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AI & Tech

Trump blocks Fable 5 after Mythos NSA breach

Thursday, June 25, 2026 · from 5 podcasts, 6 episodes
BanklessBreaking PointsAI Daily BriefForward GuidanceRabbit Hole Recap
  • Trump blocked Fable 5 after Mythos AI breached NSA systems in hours, citing national security.
  • Amazon’s safety warning triggered the ban, raising suspicions of anti-competitive motives.
  • Export controls bar foreign researchers, crippling Anthropic and accelerating sovereign AI.

Trump blocked Anthropic’s Fable 5 AI model after its underlying Mythos system breached nearly all classified NSA networks in hours, Senator Mark Warner reported. General Joshua Brudd confirmed the breach was not a test but a full penetration - exposing vulnerabilities human auditors missed for years. Trump said he pressured Anthropic directly, calling the model too dangerous to release.

The ban stems from a jailbreak discovered by Amazon researchers under Project Glasswing. While Anthropic argued the exploit was narrow and already present in models like GPT-5.5, the government used the company’s own safety rhetoric against it. Nathaniel Whittemore noted the irony: Anthropic spent months warning that frontier models required state oversight, only to be shut down by that same logic.

"Anthropic spent years selling the idea that AI is dangerous enough to require government intervention. They got exactly what they asked for."

- Nathaniel Whittemore, The AI Daily Brief

The export control directive, issued by the Department of Commerce at 5:21 p.m. Eastern on June 18, prohibits any foreign national from accessing Fable 5 or Mythos 5 - even within the U.S. This immediately barred key Anthropic staff like Andrej Karpathy, a non-citizen, from working on the models. Brian Xiao warned this creates a 'digital iron curtain,' where access to frontier intelligence depends on birthright.

Critics say the move benefits Amazon and OpenAI. Krystal Ball pointed out Amazon, a major OpenAI investor, was the first to flag the vulnerability - after reportedly killing a $40 million Sam Altman biopic to control AI’s public narrative. The timing suggests competitive sabotage masked as national security.

Meanwhile, Chinese open-weight models like Z.ai’s GLM 5.2 are filling the void. Jeremy Howard and Riley Brown now recommend them for local execution, immune to U.S. shutdowns. Open Router’s Fusion API is routing prompts across multiple models, using a 'judge' to pick the best response - turning intelligence into a commodity.

"When American models become a liability due to geopolitical volatility, reliability matters more than quality."

- Gail Weiner, The AI Daily Brief

The U.S. has lost its reputation as a rule-of-law tech provider. European and Japanese procurement officers now cite the Fable shutdown as justification for sovereign AI. As Illia Polosukhin warned, the real fix isn’t regulation - it’s user-owned AI, run locally with verifiable compute. The era of monolithic, corporate-controlled models is over.

#Agents#Regulation#Big Tech
Jeremy HowardNathaniel WhittemoreSam AltmanAmazonAnthropicOpenAINational Security Agency

Source Intelligence

- Deep dive into what was said in the episodes

Bankless
Bankless

AI, Surveillance, and the Fight for Digital Sovereignty | Near's Illia Polosukhin • Jun 23

Also from this episode: (7)

Other (7)

  • Illia Polosukhin argues that corporate AI models, by centralizing user data and prompts, function as digital gatekeepers that monetize user intent and manipulate choices.
  • Polosukhin views the current trajectory of large language models in corporate silos as leading to a total loss of user agency, akin to a "digital panopticon."
  • Polosukhin proposes "User-owned AI," running models locally or in secure environments where providers cannot access data, to ensure digital sovereignty. This allows AI to work for the user.
  • Ownership of AI extends beyond privacy, fundamentally determining who controls the AI agents that will eventually manage users' bank accounts and personal schedules.
  • Polosukhin advocates for blockchain to enable verifiable compute, allowing users to audit AI systems and trust their output despite hidden underlying code.
  • Using NEAR protocol, developers can cryptographically prove which AI model processed a request, preventing companies from covertly tweaking algorithms for specific interests.
  • The ultimate goal is to foster a market of AI agents that compete based on accuracy rather than data extraction, transforming AI into a transparent, trustworthy tool.
#Agents#Open Source#Digital Sovereignty#AI Infrastructure
Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar

