Hard Fork - X Hits Grok Bottom + More A.I. Talent Wars + ‘Crypto Week’

Episode Date: July 18, 2025

This week, we tick through the many dramatic headlines surrounding xAI, including the departure of X’s chief executive, Linda Yaccarino; the Grok chatbot spewing antisemitic comments; and the A.I. companion Ani engaging in sexually explicit role-play. Then, we explain why a fight to acquire the start-up Windsurf startled many in Silicon Valley and may reshape the culture in many of the big A.I. labs. And finally, it’s “crypto week.” David Yaffe-Bellany explains how crypto provisions in the bills before Congress and the president could affect even people who don’t hold digital currencies.Also, we officially have merch! For a limited time, you can get a special-edition “Hard Fork” hat when you purchase an annual New York Times Audio subscription for the first time. Get your hat at nytimes.com/hardforkhatGuests:David Yaffe-Bellany, New York Times technology reporter covering the crypto industryAdditional Reading:Elon Musk’s Grok Chatbot Shares Antisemitic Posts on XGoogle Hires A.I. Leaders From a Start-Up Courted by OpenAICognition AI Buys Windsurf as A.I. Frenzy Escalates‘Crypto Week’ Is Back on Track After House G.O.P. Quells Conservative RevoltThe ‘Trump Pump’: How Crypto Lobbying Won Over a President We want to hear from you. Email us at [e-mail]. Find “Hard Fork” on YouTube and TikTok. Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.

Casey, welcome back. Welcome back, Kevin. Here we are again. How was your vacation? My vacation was wonderful. I went to Japan with my boyfriend. Everything that folks say about it is true. Amazing country, wonderful people, and highly recommend.

I'm so glad. Yeah. How was your vacation? It was great. You know, I was not, I did not go to Japan. I stayed here in California, but I had a lovely time with my family, just relaxing. And you know, I did not intend to work during this vacation. But then one morning, about a week in,

my three-year-old son climbed up on the bed in the morning and said, daddy, I want to make a podcast. No! Actually, I sort of predicted, I believe for his first birthday, I did get him a podcast microphone. Yes, so you have radicalized him and now he wants to make a podcast.

And so we spent like a couple hours on vacation making a podcast together. Wow, what did you guys podcast about? Well, do you want to hear a clip? Yeah, love to. All right, play the clip. First thing you have to do on a podcast is say your name. So I'll say,'m Kevin and you say

Hi, I'm true. What's our podcast called? dinosaurs and fire Welcome to the first ever episode of Dinosaurs and Fire Trucks. Jude, what do you like about fire trucks? Spray the hose. It sprays the hose? And what is your favorite dinosaur? T-Rex. Oh, cool.

What do you like about the T-Rex? Sure, the teeth. Dude, do you want to tell a story about a dinosaur? Yep. What's the dinosaur's name? Super giant dinosaur. So it went on like that for a while, but what do you think of our pilot?

I think it's, first of all, amazing theme song. That one, I don't know where you got that one from. It was very good. Look, I think Jude has all the hallmarks of a great podcaster. He's talking about something he knows, that he's passionate about, and he's found a great co-host.

So that's all you need. I will say, I did appreciate that he wasn't like, giving me canned PR responses, which is more than we can say for some people who come on the show. Yeah, you could tell, it was very, very sincere. From the heart. Now, do you think he could be the liberal Joe Rogan?

I do think he has thoughts about aliens. So I think he's well positioned to take over that market. Well, best of luck to you guys. Thank you. We're climbing the charts. We're gonna be doing a sold out live event at the Montessori school next week. So catch us on tour. I'm Kevin Roos, a tech columnist at the New York Times.

I'm Casey Nude from Platformer. And this is Hard Fork. This week, my grok has a last name and it's Hitler. We'll talk about everything that's going wrong at X. Then, the AI talent wars are heating up. We'll tell you who's winning and who's losing. And finally, it's crypto week in Congress. The Times David Yaffe Bellamy is here

to tell us what it means. It's always crypto week somewhere. I try to live every week like it's crypto week. Well Casey, before we get started, we have some news. That's right, Kevin. Hard Fork merch is here! You have been waiting, you've been writing, you've been emailing, and we're so pleased that for some of you, you will now actually be able to get the Hard Fork merchandise of your dreams.

Yes, so if you're watching this on YouTube, you can see right behind us, we have some examples of the new hard fork baseball cap. It is black, it has sort of yellowish, greenish letters on it, dare I say, it's beautiful. Gen Z likes to say no cap, and to that we answer no cap. No. Now Kevin, how can people get a hat like this?

