks. Lower sampling rates also reduce power consumption, memory, and data transmission burdens22. Finally, the heart rate monitor on this device, provided by the Samsung Health application developed by Tizen, uses an internal proprietary algorithm to automatically record real-time heart rate based on PPG signals. All of these signals are temporarily stored on the watch and transmitted to the server at regular intervals (every 30 minutes) when connected by Wi-Fi, thus minimizing battery use24.
We used the Tornado framework (https://www.tornadoweb.org/) to create a RESTful API that facilitates communication between the application and the server. This API has two endpoints: the first stores data from the registration portal and generates unique user identifiers, and the second handles the storage of all sensor data retrieved from the watch.
The data, including user ID and sign-up time, were stored in a MongoDB Instance within the Users collection. Device identifiers, such as device ID and remaining battery ratio, were stored in the Devices collection. Meanwhile, continuous raw sensor data was packaged into CSV files and locally stored by the watch until transmission to the server along with the device ID. Before storing, the server referenced the MongoDB collections, matched the user ID with the transmitted device ID data, and sorted the CSV files into directories categorized by user ID. Once the watch connected to Wi-Fi, the packaged CSV files were transferred to the server according to user IDs, and the transferred files were then deleted from the watch locally.
Monitoring
We monitored the data collection process to ensure it was conducted properly. First, we reviewed the recordings from wearables and sleep diaries daily. Participants were informed that the research team would monitor daily recordings solely to verify that the smartwatch was worn correctly and that the data were stored accurately. If a wearable device was not worn (1) more than three times or (2) for longer than two hours per day (excluding sleep time), an individual warning was sent. Additionally, we checked daily to ensure that all participants logged an entry in their sleep diary.
Second, we set up an online chat room through a social network messenger. Reminders to wear the watch and complete daily tasks, such as connecting to the Heart + app for data storage and filling out daily diaries, along with important announcements (e.g., the three clinical surveys), were sent via this group chat. Participants were also instructed to report any issues in the chat and were provided with an emergency contact number for urgent questions and updates.
Ethics statement
The dataset workflow was developed with and approved by the Institutional Review Board of KAIST (KH2020-027). We obtained written informed consent from participants, using a form that outlined the purpose, duration, and procedure of data collection. All participants agreed to the use of anonymized personal information for research purposes and were compensated with USD 100 if they faithfully participated in the study to its completion. The most diligent 10 participants were rewarded with an extra coffee coupon. All data was anonymized before release, ensuring compliance with the privacy rights of the participants.
Participant recruitment and preparation
Our objective was to collect real-world daily sensor data along with information on sleep and mental health in healthy individuals. We recruited participants from a university and a research institution in South Korea through online postings and flyers. The recruitment announcement specified the following eligibility criteria: (1) aged 20 to 50, and (2) not undergoing any hospital treatment for acute medical, surgical, or psychiatric illness. Ultimately, 49 participants were recruited for a four-week experiment.
Table 1 summarizes participant demographic information both in aggregate and stratified by gender. The participants were balanced across three categories, which included office workers (35%), undergraduate students (30%), and graduate students (35%). Figure 2 presents the distribution of participants by lifestyle factors such as smoking, exercise frequency, consumption of alcohol and coffee, and overall lifestyle regularity, all of which were self-reported. The vast majority of participants reported being non-smokers, consuming alcohol at most once a week, and maintaining a regular lifestyle. Participants were relatively balanced in their exercise frequency and daily coffee consumption levels. The distribution of participants based on scores from clinical questionnaires assessing insomnia (ISI), depression (PHQ9), and anxiety (GAD7) is presented in Fig. 3. Although these assessments were conducted at three time points—before, midway, and after the experiment—we report the distributions from the pre-experiment and post-experiment assessments (i.e., four weeks apart), for visual conciseness. All the scores are available in the provided data.
Table 1 Demographic characteristics of participants.
Fig. 2
Distribution of participant lifestyle survey responses. The figure illustrates the frequency of participant responses across five categories: weekly exercise frequency (A), daily coffee consumption (B), overall lifestyle regularity (consistency in daily activities) (C), alcohol consumption frequency (D), and smoking frequency (E). Data are presented for all participants, with bar colors indicating female (red), male (purple), and all (grey) participants.
