Crypto World
SEC Resolves Coinbase Case Over Alleged Missing Text Messages
The U.S. Securities and Exchange Commission has agreed to pay $150,000 in legal fees to settle a dispute with Coinbase over the regulator’s internal records. The settlement ends a lawsuit that Coinbase filed two years ago seeking access to SEC materials related to what it described as an enforcement-led approach to crypto regulation.
According to a filing made Wednesday in the case docketed at CourtListener, the SEC will also compensate Coinbase with the fee award while stating it has addressed its record-retention practices. Coinbase’s legal chief, Paul Grewal, framed the settlement as part of a broader accountability effort over document retention inside the agency.
Key takeaways
- The SEC will pay Coinbase $150,000 to resolve the records-access lawsuit.
- The case centered on Coinbase’s request for internal SEC documents during the period of heightened crypto enforcement.
- Coinbase says the dispute helped uncover material it views as evidence of an enforcement strategy.
- Coinbase’s top legal executive announced a leadership transition to take effect on July 31.
- The settlement is also presented as reflecting a shift toward a more crypto-friendly enforcement posture at the SEC.
What the SEC–Coinbase settlement covers
The dispute arose after Coinbase sought internal agency documents from the SEC, alleging that the regulator’s recordkeeping did not provide the transparency Coinbase believed it was due. The complaint targeted access to materials that Coinbase argued were important for understanding the SEC’s approach at the time.
In coverage of the settlement, Coinbase leadership pointed to what it said were documentation and retention problems. Coinbase chief legal officer Paul Grewal wrote in a Wall Street Journal op-ed published Wednesday that the SEC—responsible for policing corporate recordkeeping—had effectively lost significant portions of its own communications during what Coinbase characterized as the SEC’s most intense period of anti-crypto activity.
Grewal also stated that the SEC has fixed its record retention policies as part of the resolution. The settlement agreement, as reflected in the docket, brings the two-year legal fight to a close.
Record retention controversy and the 2025 internal report
A central element in Coinbase’s argument was not only the availability of records, but the adequacy of the SEC’s retention of its own correspondence. The article’s account references an internal report released in 2025 indicating that the SEC deleted nearly a year of former Chair Gary Gensler texts due to “avoidable” errors.
Coinbase’s position is that such losses matter because they could prevent outside parties from obtaining a complete picture of how enforcement-related decisions were discussed inside the agency. Grewal’s op-ed also emphasized that message deletions occurred during the most aggressive phase of the SEC’s crackdown on crypto.
As part of the settlement, the SEC will pay the $150,000 fee award and has reportedly updated its record retention practices, addressing one of the core practical concerns that drove the lawsuit.
A legal win for Coinbase amid a changing SEC
Coinbase has portrayed this outcome as another favorable development in its litigation strategy. The settlement comes as the SEC’s leadership and approach to crypto enforcement have shifted.
The article notes that the settlement occurred under the Trump administration, characterizing it as a “legal victory” within a wider transition in how the SEC pursues crypto cases. It further states that under the SEC’s leadership—identified in the article as Paul Atkins—the agency has dropped multiple high-profile enforcement actions against crypto companies, including Coinbase, during 2025.
While the settlement resolves this particular records case, the broader implication for industry watchers is that disputes over enforcement process and documentation remain a recurring theme. Even as enforcement posture changes, Coinbase’s case underscores how document access, retention policies, and internal compliance practices can become legally consequential.
Grewal steps back from Coinbase’s legal role
Coinbase’s legal leadership is also in transition. According to the article, Paul Grewal, who has served as chief legal officer since 2020, is set to transition into an advisory role starting July 31.
The article says Coinbase will elevate two executives into expanded leadership roles: Molly Abraham will become general counsel, and Ryan VanGrack will move into the position of vice chair.
For observers, the timing matters because legal strategy has been central to Coinbase’s relationship with regulators. Leadership continuity—via internal promotions—suggests the company plans to maintain institutional knowledge as it navigates the ongoing evolution of U.S. crypto oversight.
As the settlement takes effect, the next question for market participants is how the SEC’s updated retention practices will function in practice and whether similar records disputes emerge elsewhere—especially as enforcement priorities continue to evolve under the current SEC leadership.
Crypto World
SEC Agrees to Overhaul Recordkeeping After Settling Coinbase Lawsuit Over Gensler’s Lost Texts
The US Securities and Exchange Commission went on a blatant war against the cryptocurrency industry in the past couple of years of Gary Gensler’s tenure, especially following the loud collapse of FTX.
