Good morning,
The AI leaders holding the reins of our entire economy have some pretty unconventional ideas about economics. So does the Treasury Secretary.
They’re both struggling.
David Z. Morris and Austin Campbell
P.S. If this email was forwarded to you, please subscribe to get our regular in-depth reports.
TECH
AI: The Depressing Pause
Anthropic CEO Dario Amodei last week published a 3,800 word essay about “pacing” the development of frontier AI models. Other AI figures including Elon Musk, Sam Altman, and Google’s Demis Hassabis quickly made public statements with varying degrees of agreement on direction, if not the specifics of the plan.
The proximate trigger for the statement were the recent series of cybersecurity incidents which AI labs characterized as agents “going rogue.” That framing has been heavily criticized as shifting responsibility away from the labs themselves, and the “pause” talk is similarly triggering scrutiny.
One pillar of Amodei’s proposal was the integration of “embedded third-party evaluators” for model releases - but METR, the entity Amodei nominates for an oversight role, is funded by the same sources as Anthropic itself, including Facebook co-founder and Effective Altruism overlord Dustin Moskovitz.
AUSTIN
This is what regulatory capture looks like, and what an industry trying to circle the wagons to protect themselves and kill competition in the cradle would do. There’s also the open question of economics. Suffice to say, if banks did this, everyone would rightly see it as pure lust for power and greed. Is AI any different?
Skeptics are questioning whether doom worries are the real motivator here. As we covered in depth in Zero In recently, the cost of AI data center buildouts are becoming burdensome, just as OpenAI and Anthropic both prepare for IPOs that will require major financial disclosures.
Cutting expenses for training could help make those numbers look better. But for those not terrified of an AI apocalypse, it also looks more than a little like open collusion between the industry’s major players.
Perhaps inconveniently, President Donald Trump responded by calling AI anxiety a “hoax” and a “sick conspiracy.” Trump then called Nvidia CEO Jensen Huang in the middle of a speech at the All In Summit, and Huang thanked Trump for trying to derail the doom-trolling.
Also notably absent from any agreement on a pause or slowdown are both Meta and the Chinese AI labs. In fact, Yann LeCun, formerly of Meta, said “Dario was already claiming that GPT2 was too dangerous to open source back in 2019. I made fun of them then. Everyone should make fun of them now.” Similarly, Liu Shengyu (刘胜与), at the Chinese AI lab DeepSeek, said that he does not want Anthropic to hold the most advanced AI/AGI; “to put it dramatically,” that would be comparable to Hitler getting the bomb first.
China’s MFA also derided Dario’s letter as fear-mongering, and may have killed the global AI pause before it could begin: Dario’s own letter notes it would require governments to enforce. That’s going to be difficult if the 2nd most influential government on AI policy has already said it would not participate.
Perhaps we will have to rename it Ineffective Altriusm?
DAVID
It’s hard to tell exactly where AI promoters’ muddled thinking turns into malfeasance - much like their adherent and funder Sam Bankman-Fried, who funneled $500m in stolen funds into Anthropic. It may have been a shot in the dark, but Trump is not exactly incorrect to call this a conspiracy.
MORE TECH:
Former OpenAI employee Jacob Coxon finally got the world to pay attention to the “AI Doom” extinction-risk theories widely believed by AI developers. Pick up David’s book to learn why “doomerism” is baseless.
OpenAI claimed it solved a Millenium Prize math problem, but mathematician Tristan Buckmaster alleges they used his team’s Codex queries to front-run them. This was followed by new restrictions on use of Anthropic and OpenAI models by firms including Nvidia itself, citing IP security concerns.
Layer Zero, previously embroiled in the KelpDAO hack, reportedly lost control of the private keys for Wyoming’s FRNT stablecoin.
OpenAI is delaying its IPO until 2027, citing a sudden surge in safety concerns. Skeptics say it’s more likely they can’t pull together a credible S-1.
Activity on Robinhood Chain has kept pumping, with daily volumes now at $1.6 billion. (We predicted success back in July.)