Fig. 3
Distribution of participant scores from clinical questionnaires, including insomnia (ISI: top), depression (PHQ9: middle), and anxiety (GAD7: bottom). The charts show scores before data collection started (left panel) and 4 weeks later, after the study was completed (right panel).
Data processing
The final dataset collected over the four weeks includes five types of data: (1) participant demographics, (2) smartwatch sensor data, including PPG signals, (3) computed HRV features, (4) sleep diaries, and (5) biweekly clinical survey results. The dataset also contains demographic and lifestyle information of participants matched to their device IDs. To process raw signals from wearable devices, we referred to the official Tizen documentation for sensor descriptions, filtering out values outside the acceptable range for each sensor before aggregating them into 5-minute chunks (https://docs.tizen.org/application/native/guides/location-sensors/device-sensors/). Additionally, we used sensor recordings to detect periods when smartwatches were off-wrist (e.g., not being worn) by excluding any data lacking a heartbeat frequency or heartbeat values outside the acceptable range. The research team manually inspected the sleep diaries to ensure their accuracy, correcting any AM/PM confusion by participants. Through daily monitoring, we detected issues with two participants (i.e., device IDs ab50 and kb24) during the first three days of the experiment. These participants were instructed to wear the device for an additional three days beyond the end of the study.
At the 2025 Fetch dvm360 Conference in Kansas City, Missouri, Melissa Evans, LVT, VTS(ECC), urged veterinary teams to prioritize rapid stabilization and hands-on technician care to reduce secondary neurologic damage in emergency patients. “Technicians play a really vital role in the treatment of neurologic disease, because these patients need so much hands-on care,” Evans said.1
Evans opened by distinguishing primary injury (the initial insult from trauma, toxins, or neoplasia) from secondary injury (downstream physiologic events such as hypoxia, ischemia, edema, and increased intracranial pressure) that can worsen outcomes if not managed. “Secondary [injury] is a series of events that happened after the initial injury. This tends to result in progressive neurological damage. This can sometimes be prevented,” she noted, emphasizing that early measures to maintain oxygenation and perfusion are essential.
Her practical triage advice for veterinary technicians: secure the airway, support breathing and circulation, then perform a focused neurologic exam once the patient is stable. Mentation, from alert to comatose, is a rapid bedside metric. Evans recommended using as both a triage tool and a trending measure during treatment.
Seizures and traumatic brain injury: act fast, track trends
Seizures were a focal point of the session. Evans cautioned that prolonged or repeated seizures inflict rapid brain damage and require immediate control and investigation for reversible causes such as hypoglycemia or toxins. “Oh, poor baby’s brain is on fire. Because that’s basically what it is,” said Evans, to underline the urgency of anticonvulsant therapy and continuous monitoring. Practical bedside interventions she recommended include audible seizure alerts (bells), continuous observation, and recumbent care with passive range-of-motion for altered patients.
For traumatic brain injury, Evans advised routine use of the Modified Glasgow Coma Scale (MGCS) as a serial tool rather than a single prognostic snapshot. “This is not a one off. Doing this once doesn’t tell me a whole lot…Trends are a big word when it comes to the Modified Glasgow Coma Scale,” she said, recommending repeated scoring to document response to therapy and guide escalation. She also urged careful documentation of posture and gait abnormalities to help localize lesions and inform imaging choices.
Monitoring, positioning and advocacy
Evans outlined technician-led measures that frequently determine outcomes: spinal stabilization before movement, documenting motor function before analgesia, and selecting imaging appropriate to the suspected cause (MRI for IVDD, CT for high-energy trauma). She stressed pain reassessment, urinary care, pressure-relief rotation and early physiotherapy as routine priorities for spinal and recumbent patients.
On vestibular disease, she contrasted typically self-limiting peripheral cases with central disorders that often include mentation changes and carry a guarded prognosis; padded housing, antiemetics and close neurologic checks can both comfort the patient and reveal progression.
“Understanding how to do that and understanding what we see when they come in is really important,” Evans concluded, framing veterinary technician training and vigilant bedside care as pivotal to improving neurologic patient trajectories.
The take-home message from the session? Stabilize first, monitor consistently, and apply focused technician interventions to limit secondary injury and give neurologic patients the best chance for recovery.
Reference
Evans M. Neurologic emergencies. Presented at: Fetch dvm360 Conference; August 22, 2025; Kansas City, Missouri.