However, the new administration settled most cases, and now it was time for one that was actually initiated by Coinbase. It came with some groundbreaking changes as well.
From Defendant to Plaintiff
The legal disputes between the two parties began in 2023 when the regulator went after the largest US-based crypto exchange. However, the roles reversed a year later when Coinbase, through its research firm History Associates, sued the watchdog after the latter denied requests for internal communications related to its approach to crypto regulation.
The Brian Armstrong-led firm argued that the requested records could shed some light on how the SEC developed its enforcement strategy against crypto companies during the Biden administration, including legal theories underpinning several high-profile lawsuits. Recall that the SEC had sued industry giants like Binance, Ripple, and many others.
The agency has now settled with Coinbase in the Freedom of Information Act (FOIA) lawsuit and has agreed to pay $150,000 in attorney fees, release two previously withheld documents, and review its policies governing the presentation of text messages and other electronic communications.
The settlement was announced in an opinion piece by Coinbase Chief Legal Officer Paul Grewal, who said it marked an important victory for government transparency. However, there’s no official confirmation from the SEC as of press time.
Why It Matters
Under Gensler’s leadership, the agency imposed billions of dollars in penalties on banks and financial institutions for failing to preserve employee communications conducted through texts and other unofficial channels. Coinbase, on the other hand, argued that the regulator should be held to the same standards it had enforced against the private sector.
The legal dispute intensified after the SEC disclosed that certain texts involving Gensler and other senior officials had been automatically deleted, making them unavailable for production under the FOIA requests.
Although the settlement does not confirm any wrongdoing by the SEC, it requires the watchdog to review its record-retention procedures, which is believed to be particularly groundbreaking for a regulator whose own rules emphasize preserving official communications.
The post SEC Agrees to Overhaul Recordkeeping After Settling Coinbase Lawsuit Over Gensler’s Lost Texts appeared first on CryptoPotato.
Circle has signed separate memorandums of understanding with Kakao Group and South Korean fintech operator Toss to explore stablecoin payments, blockchain settlement and digital asset infrastructure in South Korea.
Summary
- Circle signed agreements with Kakao Group and Toss to explore stablecoin payment infrastructure in Korea.
- Kakao plans to assess KRW stablecoins, remittances and merchant settlement using Circle’s blockchain payment technology.
- Toss will explore USDC-based services, digital wallets and programmable payments while regulations continue developing nationwide.
The agreements bring Circle’s USDC and payment technology into discussions with some of Korea’s largest consumer finance platforms. Kakao, Kakao Pay and Kakao Bank will study opportunities around KRW-based digital assets, cross-border payments and tokenized financial services. Toss and Toss Bank will examine similar uses, including digital wallets, overseas payments and programmable onchain transactions.
Kakao Group said its agreement with Circle will combine the KakaoTalk-centered platform ecosystem with Kakao Pay’s payment services, Kakao Bank’s banking capabilities and Circle’s blockchain infrastructure. The companies plan to review payment, settlement and digital asset connectivity as South Korea develops rules for stablecoins and other tokenized financial products.
The initial work will focus on faster payment and settlement systems, according to local reporting. The companies will also assess cross-border remittances, merchant settlement and links between blockchain networks and existing financial systems. Kakao Group said the infrastructure could eventually support services from other Korean companies, although the MOU does not set a launch date or confirm a specific stablecoin issuance model.
Kakao Pay CEO Shin Won-keun, who leads the group’s stablecoin task force, said the companies would “preemptively prepare a Korean digital asset ecosystem with Circle.” Circle executives met Kakao representatives in Pangyo on July 22 before the partnership was announced.
Toss explores USDC and programmable payments
Circle also signed a separate MOU with Viva Republica, the operator of Toss, and Toss Bank. The companies will study blockchain-based payments and stablecoin infrastructure, with potential uses covering digital wallets, cross-border settlement and financial services that use USDC.
Toss will review biometric payment tools, USDC-linked financial products and programmable onchain payments. Toss Bank will focus on connecting stablecoin infrastructure with traditional bank accounts and fiat payment networks. The parties also plan to examine compliance, risk management, security and anti-money laundering requirements as Korean rules develop.