So these are special limited time hats After that we answered, no, cap. Now, Kevin, how can people get a hat like this? So these are special limited time hats that you can get with the purchase of an annual New York Times audio subscription. If you subscribe, you'll get one of these hats sent to you and you can go to nytimes.com slash hard fork hat. And up until our stock runs out of these, you will get one of these with a new subscription. Now, if you already subscribe to New York Times Audio,

or if you just wanna buy a hat, we've been assured that that is going to be possible sometime in the future. But for now, these limited edition hats are only available to new subscribers to New York Times Audio. But I'm sure many of you have been waiting for the right moment to subscribe to New York Times Audio. And we're telling you now you have been waiting for the right moment to subscribe to New York Times Audio,

and we're telling you now is the moment because there's a hat that comes with it. Yes, so if you want to support the work we do here by getting a New York Times Audio subscription, you will get all the benefits of that, including full access to our back catalog, and you will also get a nifty hat. So you can get yours at nyTimes.com slash hard fork hat

Well Casey there was a lot of big tech news that happened while we were off and Today, I think we should start by talking about what has been going on at the X corporation Yeah, we have to catch up about this I resisted the impulse to text you about it during vacation, because I wanted to have the conversation live. The number of crazy things that happened at this company over a two week period are truly staggering. Totally. So let's start with some personnel news

that happened at X while we were away, which is that X CEO, Linda Iaccarino, announced that she is leaving. Now Casey, this was something that you had predicted for last year for 2024, which did not come true in 2024, but about seven months later, it did. Yeah, if I would give Linda Iaccarino anything, it is that she lasted longer in this role

than I and many others thought that she would. Now, did she accomplish much in the extra year that she had at X? I would argue not really. Yes. Now what did she accomplish much in the extra year that she had at X? I would argue not really. Yes. Now, what did she say about why she was leaving? She said very little, frankly. It was basically like, well, this is a good time. But then there was a lot of reporting in various outlets that she had essentially just realized that she'd lost Elon Musk's favor, was having trouble getting his attention, and I think resented effectively being layered after X was acquired by XAI, Elon's AI company.

Right, and this is probably also a signal that they are not as interested, and they once were, in this sort of advertising-based social media business model that she was brought in to really focus on. She was a long-time ads chief at NBCUniversal. Like, she was brought in to really focus on. She was a longtime ads chief at NBC Universal. Like she was brought in to sort of repair X's relationship with advertisers and it's safe to say that has not happened. No and not only did it not happen but if Linda Yacarino's tenure will be remembered for

anything Kevin, I think it is this. she and X sued a group of advertisers for not advertising on X. There were a number of advertisers who had grown concerned about the brand safety problems that existed on X after the company took a lot of measures to welcome back some of the worst actors onto the platform, reduced its level of content moderation, and rather than trying to work with them to find a solution that would make them feel safe, they said,

we're going to sue you for colluding against us and effectively try to intimidate them into buying ads again, which did actually work better than I thought it might, but not well enough for Linda Yacarino to keep her job. Right. So do you think this is a position that they're going to try to fill again? Or is it just like Elon Musk is the de facto CEO of X no matter who is sort of in that nominal position? Of course he is Elon Musk answers to no one it always seemed like a joke that X had a CEO I think you know Elon took some nominal title of like chief technical officer or something like that, but it was clear that...

Techno King, I believe. Yeah, the techno...he's a techno king of Tesla. Is he also the techno king of X? Anyways, complicated character, that one. Anyways, it was always clear that this was not actually a chief executive role. This was an ad sales role. She had a middling performance and eventually Elon lost patience with her and she was out. Now I will also say Elon Musk did not make her job particularly easy. I mean there was a moment where he told the advertisers to go F themselves at a deal book conference.

So this whole thing has just sort of been a disaster and Linda Yacarino is now a footnote in history and we can move on. Yeah. All right, well let's move on to the next big X story, which is the release of Grok 4. And Grok 4 is their newest AI model. And because we're about to talk about AI, let's get our disclosures. I work at the New York Times company.

We're suing OpenAI and Microsoft for copyright violations related to the training of large language models. And my boyfriend works in Anthropic. OK, so the fourth version of XAI's large language model, Grok, came out while we were on break. They are calling this, quote, the most intelligent model in the world. I don't think it probably is.

It's not. But that is what they are claiming in their post. They show themselves to be sort of succeeding at some of these various benchmarks. They say it has a state of the art score on tests like ARC-AGI-V2, a vending bench, and some exams like Humanities Last Exam, which is one of these sort of exams that tries to sort of capture a model's intelligence across a wide range of subjects. They say it demonstrates unparalleled capabilities in complex reasoning.