Although radiotherapy was safe and well-tolerated in patients with esophageal squamous cell carcinoma, more research is needed to confirm these results.
Adding radiotherapy to first-line chemoimmunotherapy significantly improved the survival of Chinese patients with locally advanced or metastatic esophageal squamous cell carcinoma (ESCC) compared with chemoimmunotherapy alone, according to results from the multicenter, retrospective ChinECR trial (NCT06478355) published in Frontiers in Immunology.1
Before propensity score matching (PSM), after a median follow-up of 37.0 months (IQR, 28.3-35.7), patients in the radiation group had significantly longer overall survival (OS; P <.001) and progression-free survival (PFS; P <.001) than in the chemoimmunotherapy alone cohort. Furthermore, OS (P = .015) and PFS (P = .008) remained significantly improved with the radiation group after PSM. The median OS in each respective group was 34 months (95% CI, 27.0-41.0) vs 20 months (95% CI, 17.7-26.3), and the median PFS was 16 months (95% CI, 11.6-20.4) vs 12 months (95% CI, 9.8-14.2).
Additionally, univariate analysis after PSN found factors that particularly impacted OS, including age, tumor location, cT, cN, maintenance therapy, and radiotherapy. Furthermore, in the multivariate analysis, independent factors affecting OS and PFS included cN, maintenance therapy, and radiotherapy.
A matched population analysis showed patients could recover from radiotherapy, with a respective OS HR of 0.67 (95% CI, 0.50-0.89; P = .006) and a PFS HR of 0.68 (95% CI, 0.53-0.89; P = .004). Additionally, it showed that immune maintenance therapy was beneficial, with respective OS and PFS HRs of 0.44 (95% CI, 0.30-0.61; P <.001) and 0.72 (95% CI, 0.52-0.99; P = .045).
“According to the research, adding radiotherapy into systemic chemotherapy integrated with immune checkpoint inhibitors significantly improves the prognosis of patients in China who suffer from locally advanced or metastatic esophageal squamous cell carcinoma,” Xinyi Liu, MD, professor of the Department of Radiation Oncology at Hebei Medical University Fourth Hospital in Shijiazhuang, China, wrote in the publication with study coinvestigators.1 “There is a safe combined treatment, and the treatment-related adverse effects are manageable. However, large randomized controlled trials need to be carried out to further confirm those results.”
The retrospective cohort study enrolled patients 18 years and older with stage II to IV ESCC confirmed by bite histopathology across 11 large cancer centers in China who received immunochemotherapy alone (n = 226) or with radiation therapy (n = 438). Both groups of patients underwent platinum-based chemotherapy every 3 weeks for 4 to 6 cycles in the absence of disease progression or unacceptable toxicity based on the investigator’s choice.
Additionally, anti-PD-1 antibodies consisting of sintilimab (Tyvyt), camrelizumab (Airuika), tislelizumab (Tevimbra), or pembrolizumab (Keytruda) were given every 3 weeks until intolerable toxicities, disease progression, or a maximum of 2 years. Immunotherapy received after the sixth cycle was considered immune maintenance therapy.
Radiotherapy was given as 6 to 8 MeV X-ray employing volume modulated arc therapy, intensity-modulated radiotherapy, and tomotherapy. Of 438 patients who underwent radiotherapy, 31 received palliative treatment, receiving 40.0 to 46.9 Gy in 10 to 26 fractions, and 407 received conventional radical treatment, at a dose of 50 to 60 Gy in 25 to 33 fractions. The decision to irradiate to distant organ metastases was determined by the attending physician.
Among patients included before PSM in the radiation therapy and control arms, most were male (75.3% vs 75.2%), younger than 70 (70.3% vs 67.3%), and had an ECOG performance status of 0 to 1 (88.1% vs 88.1%). In each arm, the most common tumor location was middle-thoracic (40.9% vs 47.3%), the most common tumor status was T3-4 (83.3% vs 82.3%), and the most common node status was N2 (39.7% vs 46.5%). A total of 13.0% vs 20.4%, 2.7% vs 12.4%, 3.7% vs 8.8%, and 1.6% vs 0.4% of each arm had lung, liver, bone, and brain metastases, respectively.
The primary end points included objective response rate and safety.2 Secondary end points included OS, PFS, and disease control rate.