The agreement builds on Toss’s broader interest in digital assets. As crypto.news previously reported, the fintech has explored a proprietary blockchain and a possible token while preparing for a Korean stablecoin market. Toss Bank has also been studying blockchain-based payment and settlement models.
Circle expands its South Korea strategy
The new agreements follow months of outreach by Circle in South Korea. As crypto.news reported on July 13, the company planned its Current Seoul event to bring banks, exchanges, payment firms and super-app operators together for talks on digital asset regulation and payments. Kakao Pay CEO Shin Won-keun was among the scheduled speakers.
Circle CEO Jeremy Allaire also visited Seoul in April and met executives from Korean banks, exchanges and payment companies. He said Circle did not plan to issue its own won stablecoin. Instead, the company has positioned USDC and its infrastructure as possible links between future KRW-denominated tokens and global payment networks.
That approach is visible in the latest agreements. Circle is not announcing a KRW stablecoin with Kakao or Toss. The companies are studying how local won-based digital assets could work alongside USDC, blockchain settlement systems and existing financial infrastructure.
Any commercial launch will depend on the final product design and regulatory approvals. Circle Chief Commercial Officer Kash Rajaghi said Korea has “a solid foundation for financial innovation.”
Korean firms prepare for stablecoin rules
South Korean technology and financial groups have increased work on won-based stablecoins as policymakers prepare a broader legal framework. Kakao Bank has already explored stablecoin development, while Kakao Pay has been building a wider group strategy around KRW-linked digital assets.
Kakao Group said its Circle partnership could support a shared foundation for stablecoin services beyond its own platforms. The group is also reviewing tokenized financial services, which could use stablecoins as a settlement layer when assets move between blockchain networks and traditional financial systems.
Circle has taken a similar infrastructure-led approach elsewhere in Asia.The company recently partnered with Japan’s JCB to test USDC for corporate treasury transfers and merchant payments. The Korean agreements extend that regional strategy into platforms with large domestic payment and banking networks.
For now, both partnerships remain exploratory. Kakao Group, Toss and Circle have not announced a launch date for a KRW stablecoin or a live consumer payment product. Their agreements instead create a framework to test business models, technical connections and regulatory requirements as South Korea’s digital asset rules take shape.
Jim Cramer used his July 22 Mad Money episode to point investors toward Keel Infrastructure (KEEL), a former Bitcoin miner turned AI data center developer. He cited a hedge fund’s expanding stake as the reason to pay attention.
What Cramer Flagged
Cramer highlighted Situational Awareness LP, the fund run by AI researcher Leopold Aschenbrenner, as a notable KEEL holder. Regulatory filings show the fund grew its position by 188% in the first quarter of 2026. It now holds nearly 20 million shares, up from roughly 6.9 million.
Fresh analyst coverage backs up the timing. BTIG initiated KEEL at Buy on July 22 with an $8 price target. That implies roughly 72% upside from the stock’s $4.65 close. The firm pointed to Keel’s power portfolio as the key asset. It also noted that hyperscalers and AI enterprise customers have signed around 10 colocation contracts totaling roughly 2 gigawatts across the sector this year.
The Company Behind the Ticker
Keel Infrastructure is the rebranded successor to Bitfarms. The company completed its shift from Canadian Bitcoin miner to Delaware-based AI infrastructure developer in April. It now controls a 2.2 gigawatt power pipeline across Pennsylvania, Washington, and Quebec. But it still hasn’t landed its first hyperscale colocation contract, the catalyst BTIG and other analysts are watching for.
Keel also carries a debt-to-equity ratio above 140% and negative free cash flow. Execution risk stays real even as the power pipeline draws bullish coverage. The stock’s 52-week range, from $0.98 to $7.37, shows just how sharply sentiment swings on AI infrastructure names that are still waiting on a signed customer.
Should Investors Trust Cramer’s Read
Cramer’s Keel comments follow a rougher stretch for his other tech calls. BeInCrypto has tracked the Inverse Cramer pattern through this earnings season, including Intel’s slide hours after Cramer named it his favorite stock. That history gives KEEL bulls a reason for caution alongside the bullish signal.
Still, the Situational Awareness stake predates Cramer’s endorsement by more than a quarter. And BTIG’s target reflects a specific catalyst analysts are tracking, not blanket enthusiasm for the crypto-to-AI pivot trade.
That trade has also produced disappointments, including American Bitcoin’s post-IPO stagnation.
Whether Keel signs a hyperscaler deal will decide which read on this one ages better, not Cramer’s airtime.