Someone taught a modeled fly brain to trade Bitcoin.
Elon Musk insists chess is solvable.
POLICY
Revolut Didn’t Get Hacked - It Was Worse Than That
Neobank Revolut suffered a serious breach of customer data, and international anti-money laundering regulations are to blame.
According to Protos, leaked data “included names, dates of birth, addresses, email addresses and phone numbers, alongside copies of passports and driving licences.” That could be enough data to seriously compromise customer safety and security.
Revolut has stated only that a “very limited” number of customers were impacted, but the nature of this breach is more important than its scale. According to a spokesperson, “Revolut recently identified a sophisticated external impersonation scam where an unauthorised third party utilised a legitimate government agency domain email to submit fraudulent requests for information.”
AUSTIN
This is a grim parallel with police misuse of Flock cameras in the U.S.A. In both cases, bad actors used surveillance policy to steal information. In both cases, the problem is that the data has been gathered into one easily-exploitable honeypot.
Sleuths have concluded that an EU member country was used as a sockpuppet by hackers to compel Revolut to hand over customer information, in accordance with regional anti-money laundering policy. Refusal to comply with the request would have put Revolut in violation - yet they had no handshake procedure to confirm that the government request was genuine.
DAVID
Constantly generating and storing more sensitive customer data is an insane way to run a system that’s supposedly meant to protect people. There are new, more secure ways to do this. Some of them, purely by coincidence, use Zero Knowledge Proofs to validate compliance while protecting customer data.
MORE POLICY:
Hunter Biden’s memetic redemption arc has been undercut by a memecoin launch that immediately dumped. The ticker, of course, is $LAPTOP ( ▼ 9.03% ).
Comedian Nathan Fielder released a magnetic teaser for “You Can See Everything,” a documentary about notorious Theranos founder Elizabeth Holmes. Anticipation is electric.
ZERO INSIGHTS
Deep Dives on Critical Topics
FINANCE
Energy Off the Rails
Brent crude peaked north of $109 after Saudi Arabia said it would close a critical pipeline after a drone attack originating in Iraq, and the breakdown of negotiations with Iran. Mounting knock-on effects of Donald Trump’s war on Iran seemed to reach a critical threshold, with deisel fuel hitting an all-time high in the U.S. Natural gas was already outpacing the ECB’s worst-case projections - then it jumped another 6%.
AUSTIN
As I recently commented on Bits + Bips, interest rates can’t create more atoms. An energy crisis can’t be solved by flipping financial switches, and this one is looming at a particularly bad time.
Those disruptions could blow back on particularly inconvenient bystanders: data centers, which notoriously consume a heck of a lot of electricity and often rely on natural gas power generation. OpenAI’s delayed IPO in particular exposes them to cost risk if the situation continues to escalate.
This also naturally exacerbates both global inflation worries and an arguably emergent international debt crisis. It’s not just Scott Bessent getting desperate to throw hands at the yield curve.
DAVID
Iran’s ability to control the Strait, and the dire consequences of that control, have been understood by every U.S. administration for going on half a century … yet it escaped this President and his Department of War.
MORE FINANCE:
Scott Bessent declares “I am the house now,” gets quickly schooled as bond yields soar globally.
We attended Stablecon in DC last week, and cannot say enough good things about the rigorous, regulation- and privacy-focused conference.
Criminal charges for Craft Ventures-backed CEO who used investor money to buy homes and cars. It was, of course, a compliance startup.
READ MORE
SB Energy’s IPO Dreams. Francine McKenna and Olga Usvyatsky unpack a data center company that has never built a data center.
How Poland Lost $230m Buying Oil With Tether (FT). Stablecoins solve some problems in international trade - and introduce new ones.
What Happens When America Cancels You? Coincenter explores the consequences of U.S. financial sanctions on individual political opponents.
Thanks for reading.
Talk to you again soon.
Austin Campbell, CEO
David Morris, Managing Editor
Shirley Yu, Executive Producer