According to the safety analysis, a greater total incidence of esophagitis was observed in the radiation group vs chemoimmunotherapy alone; at 22.8% vs 3.6% (P < .001) for any-grade esophagitis and 4.2% vs 0% (P = .015) at grade 3 or 4 severity. For any-grade pneumonia, it was 10.8% vs 3.0% (P = .008), including 1.8% vs 0.6% (P = 0.623) experiencing it at grade 3 or 4 severity. A total of 5.4% of patients in the radiation group developed esophageal fistula vs none in the control group.
References
Liu X, Wen J, Zhang Y, et al. Impact of first-line chemoimmunotherapy with or without radiotherapy on the prognosis of patients with locally advanced or metastatic esophageal squamous cell carcinoma: a multicenter, real-world, retrospective cohort study from China (NCT06478355). Front Immunol. Published July 28, 2025. doi: 10.3389/fimmu.2025.1633930
Immunotherapy combined with chemoradiotherapy for first-line treatment of esophageal squamous cell carcinoma (ChinECR). ClinicalTrials.gov. Updated June 3, 2025. Accessed August 21, 2025. https://tinyurl.com/y2czh7cv
Bitcoin (BTC) grew to account for about 1.7% of global money, a figure that includes aggregate M2 money supply data for all major fiat currencies, the largest minor currencies, and gold’s market cap, according to River, a Bitcoin financial services company.
“In 16 years, Bitcoin went up to 1.7% of global money,” River said. The company weighed Bitcoin’s market cap against a $112.9 trillion basket of fiat currencies and $25.1 trillion in hard money, which excluded silver, platinum, and exotic metals like palladium.
The data assumes Bitcoin has a market capitalization of $2.4 trillion, which it topped earlier in August. However, BTC’s current market cap is approximately $2.29 trillion, which brings its total share of global money down to around 1.66% at the time of this writing.
Bitcoin market cap compared to global money. Source: River
Bitcoin and gold continue to claim a greater share of the global money pie as central banks around the world inflate their fiat currencies through excessive money printing, destroying purchasing power and driving investors to hard money alternatives.
Related: Crypto sentiment returns to Greed as Bitcoin and Ether spike on Fed speech
US Federal Reserve chair signals coming rate cuts and continued monetary expansion
United States Federal Reserve chairman Jerome Powell delivered a keynote address at the Jackson Hole Economic Symposium in Wyoming on Friday, signaling impending interest rate cuts and continued monetary expansion. Powell said:
“Our policy rate is now 100 basis points (BPS) closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.”
The price of Bitcoin surged by over 2% in response to Powell’s speech, hitting a price of about $116,000 per BTC on Friday.
Federal Reserve chairman Jerome Powell delivers keynote address at the Jackson Hole Economic Symposium. Source: Kansas City Fed
Bitcoin and other cryptocurrencies tend to appreciate during periods of monetary expansion, as the price of digital assets continues to correlate with global liquidity levels.
75% of investors now anticipate an interest rate cut of 25 basis points in September, according to data from the Chicago Mercantile Exchange (CME) Group.
Magazine: Baby boomers worth $79T are finally getting on board with Bitcoin
Two Dutch teenagers were found dead in their Istanbul hotel room and their father hospitalised, Turkish media reported on Saturday, with initial suspicion falling on a restaurant meal they had eaten.
The boys, aged 15 and 17, were deceased when police and paramedics arrived at the hotel where they were staying, in the Fatih district, near Istanbul’s Blue Mosque and Grand Bazaar, according to the NTV television channel.
“When they arrived, ambulance paramedics noted the two children were deceased. The father was taken to hospital by ambulance” in a state of shock, the channel reported.
The three had been vacationing in Turkey and were believed to have gone to the touristy Taksim district for dinner, media said.
Read More: How floods turned wedding celebrations into 24 funerals
The 57-year-old father told police he had gone with his sons to Taksim “but did not eat”, the Haber Turk news outlet reported.
Later that evening, after returning to the hotel, the father called out to the boys, who did not respond. A hotel employee, Mehmet Kirdag, heard the father crying for help, NTV reported.
“When I knocked at the door and entered, the two sons were dead, one of them in bed, the other on the floor… When paramedics arrived, the two young men were deceased. The father was in a state of shock,” Kirdag said.
Istanbul police have launched an investigation, NTV reported.
WaterStation vending machines stored at a warehouse, from court filings with the US Federal Bankruptcy Court.
