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Alibaba (BABA) Stock: Tech Giant Unleashes $431M AI Chatbot War Chest

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TLDR

  • Alibaba commits $431 million to promote Qwen AI app during Lunar New Year, starting February 6.
  • The budget is three times larger than Tencent’s $143 million and Baidu’s $71 million for their chatbot promotions.
  • Nine-day holiday period begins February 15, providing extended marketing window.
  • Digital red envelopes will offer dining, entertainment and leisure rewards to users.
  • Move follows DeepSeek’s R1 launch that accelerated AI competition in China.

Alibaba revealed plans Monday to invest 3 billion yuan in its Qwen AI application. That translates to roughly $431 million. The campaign launches February 6.


BABA Stock Card
Alibaba Group Holding Limited, BABA

The investment towers over what competitors announced recently. Tencent put 1 billion yuan on the table for Yuanbao. Baidu went with 500 million yuan for its chatbot efforts.

The timing takes advantage of China’s extended holiday this year. The Lunar New Year break starts February 15 and spans nine days. That’s longer than usual.

Tech companies in China view this period as prime territory for user growth. Hundreds of millions of people travel home during the festivities. They spend more time on their devices while with family.

Red Envelopes and Rewards

Alibaba plans to distribute digital red envelopes throughout the campaign. These will cover dining, drinks, entertainment and leisure activities. The company called them “large” in its statement.

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What remains unclear is the format. Alibaba didn’t say if users get cash or discount codes. If it’s codes, they’d probably work on platforms like Taobao.

The red envelope strategy has proven effective before. Tencent used it in 2015 with WeChat. That campaign helped WeChat Pay challenge Alipay’s dominance in mobile payments.

Tencent’s current push starts Sunday. Users need the latest Yuanbao version to claim envelopes. The money goes straight to WeChat wallets. Sharing links spreads the rewards to others.

DeepSeek Changed Everything

China’s AI landscape shifted after DeepSeek dropped its R1 model last January. The launch rattled markets globally. It forced domestic players to move faster.

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Companies are rushing out upgrades before the holiday hits. DeepSeek itself reportedly has V4 coming in mid-February. The new model focuses on coding capabilities.

The extended holiday gives Alibaba more time to convert users. Nine days means more opportunities to hook people on Qwen. The company is clearly betting big on this window.

Baidu’s spending sits at roughly one-sixth of Alibaba’s budget. Tencent falls in the middle. All three want the same thing: more active users on their platforms.

The competition reflects how quickly the AI chatbot market is evolving in China. Companies are throwing serious money at user acquisition. The Lunar New Year offers a concentrated period when people are most receptive to trying new apps.

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Alibaba hasn’t detailed the exact mechanics of its reward system. But the scale of spending signals how important this campaign is to the company’s AI strategy.

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Every 5 Minutes: Korea’s New Rule for Crypto Exchanges

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South Korea’s financial regulator has ordered all crypto exchanges to verify user asset balances every five minutes, following a massive overpayment incident that shook market confidence earlier this year.

One botched reward payout exposed systemic cracks across the entire industry.

What Triggered the Rules

In February, Bithumb accidentally sent 2,000 BTC per person instead of 2,000 Korean won ($1.40) during a promotional event. The error amounted to roughly $42 billion in misallocated crypto. The Financial Services Commission (FSC) launched emergency inspections across all five major Korean exchanges immediately after. What they found went far beyond a single human mistake.

Most exchanges were only reconciling their books once every 24 hours. Three had no automatic kill switch to halt trading when discrepancies appeared. Four lacked multi-step approval systems for high-risk manual transactions. Two exchanges hadn’t even separated their general accounts from high-risk transaction accounts — a basic safeguard.

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What Exchanges Must Now Do

The FSC announced a three-pillar reform package on April 6. Exchanges must run automated balance checks every five minutes, with alerts and automatic trading halts triggered by major mismatches. Monthly external audits replace the previous quarterly schedule, and public disclosures must now include asset-by-asset blockchain holdings rather than a simple coverage ratio.