The post Jim Cramer Eyes Ex-Bitcoin Miner’s AI Power Pivot as Hedge Fund Bets Big appeared first on BeInCrypto.
Anthony Scaramucci says the Clarity Act’s new ban on federal officials sponsoring crypto doesn’t go far enough. The SkyBridge Capital founder argues the same ethics logic should extend to insider trading across the board, not just digital assets.
Speaking on CNBC, Scaramucci pointed to Congress’s own pay structure as the root problem.
The Pelosi Problem
Members of Congress earn $180,000 a year, a salary Scaramucci says pushes some toward trading on information they gather in office. His proposed fix borrows from Singapore, where officials draw multimillion-dollar salaries in exchange for stricter ethics enforcement.
Scaramucci’s argument leans on a data point that’s hard to ignore. Public trading records show former House Speaker Nancy Pelosi’s portfolio, managed by her husband Paul Pelosi, has consistently beaten both the S&P 500 and Warren Buffett’s Berkshire Hathaway.
Her 2024 disclosures showed a 70.9% gain against the index’s 24.9% return, and cumulative figures since 2014 put her total returns thousands of percentage points ahead of the benchmark. Rep. Anna Paulina Luna has previously accused Pelosi of trading on nonpublic information, though Pelosi has not been charged with any wrongdoing.
A Familiar Playbook
Scaramucci also referenced a past attempt to weaken congressional trading oversight, saying lawmakers once rolled back a transparency measure through a procedural vote designed to avoid public scrutiny.
The comparison tracks a real precedent: Congress passed the STOCK Act in April 2012 to bar members from trading on nonpublic information, then quietly amended it a year later to scrap the requirement for a searchable online database of staff trades, passing the rollback by unanimous consent with no recorded vote.
Treasury Secretary Scott Bessent has since pushed to revive stricter limits on congressional stock trading.
“They can’t afford two houses… they have all these different loopholes, and they have all these junkets, and they have these ways to get them money.”
— Anthony Scaramucci, CNBC
The updated Clarity Act already bars the president and other federal officials from issuing or sponsoring digital assets, a provision Scaramucci previously called this same bill’s ethics compromise dead on arrival. Whether Congress extends that same logic to its own stock trades remains an open question heading into the bill’s tight window before August recess.
If the crypto ban sets a precedent, Scaramucci’s broader ask may be the harder sell in an institution that has resisted it for over a decade.
The post Scaramucci Says CLARITY Act’s Crypto Ethics Isn’t Enough, Wants Insider Trading Gone appeared first on BeInCrypto.
The crypto industry directly supports 34,000 jobs and contributes $55 billion to the US economy in 2026.
The findings come from a new report by the National Cryptocurrency Association (NCA), which commissioned the study from the Pragmatic Policy Group (PPG).
How Crypto Jobs Stack Up
To put that headcount in context, the report measured it against familiar industries. Crypto’s 34,000 direct workers now outnumber coffee and tea manufacturing, which supports 28,400.
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The gap widens against other benchmarks. Crypto tops both cement manufacturing at 15,300 and tobacco manufacturing at 10,600.
The report also puts the average crypto-related job at $133,000 a year, more than double the national median of $64,000.
It ranks that average above other high-paying fields, listing information and technology at $104,000 and manufacturing at $76,000. In addition, of the $55 billion total economic contribution, roughly $31 billion is worker income.
The Wider Economic Footprint
The report also estimates indirect effects. It finds that each direct crypto job supports 6 more across the economy. That brings total supported employment to 232,000 jobs in 2026.
The total figure accounts for direct, indirect, and induced jobs, not just crypto company payrolls. Supplier industries account for 75,000 roles, while worker spending adds another 123,000.
The distribution is uneven. California, New York, and Texas hold 60% of US crypto jobs, followed by Washington and North Carolina. Heartland states account for more than 17,000 positions.
Overall, crypto’s economic weight now extends well beyond trading, reaching into wages, supplier industries, and household spending across the country.
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The post Crypto Now Employs More Americans Than Coffee or Tobacco Manufacturing Industries appeared first on BeInCrypto.
Another week, another multi-million-dollar hack in DeFi, and once again, it’s an off-chain compromise rather than a smart contract exploit.
AFX Trade, a decentralized perpetuals exchange that settles in dollar-pegged stablecoin USDC, was drained of about $24.15 million on Wednesday after an attacker compromised the validator signing keys behind a bridge the protocol operates on Arbitrum, blockchain data shows.