(Bloomberg) — The pitch went like this: Good, safe drinking water has become such a scarce resource that Americans will pay to fill up jugs — 30 or 40 cents to the gallon — at dispensers all across the country.
Most Read from Bloomberg
Hundreds of investors bought thousands of units, believing in the vision laid out by Ryan Wear, founder of a startup called WaterStation Management. They plunked down $8,500 for each vending machine and then waited for the dispensers to throw off a steady stream of cash. Among those lured in was a product manager in Oregon in 2021 and then, several months later, a dentist in Illinois. Each bought dozens of water dispensers, which Wear’s team would install and operate.
What they didn’t know is that at least one of those Hylyte-branded machines wound up being sold to both of them: serial number 101962, wedged in between a liquor store and a yoga studio in a strip mall in the Los Angeles suburb of Torrance, according to court records. To make matters worse, a machine with that same serial number was also pledged as collateral to back WaterStation bonds that were sold in April 2022 to the investment bank Jefferies Financial Group Inc.
Serial number 101962, faded and rusted in pictures submitted to court, is now gone from that strip mall, WaterStation is in bankruptcy, and Wear, 49, is the target of legal action by federal prosecutors, the Securities and Exchange Commission, a state banking regulator, Jefferies and scores of small-time investors, all of whom claim the company’s business was largely an illusion.
A photo of the Hylyte dispenser in Torrance, California, filed in federal bankruptcy court. Source: US Federal Bankruptcy Court
“This case involves a massive Ponzi scheme,” Assistant U.S. Attorney Justin Rodriguez told a federal judge in Manhattan Wednesday after Wear pleaded not guilty to criminal charges. A few feet away sat Jordan Chirico, a former Jefferies fund manager who prosecutors allege also committed fraud, directing his fund to purchase more WaterStation bonds after Wear admitted many water machines didn’t exist. He, too, pleaded not guilty. Lawyers for both declined to comment.
Voluminous legal filings describe a business that drew in military veterans, stock traders, pharmacists, salespeople and retirees by leveraging growing fears about contaminated tap water and microplastics and offering a lucrative solution that’d churn out annual returns as high as 20%, year after year. That desire to make easy money, coupled with clever marketing and alleged diligence lapses, kept the sputtering business going until the money finally stopped flowing around June 2023, according to court documents.
“These schemes never arise in a vacuum,” said John Bender, a lawyer who is representing a committee of WaterStation creditors. “The tragic consequences of the WaterStation affair could have been avoided had it not been for a cabal of insiders and institutions that prioritized their greed over doing the right thing even if it meant devastating the lives of a lot of people.”
Earlier this month, the committee asked a judge overseeing the proceedings to rule that Wear’s business meets the legal definition of a Ponzi scheme — a type of operation that uses new money to pay returns of existing investors or other creditors, with promoters usually promising high returns for little risk. If granted, franchisees would likely get tax relief and advisers would have an easier time clawing back funds from entities that profited off WaterStation’s business, which “will lay the groundwork for future recoveries on behalf of victims of this Ponzi,” according to the committee’s filing.”
Machine Mismatch
Formed in 2016 in Everett, Washington, WaterStation Management sold upwards of 21,000 machines and raised more than $380 million over the course of some seven years. Growth was fueled by a handful of banks that issued loans backed by the US Small Business Administration, as well as about $100 million in bonds bought by a fund run by Jefferies. Wear claimed in a 2023 deposition that his business had more than 500 employees.
In actuality, Wear’s firm only deployed roughly 2,100 machines, many likely never existed at all and most of the money WaterStation raised paid other costs or payments to existing franchisees, according to court records. Many dispensers that do exist were sold to multiple buyers — like the one that was in Torrance — or were promised as Jefferies’ collateral. Serial numbers on other machines don’t correspond with addresses investors were given by the company, court papers indicate. Determining who owns each machine and who bears responsibility for the alleged scheme is being fought over in federal court.
To locate machines that were sold more than once, Bloomberg News analyzed thousands of serial numbers submitted in court by creditors with claims to WaterStation machines and more than a dozen investor lawsuits that have piled up. Restructuring advisers say in court papers that more than 10,000 water machines were sold to multiple purchasers.