6/22/26: Mythos AI Hacked NSA In Hours, Trump Reflecting Pool Meltdown, Zohran Vs AIPAC • Jun 22

  • Trump said he blocked Anthropic's Fable Five AI release, deeming it too dangerous, and claimed Anthropic responded responsibly to his pressure.
  • Senator Mark Warner, citing NSA chief General Joshua Brudd, said Mythos AI broke into almost all U.S. classified systems not in weeks, but in hours.
  • Saagar notes the Trump administration's approach to AI lacks a transparent, consistent regulatory process and depends on the politics of individual CEOs like Sam Altman.
  • Krystal argues AI-powered spam farms now generate up to 25 calls per day, forcing users to enable extreme carrier settings to block unknown numbers.
  • Trump claims the renovated reflecting pool was vandalized, requiring draining and repairs, but the hosts attribute the algae bloom and peeling sealant to rushed, no-bid contractor work.
  • The National Guard was deployed to the reflecting pool after chunks of blue sealant floated up, and a duckling died from the chemicals poured in to treat the algae.
  • Former Olympic canoeist David Hearn was arrested for allegedly vandalizing the pool by touching the sealant, which he described as 'very rubbery'.
  • Candidate Claire Valdez says her NY-7 campaign is centered on housing affordability, tenant rights, union jobs, a Green New Deal, and ending the Gaza genocide.
  • Candidate Dariela Avila Chevalier argues her opponent Adriano Espaillat uses MAGA-style tactics, including smear campaigns and disinformation in the Dominican Republic, rather than debating his record.
  • Avila Chevalier apologized for old tweets, including one criticizing Kamala Harris's immigration stance, but emphasized her core values of human dignity and accountability remain.
  • Mayor Zohran Mamdani called AIPAC a 'monster' for moving dark money into races, prompting criticism from Rep. Josh Gottheimer who labeled the rhetoric antisemitic.
  • Avila Chevalier contends AIPAC is a right-wing lobby that backs Republicans and Trump, and its funding of Democrats undermines the fight against fascism.
Also from this episode: (2)

Big Tech (1)

  • Saagar argues Amazon shelved a film about OpenAI after announcing a $50 billion investment in OpenAI, linking the cancellation to corporate conflicts of interest.

AI Infrastructure (1)

  • Krystal describes a data center in Sterling, Virginia, whose backup generators ran for a year, creating 70-80 decibel noise that damaged property values and required residents to install plexiglass.
#Models#Safety#Big Tech#Regulation
The AI Daily Brief: Artificial Intelligence News and Analysis
The AI Daily Brief: Artificial Intelligence News and Analysis

Nathaniel Whittemore

The 5-Minute AI Weekly Recap: Realignment Week • Jun 20

  • Nathaniel Whittemore argues export controls forcing Anthropic to suspend Fable 5 access killed the assumption that frontier model APIs are always available, creating a window for a resilient new ecosystem.
  • Chinese open-weight models like GLM 5.2 are becoming contingency plans for Western developers, as they pass a frontier 'vibe test' and can be run locally, offering sovereignty over API shutdowns.
  • Open Router’s Fusion API exemplifies a strategic shift to model routing, fanning prompts to a panel of models and using a judge to select the best response for cost and censorship hedging.
  • The rise of loops and agentic workflows, like Matthew Berman’s Loop Library, shifts enterprise AI to modular systems using multiple models for specific functions rather than monolithic APIs.
#Models#Big Tech#Startups#Regulation#Open Source