In other words, the smart contract did what it’s supposed to do – verify the signature and execute the transaction. The problem was with the private keys that generated those signatures, as attackers compromised the private validator signing keys (hot keys held offchain by the bridge operators or validators).
Steven Goldfeder, co-founder of Offchain Labs, which develops and maintains the network, said the Arbitrum native bridge “has not been hacked or exploited in any way” and that the transaction originated from a third-party protocol.
A hack of Arbitrum’s own bridge would signal risk across the entire layer-2 network, but a compromised protocol running on top of it is a contained failure.
Nothing in the bridge’s own code logic was broken. Bridges are blockchain-based tools for transferring tokens between various networks, including those they were not initially supported on.
The Securities and Exchange Commission listed three crypto-focused rulemakings in its 2026 Unified Regulatory Agenda, targeting proposed rules as soon as July, according to the agency's own Agency Rule List published on reginfo.gov. The agenda entries cover crypto asset offerings, broker-dealer… Read the full story at The Defiant
Uber cut 10% of its customer service jobs on Wednesday, marking the first time the company has tied layoffs directly to an artificial intelligence (AI) efficiency push.
The reductions hit Uber’s community operations team. Remote workers on the team were also told to relocate to a hub office under the company’s return-to-office mandate.
Why Uber Is Cutting Support Roles
Megha Yethatika, Uber’s vice president of global community operations, told her division that the organization had become “too complex and siloed.” She said the team had made progress with AI but needed a cleaner foundation to build on, according to a memo reported by Bloomberg.
“We cannot scale frontier technology on top of fragmented processes,” Yethatika said.
According to an Uber spokesperson, the company seeks “to simplify operations, strengthen in-person collaboration, and continue to embrace AI”.
The cut is Uber’s second round of reductions in under two months. In June, the company trimmed 23% of its people division, under 1% of its 34,000 global workers, after a new president took charge.
Uber said in May it would slow hiring because of internal AI use. However, it still lists more than 500 open roles, including engineers for its robotaxi partnerships.
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Uber Joins a Widening 2026 Layoff Wave
Uber’s move mirrors a broader shift across the job market. AI was cited in 101,743 US job cut announcements through June, roughly 23% of the total, according to outplacement firm Challenger, Gray and Christmas.
AI has led all stated reasons for layoffs for four straight months. Yet the impact of AI on jobs remains contested.
Jeff Bezos recently dismissed concerns that AI would displace jobs, arguing that the technology will reshape household economics and create labor scarcity.
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The post Uber Cuts 10% of Customer Service Staff in AI Efficiency Push appeared first on BeInCrypto.
A senior official from the White House’s Office of Science and Technology Policy has accused the Chinese AI firm behind Kimi K3 of using “covert industrial distillation” techniques to replicate capabilities from U.S. models. The allegation, posted to X on Wednesday by Michael Kratsios, underscores how U.S. concerns about AI competitiveness are increasingly blending with fears of large-scale intellectual property (IP) theft.
Kratsios said the company built an internal platform to distill U.S. models “at scale,” specifically using methods intended to evade detection. While he argued that distillation—compressing a model into a smaller one—can be legitimate and part of open innovation, he framed the alleged approach as unacceptable because it targets proprietary American technology rather than improving models through transparent research.
Key takeaways
- White House OSTP Director Michael Kratsios alleged Chinese firm Moonshot AI used large-scale covert distillation tied to the Kimi K3 release.
- Kratsios contrasted legitimate model distillation with alleged industrial-scale techniques aimed at stealing U.S. IP and avoiding detection.
- Some AI researchers dispute claims that Anthropic’s Fable was used to produce Kimi K3’s performance, citing technical plausibility and timing constraints.
- U.S. officials warned that sanctions and Entity List designations could follow IP-theft-style distillation attacks.
Why the allegation matters beyond headlines
AI distillation is not inherently controversial. In general terms, distillation helps create smaller, more efficient models by training them on outputs generated by a larger “teacher” model. The White House’s argument, as stated by Kratsios, is that scale and secrecy change the nature of the activity—turning a common engineering practice into something closer to a targeted extraction of proprietary capability.