Falling Behind
WaterStation had trouble paying franchisees for years before monthly payments stopped completely two years ago, according to Becky Yang O’Malley, a GlassRatner Advisory Services managing director and certified fraud examiner retained by a committee representing WaterStation franchisees and other creditors. Franchisees have sued WaterStation and Wear, who along with Chirico, was sued by the Jefferies fund, while banks have sued franchisees who have fallen behind on business loans, according to court records. Jefferies has also sued one lender, First Fed Bank, alleging it helped keep WaterStation afloat after becoming aware of the alleged fraud in order to prioritize repayment of debt it was owed.
Wear in a sworn statement in April 2024 said franchisees’ allegations that machines don’t exist were untrue and their claims of fraud “are baseless, inflammatory and false.” Although WaterStation had occasionally experienced cash-flow issues, the business was legitimate and profits derived from water machines “were historically paid to plaintiffs,” Wear said at the time.
A First Fed spokesman said the bank isn’t able to comment on specific aspects of Jefferies’ lawsuit “as this is an ongoing legal matter,” but that the lender did nothing wrong. The bank will be submitting a formal response to Jefferies’ complaint next month, “which will provide additional clarity at that time,” he said.
‘Financially Devastated’
Chirico, 41, has also denied wrongdoing. His lawyer has said Chirico is also a victim of the WaterStation fraud and that Jefferies has “tried to scapegoat our client for an alleged scheme that deceived him along with hundreds of other investors and major institutions.”
Jefferies’ 352 Capital fund, once managed by Chirico, filed a civil lawsuit against Chirico in New York state court after a federal judge in May dismissed an earlier complaint. The bond transactions and their risks “were no secret” to the firm and other institutions, Chirico’s lawyers said in a motion to dismiss the latest lawsuit. Chirico sought to protect the fund by removing Wear as manager and attempted “to stabilize the collateral so the possibility of a restructuring or refinancing could be explored,” according to his Aug. 14 motion.
Restructuring advisers face a daunting task of trying to return money to franchisees who face substantial losses after Wear’s businesses went bankrupt last year. The situation is worse for those who took out loans to buy machines because even though the business was an alleged fraud, franchisees are still responsible for the debt and certain banks have sued borrowers who have fallen behind on payments. Some investors contend banks that partnered with Wear’s business should have uncovered the alleged scheme earlier because they had access to machine lists with duplicate serial numbers.
“My family has been financially devastated by the WaterStation scheme,” one Indiana franchisee noted in a sworn statement. He said he spent $3.3 million on machines and took out loans from two banks to fund his investment, pushing his monthly loan payments to $35,000. He said WaterStation’s assurances that it would buy back machines and that the financing was “SBA-approved” made him believe the business was more profitable and secure than it actually was.
Bank Loans
WaterStation was listed on the SBA’s database of franchises eligible for agency-approved loans starting in 2018. It gained momentum two years later, when Wear hired former bank-loan officer Kevin Nooney to help forge ties with banks and build a financing program to boost machine sales. The arrangement brought in new investor cash as the pandemic triggered a plunge in interest rates that motivated Americans to pile into a raft of alternative investments during lockdowns.
First Fed and fellow regional lenders Unibank and Celtic Bank were among the institutions that provided the most financing to investors, according to papers filed by a committee representing WaterStation creditors. Nooney said in a 2024 court filing that one of his former colleagues knew First Fed’s vice president of commercial lending, and that he also had “long-standing personal relationships” with Unibank’s former chief credit officer and a former loan officer.
Unibank and Celtic participate in the SBA’s preferred lending program which lets private banks administer SBA-backed loans with minimal agency review. Preferred lenders approved 28,875 SBA loans worth nearly $30 billion in fiscal 2021, roughly 55% of all loans approved in the SBA’s flagship lending program, according to a 2022 congressional report.
Unibank and Celtic didn’t respond to requests for comment.
From the start, though, the machines that Wear’s business was built on never made enough money to pay investors or cover WaterStation’s other costs. Instead, Wear relied on investors’ money and other loans to pay returns he promised franchisees “and to perpetuate the illusion of a legitimate business,” according to Yang O’Malley’s report.
As new money rolled in, people who already purchased machines got payouts they thought were their cut of the money generated from the vending business, according to court documents. WaterStation paid out $31.5 million in investor returns in 2021, about double what it paid in 2020, and more than $44 million in 2022, according to Yang O’Malley’s report.