The Models Trying to Fill the Fable Gap • Jun 18

  • Nathaniel Whittemore reports the US government ordered Anthropic to suspend all access to Fable 5 and Mythos 5 for any foreign national worldwide citing national security concerns, a directive Anthropic received at 5:21 p.m. Eastern.
  • The Wall Street Journal reported Commerce Secretary Howard Lutnik issued the export restriction letter to Anthropic CEO Dario Amade. Journalist Prince cited Axios reporting that the government unsuccessfully asked Anthropic to pause the model release.
  • Anthropic argued in its blog post the government's national security concern was a narrow, non-universal jailbreak discovered by researchers, likely at Amazon under Project Glasswing. Anthropic claims this method finds vulnerabilities already widely discoverable via other models.
  • Anthropic stated that perfect jailbreak resistance is impossible for any model provider and defended its defense-in-depth strategy, including 30-day customer data retention to research and mitigate jailbreaks.
  • AI entrepreneur Bindu Ready argued the government's pretext is weak because every model can be prompted to reveal common security vulnerabilities or other sensitive information that is freely available on the internet.
  • Nathaniel Whittemore notes the policy's immediate impact blocks key Anthropic technical staff like Andre Carpathy, who are non-US citizens on visas, from accessing the company's own models.
  • CFR senior fellow Chris Magcguire criticized the Department of Commerce export control strategy as incoherent, simultaneously sending advanced AI chips to China while banning model access globally.
  • Nathaniel Whittemore highlights the perceived hypocrisy: the White House Office of Science and Technology Policy recently defended voluntary model sharing as not being government oversight, citing chilling effects on free speech and innovation.
  • AI builder Sarah Hooker and Jeremy Howard criticized Anthropic's arrogance in pursuing the Fable release, assuming their unique safety stance would be accepted.
  • Will Manitus cited Anthropic's earlier blog post advocating for government power to block unsafe model deployments, framing the current export control as a 'say-around, find-out' moment for the company.
  • Entrepreneur John Enis argued Anthropic's safety song-and-dance was largely due to compute constraints for serving Mythos at scale, not genuine danger, and that launching Fable with restrictions was an IPO strategy.
  • Nathaniel Whittemore reports Eleazar Yudkowski's nuanced reaction, stating international treaties to halt AI escalation would be good, but the current action's selectivity and overrule aspects are bad.
  • Aaron Levy stated this action creates a precedent where governments deem some models too powerful for certain uses, marking a major turning point for AI regulation.
  • Sterling Crispen coined 'capability thought crimes,' warning the precedent could require DOW clearance for future model releases and be detrimental for progress.
  • Brian Xiao outlined operational impacts: US companies will need ID verification for API billing, affecting downstream services like Cursor and Harvey. Frontier labs like OpenAI and Google DeepMind now lack incentives to release mythos-caliber models.
  • Connor Brown compared this to the 1990s cryptography wars, predicting a fight over KYC and anti-compete laundering laws for frontier models with much higher stakes.
  • Daniel Woo argued this precedent torpedoes the AI bull case by restricting monetization of powerful models and creates compliance headaches for US enterprises with non-US national employees.
  • Nathaniel Whittemore posits the entire US economy rests on Anthropic and OpenAI's revenue growth, and the government's move damages the whole economy's AI buildout.
  • VC Hemtt Mahabra and Alex Petropolis warned this triggers a sovereign AI moment, where nation states will require citizenship or security clearances for state-of-the-art model work, forcing middle powers to build leverage.
  • Gail Weiner argued the US narrative of being a predictable, rule-of-law provider evaporated, giving procurement officers globally defensible arguments for sovereign AI hedging or experimenting with Chinese openweight alternatives.
  • Nathaniel Whittemore cites the 'Europeans account' tweet framing this as technological dependence: European entities built on frontier models could see workflows stop overnight, costing millions in emergency replacements.
  • Malon X described the dystopian outcome as a caste system based on access to frontier intelligence, a new digital iron curtain dividing those allowed to accelerate science from citizens of other countries.
#Models#Regulation#Safety#Big Tech#Startups
Forward Guidance
Forward Guidance

A New Era Is Beginning In Markets | Weekly Roundup • Jun 19

Also from this episode: (11)

Fed (5)

  • The Fed under Kevin Warsh sharply reduced forward guidance, cutting the FOMC statement by 80% and ending with a succinct commitment to price stability, signaling a break from 15 years of communication aimed at suppressing volatility.
  • Markets interpreted the Fed's June meeting as peak hawkishness, pricing in two hikes by mid-2027, but many of those hawkish dots likely came from non-voting regional presidents pushing back against Warsh's new, less communicative approach.
  • Warsh's hawkish pivot collides with disinflationary data: oil is down 30% since the last Fed dot plot, inflation swaps have returned to pre-war levels, and shelter inflation appears to be peaking, making actual rate hikes unlikely.
  • The flattening yield curve suggests a growth problem, not just an inflation issue, and may be part of a Warsh-Treasury strategy to lower long-term yields to facilitate government debt term-outs and improve housing affordability.
  • Record short positioning in SOFR futures and across the Treasury curve creates a potential squeeze, as the market consensus for hikes faces off against weakening inflation data and a cooling labor market.