For manual, high-risk transactions such as event payouts, exchanges must use separate accounts, deploy validity-check systems that automatically reject mismatched inputs, and require cross-verification by a third party before execution.

The FSC will also require exchanges to appoint dedicated risk management officers and establish risk management committees — standards already expected of traditional financial firms. Compliance checks move from annual to twice-yearly, with results reported to regulators.

DAXA, the industry body, will complete self-regulatory amendments this month, with systems built out by May. Key provisions will feed into Korea’s forthcoming second-phase Digital Asset Act.

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Chaos Labs Leaves Aave Due to Budget, Risk Disagreements

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Chaos Labs Leaves Aave Due to Budget, Risk Disagreements

Chaos Labs has parted ways with the Aave ecosystem after serving as the crypto lending protocol’s main risk service provider for three years, citing a budget dispute and disagreements over how Aave should manage risk.

“This decision was not made in haste,” Chaos Labs founder Omer Goldberg said in a post to X on Monday. “We worked in good faith with DAO contributors. Aave Labs was professional and supported increasing our budget to $5m to retain us. However, we are leaving because the engagement no longer reflects how we believe risk should be managed.”

Source: Omer Goldberg

Aave Labs CEO Stani Kulechov said that Chaos didn’t depart on bad terms, but claimed that Chaos pitched a proposal seeking to become the sole risk provider and thus force out other partners — a compromise Aave wasn’t willing to accept.

Chaos played a key role in Aave’s back-end infrastructure, from pricing loans and managing risk in the Aave V2 and V3 markets since November 2022, during which Aave’s total value locked rose fivefold to $26 billion.

Risk has been a major talking point in the Aave community after a user lost $50 million in a trade while interacting with Aave’s interface on March 12. The following week, Aave said it would introduce an “Aave Shield” protection feature to deter users from high-risk trades.

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As for Chaos’ departure, Goldberg said there became an increasing misalignment over how the parties thought risk should be managed. He noted that some Aave contributors had left, raising its workload, while also arguing that Aave V4’s expanded functionality introduced additional operational and legal risks that fell on Chaos’ shoulders.

“While Aave Labs is optimistic about a swift migration to V4, history suggests these transitions take months and even years,” Goldberg said. “Until V4 fully absorbs V3’s markets and liquidity, both systems need to be operated and managed simultaneously. The workload during the transition doesn’t halve. It doubles.”

Weighing the risk of a protocol failure, Goldberg said, “There is no regulatory framework, no safe harbor, and no settled law that answers the question of what a risk manager or curator owes when a protocol fails. If things work, the work is invisible. If things break, the blame is not.”

As such, “We are walking away from a $5 million engagement,” Goldberg said.

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Chaos wanted Aave to boot LlamaRisk, Chainlink: Kulechov

Aave Labs CEO Stani Kulechov told a slightly different story, stating that Chaos wanted to be the sole risk manager and use its price oracles instead of Chainlink’s.

Following that request would have forced Aave to push out its other risk protocol partner, LlamaRisk, and thus abandon its two-layer economic risk model.

Related: DeFi lender Aave launches on OKX’s Ethereum L2, X Layer

Kulechov added Aave was unwilling to integrate Chaos-built price oracles, citing Aave’s “track record” with Chainlink’s services, which its “users are currently more comfortable with at scale.”

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He also said Chaos was already “exploring winding down its risk consultancy services,” and that Aave had offered to double its payment to $5 million to retain them.

Cointelegraph reached out to Chaos Labs for comment.

Kulechov noted that Chaos’ departure hasn’t disrupted the Aave protocol, its smart contracts, token listings or network integrations.

Moving forward, Aave said it “will work closely with LlamaRisk to ensure a smooth transition” and maintain its two-layer economic risk model. 

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Source: LlamaRisk

Chaos’ departure comes amid a protocol-wide feud over how much funding and revenue control Aave Labs should receive versus Aave’s decentralized autonomous organization.

Despite the internal issues, Aave crossed the $1 trillion mark in cumulative lending volume in late February, marking a first in the DeFi industry.

Magazine: Animoca teams up with Ava Labs, Shrapnel on Steam: Web3 Gamer