But cracks were already forming as soon as August 2021, when Nooney learned that WaterStation purchases could constitute a security, according to a complaint brought by Washington’s banking regulator in May. The company responded by altering how it pitched the opportunity and paid returns, and these changes had the effect of curtailing new purchases, the complaint said. A lawyer for Nooney didn’t return messages seeking comment.
There was another problem with Wear’s business. The company pitched its machines as a way to make passive income, even though SBA rules say the loans WaterStation benefited from can only be used to fund actively managed franchises, according to the complaint. The state regulator also said WaterStation exploited the SBA’s preferred lender program.
The SBA was “left in the dark” and relied on lenders to verify that funds for the WaterStation loans were being used for approved purposes, Washington authorities said.
Enter Jefferies
In need of fresh capital, Wear turned to the bond market. In 2022, a Jefferies hedge fund called 352 Capital purchased roughly $100 million in WaterStation bonds earmarked for machine purchases. The fund was run by Chirico, who had bought hundreds of machines prior to joining 352 Capital as portfolio manager, according to federal prosecutors. Chirico didn’t fully disclose to Jefferies his personal stake in WaterStation, according to the indictment, which he disputes.
The bonds have spawned a separate Jefferies lawsuit against First Fed, which the firm claims became aware in the summer of 2022 that many machines didn’t exist. The lender, a unit of First Northwest Bancorp, had serial numbers for machines purchased with loans it gave franchisees, as well as machines WaterStation claimed ownership of that served as collateral for the bonds, “and hundreds of machines appeared on both lists,” according to Jefferies’ suit.
First Fed has denied wrongdoing and last year sought a receiver to take over Wear’s business. In a July bankruptcy settlement, the bank also agreed to pay $2.87 million to creditors and make additional payments and concessions to benefit franchisees, according to court papers.
First Fed in a statement this month said the bankruptcy settlement will benefit creditors because the bank released claims against WaterStation as well as liens on properties owned by an affiliate company. Proceeds from those assets will “become available for ratable distribution” to creditors, the bank said.
‘Going to Jail’
As for Chirico, prosecutors allege he had “learned of serious issues at WaterStation” by the summer of 2023. Then, in a phone call the following January, Wear admitted that thousands of machines supporting the bonds didn’t exist. But instead of telling Jefferies, Chirico allegedly directed the fund to purchase more WaterStation bonds which Wear partly used to repay a debt to Chirico, according to the indictment.
At Wednesday’s arraignment, Rodriguez, the prosecutor, told a federal judge that a “lengthy recorded phone call” is among the evidence law enforcement collected along with messages from Wear’s business email account. An investor who was also on the recorded phone call told Wear this was the “largest franchise fraud case in the history of the United States” and that he was “going to jail,” according to the indictments.
As the legal process plays out, borrowers are still responsible for SBA loans even if they are victims of an alleged scam, said Paul Midzak, a lawyer who advises small business owners. However, borrowers like the WaterStation franchisees can raise the alleged fraud as a defense against their loans and challenge lenders in court, Midzak said. The SBA, meanwhile, can be slow in responding to borrowers and working with the agency can be “like dealing with a woolly mammoth,” he said.
An SBA spokesman directed Bloomberg News to the Department of Justice. The DOJ in its press release announcing the criminal charges this month said that the SBA’s Office of Inspector General was among the federal agencies that assisted law enforcement in the criminal investigation.
Outside court proceedings, the physical markers that remain of Wear’s business include the water dispensers that actually were deployed in places like Pahrump, Nevada, where a Hylyte machine sits near the Lakeside Casino & RV Park, serving water to travelers who stop at the casino for a $12 plate of steak and eggs before heading east to Las Vegas or west to Death Valley.
Another 4,000-plus machines are sitting idle in two dozen abandoned warehouses stretching from Everett to Missoula, Montana, and Fort Meyers, Florida. Liquidation firm TAGeX Brands was hired to inventory machines. It discovered that people have broken into the warehouses to harvest copper wiring from the walls and that some packaged food left inside has attracted rats, according to court papers.
The facilities “stand out as among the most disorganized warehouses I have encountered in my 38-year career,” TAGeX Chief Executive Officer Neal Sherman said in an August court filing. The machines lack insulation and pipes inside dispensers left in cooler climates often burst, making them impossible to sell.
“The water machines were in poor condition,” Sherman said, “and were poorly made.”
–With assistance from Nicola M White and Katanga Johnson.