That distinction is critical for investors, developers, and researchers because it signals a potential shift in how regulators and governments may view certain AI training pipelines. If authorities treat “covert industrial distillation” as IP theft, it could influence enforcement priorities, compliance expectations, and the willingness of model providers to share weights, outputs, or licensing terms—especially across geopolitical lines.
Timing and the dispute over Anthropic’s role
Kratsios’s claim places particular focus on the question of whether U.S. model technology was used in the preparation of Kimi K3. Cointelegraph previously reported that Anthropic’s Fable 5 was taken offline quickly due to U.S. export controls, then re-released on July 1. Kimi K3, meanwhile, launched on July 16—creating what critics describe as a narrow window for any distillation-derived transfer.
Elie Bakouch, a researcher at Prime Intellect, publicly questioned whether the technical story matches the observed outcomes. In an X post referenced in the original reporting, Bakouch argued that there are only “15 days between fable 5 ban removal and kimi K3 release,” and he added that the performance “could” not be explained in a straightforward way by distillation from Fable.
Dean Ball, head of strategic futures at OpenAI, also pushed back. On Friday, Ball said he did not believe K3’s performance could be “explained away by distillation or anything like that.” Both responses reflect a broader point: even if distillation happened, it may not be the sole—or even the primary—reason for a model’s capabilities, and establishing a clean causal link can be technically difficult.
In the absence of publicly available technical evidence, these disputes matter because they highlight uncertainty. Government accusations may have intelligence backing, but for the wider AI community, the plausibility and traceability of model-to-model influence is a separate question from whether the activity would violate policy or law.
Washington escalates from concerns to potential enforcement
The posture from U.S. officials appears aimed at deterrence. In addition to Kratsios’s claim that “covert industrial distillation” intended to steal U.S. technology is unacceptable, U.S. Treasury Secretary Scott Bessent warned that sanctions and restrictions could be pursued.
Bessent said the U.S. supports open-source AI and the innovation it enables, but he argued open source does not mean “open season” on American IP. He also warned that if firms conduct covert, industrial-scale distillation attacks that cross into IP theft, consequences could include sanctions and Entity List designations.
That statement suggests the U.S. may attempt to treat certain distillation behaviors under the same enforcement logic used for other technology-transfer and IP-protection efforts. For AI companies, the practical takeaway is that even widely used ML techniques could be reinterpreted depending on intent, transparency, and scale.
It also raises a policy tension: distillation can improve accessibility and efficiency, but enforcement actions could push industry toward more restrictive handling of model outputs and training procedures. Developers may respond by tightening documentation, auditing data provenance, or changing how they handle third-party model access.
What to watch next
Whether the dispute becomes a broader enforcement campaign will likely depend on what additional evidence, if any, is made public and how regulators define “industrial-scale” and “covert” distillation in measurable terms. For now, observers should watch for any formal government actions tied to Kimi K3 and for further clarification from researchers on what technical signals can reliably connect teacher models to student performance.
A White House official accused Moonshot AI of distilling Anthropic’s Fable AI model to develop Kimi K3, which launched last week.
In a post on X on Wednesday, White House Office of Science and Technology Policy Director Michael Kratsios alleged the Chinese AI firm developed an internal platform to distill US models at scale, using methods designed to evade detection.
“Legitimate AI distillation used to create smaller, more efficient models plays a vital role in this open innovation ecosystem,” he said. “However, large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable.”
Kimi K3 has emerged as one of China’s most capable AI models, intensifying Washington’s concerns that American models are being covertly used to accelerate China’s AI progress.
However, some AI researchers questioned claims that Anthropic’s latest AI model was used to train Kimi K3.
Anthropic’s Fable 5 was re-released on July 1 after it was quickly taken offline due to US export controls, while Kimi K3 launched on July 16, giving a narrow window for distillation attacks to occur.
“There are only 15 days between fable 5 ban removal and kimi K3 release,” said Elie Bakouch, a researcher at AI startup Prime Intellect.
“I don’t think claiming that K3’s performance comes from fable distillation (even if they did it) makes sense technically.”
Dean Ball, OpenAI’s head of strategic futures, said on Friday he didn’t believe the K3 model’s performance could be “explained away by distillation or anything like that.”
Related: Anthropic to bring back Fable 5 as US lifts export controls
US Treasury Secretary Scott Bessent warned that the large-scale distillation attacks could result in sanctions and other restrictions.
“We support open-source AI and the innovation it unlocks. But open source is not open season on American IP,” said Bessent.
“When PRC firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table.”
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