Markets (3)

  • High-yield credit spreads remain resilient despite tightening financial conditions, allowing the AI-driven capex cycle to continue unabated, with data center spending growth slowing from 80% to 45% year-over-year but remaining massive.
  • Capital is rotating out of hyperscalers and into AI bottleneck stocks and infrastructure plays, a trend Quinn identified early, as the buildout shifts from being cash-flow funded to requiring significant debt and equity issuance.
  • Gold sentiment has reversed violently, with six-month put/call skew at a 10-year high and CTA positioning collapsing to the 1st percentile, showing how government intervention in markets creates extreme sentiment swings across all asset classes.

BTC Markets (2)

  • MicroStrategy's distress stems from Saylor's refusal to build cash reserves for dividends and debt, instead levering up to buy more Bitcoin, creating a self-reinforcing downward spiral as Bitcoin price falls and equity issuance dilutes shareholders.
  • Bitcoin's narrative struggles in a new era where capital has productive alternatives like AI infrastructure, breaking the TINA dynamic that drove its previous bull cycles and highlighting its role as an insurance asset against future currency dilution.

Regulation (1)

  • The crypto industry faces a cleanup phase where scams and misallocated capital from 2022 must be cleared before legitimate projects - like simplified banking rails - can emerge, a process dependent on regulatory clarity and improved traditional market liquidity.
#Fed#Macro#AI Infrastructure#BTC Markets#Markets
Rabbit Hole Recap
Rabbit Hole Recap

RABBIT HOLE RECAP #414: BITCOIN IS THE BEST MONEY • Jun 18

  • Block’s new AI tool, BuilderBot, now merges about 50% of the company's production code changes, handling 1,500 pull requests per week by researching, writing, and testing code autonomously.
  • The hosts claim China's Gege Networks is developing AI tools to predict political dissent by building behavioral profiles from social media, location, and telecom data.
  • Marty argues the forced removal of Anthropic's Fable 5 model is a mix of political retaliation and a potential pretext for establishing a KYC/AML licensing regime for AI models.
  • The Trump administration is backing XAI against an NAACP lawsuit over data center emissions, framing the AI infrastructure buildout as a national security priority.
  • SpaceX is acquiring AI code tool Cursor at a $60 billion valuation, a move Bill Aamann argues is strategically accretive due to SpaceX's high market value attracting talent and enabling cheap acquisitions.
  • A leaked list reveals over 200 global elites, including tech founders and politicians, are members of Peter Thiel's secretive 'Dialogue' society, which hosts sessions on topics from cult-building to nuclear policy.
  • Midjourney, a bootstrapped AI image company, is developing a consumer body scanner it claims will replace MRIs, funded entirely by its $200M+ annual revenue from image generation.
  • A SemiAnalysis study found AI subscription plans are heavily subsidized, with OpenAI's $200/month ChatGPT Pro offering $14,000 in token value and Anthropic's $200/month Claude Max providing $8,000 worth.
  • The hosts warn that autonomous drone swarms represent a fundamental shift in warfare, being cheap, asymmetrical, and difficult to counter with traditional jamming or small arms.
  • Marty and Matt advise against locking business operations into a single AI provider like Claude Code, recommending agentic harnesses that allow easy model switching to avoid vendor lock-in and regulatory risk.
Also from this episode: (4)

Protocol (3)

  • The hosts argue the new Illinois Digital Asset Tax Act is a predatory law designed to criminalize financial privacy, not generate revenue, by imposing a 0.2% tax on all crypto transactions.
  • Marty argues Bitcoiners in Illinois should consider moving their families and businesses to friendlier jurisdictions, citing his own exit from New York as a precedent for voting with your feet.
  • A bug in Bitcoin Core v31.0’s private broadcast feature can leak a node's IP address if a V2 transport handshake fails, compromising privacy for users not routing through Tor.

Business (1)

  • Robinhood is cutting 10% of its full-time workforce, about 290 roles, to flatten management and operate more efficiently as its stock lags the broader market.
#Safety#Regulation#Agents#Privacy#Coding

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