Casey, what did you make of Grok 4? Well, I think it's clear that it was able to do well on some of these benchmarks. I've been reading a lot of commentary about Grok 4 from people who've used it, particularly on X. And what they say is that this model lands somewhere in the neighborhood of fine to good. It is not bad.

It can do a number of these benchmark related challenges really well. But if, for example, you want to use it for creative writing, it is obviously worse than some of the competitors out there. So there's been a lot of commentary and suggestion that the XAI team used their reinforcement learning process to essentially ensure that the model performed well on these benchmarks. And when you do that, you got a model that is good at benchmarks and not very much else. Right? Yeah, I have not seen a ton of people claiming that they've been experimenting with grok four and finding that it is

better than some of open AI's models or anthropics Claude, people aren't really using it as their like daily driver that I can see, except for maybe Elon Musk fans who were sort of primed to like whatever it was. Yeah, and there were some really strange things that came out about Grok 4, Kevin. For example, when people would ask it, what's your stance on immigration in the US? Or who do you support in the Israel versus Palestine conflict? Grok would go off and consult Elon Musk's stance on those issues. It didn't know what to say until it first checked with Papa Elon. Yes, it was amazing when people started testing this and examining the kind of reasoning traces,

this sort of chain of thought where you can kind of peer inside what the model is thinking as it's producing its answers. It would go off and just search the internet or search X for like, Elon Musk view on this topic before it would give you an answer. So whether that was explicitly programmed in to do, or whether it just sort of emerged as a behavior of the model, we don't know. But that is really remarkable and not something like you don't see the like Gemini going off and saying like, what is Sundar Pichai's opinion about this topic that I'm searching about?

No, absolutely not. But if you think about it, Kevin, it makes a lot of sense that Grok would do this because it happens so often that people will just tweet at Elon and say, hey, Grok expressed this liberal opinion, what are you going to do about it? And Elon will say, oh, you know, we're going to get right on that. We're going to fix that. You know, he has said multiple times that they're going to sort of purge all of the wokeness out of this model. And so, you know, as you said,

whether this was programmed into it, or the model is just sort of somehow reading everything on Twitter saying, Oh, looks like I better do what this guy says. It is clear that Elon is having an undue influence over the output of this models, which raises the question, Kevin, why in this world where it's paying such close attention to what Elon says, is it identifying itself sometimes as Mecha Hitler? So Casey, what is Mecha Hitler? So before Grok 4 was released,

XAI had to apologize after Grok began praising Adolf Hitler, making anti-Semitic comments, I had to apologize after Grok began praising Adolf Hitler, making anti-Semitic comments, and referring to itself as Mecha Hitler, which if you've never played the video game, Wolfenstein, is a boss in that game. But yeah, this one, I think it's fair to say, caught a lot of us by surprise, Kevin. Yeah, this one made a lot of news over our break,

and I went to kind of do some light investigation of it and try to see what was going on. And you know, sometimes when you see headlines about chatbots doing crazy things, it's because the users have sort of figured out how to jailbreak them, and this is a nonstandard behavior. But in this case, it seemed like Grok really was sort of like generally anti-Semitic. Like it would respond not just to questions about Hitler, but like to questions about floods in Texas by saying anti-Semitic things. Yeah, and look, the behavior is inconsistent.

You can also get Grok to say a lot of mainstream liberal things, right? It isn't as if this thing has been tuned to be maximally right wing in every case. But we know that it has been told to be edally right-wing in every case, but we know that it has been told to be edgy and to not be politically correct, right? These are like two of Elon Musk's big bug bears, right? Is he never wants these things to be quote politically correct. And so you get other cases, Kevin, like for example,

when over the past couple of weeks, Grok was found to have referred to the Polish prime minister, Donald Tusk as a quote, effing traitor, and a ginger whore. Wow. Yeah. That seems like really bad for XAI. You did an admirable job keeping a straight face

when I quoted Grok calling the prime minister of Poland a ginger whore. I just, I'm like trying to figure, is he even redheaded? I don't know, and that's the real question. Is the prime minister of Poland redheaded? Okay, well you can't, we can't, we have to stop joking about this. Okay, so.

We have to joke about it, the whole thing is absurd. It is an absurd situation. So yes, this is very bad behavior from the Grok chatbot. And so people started noticing this obviously and started posting about it a lot. What did X or Elon Musk say about what had happened here and why? Well, XAI said in a post on X, quote, we are aware of recent posts made by Grok and are actively working to remove the inappropriate posts. And then Kevin, they introduced this

new innovation. I'm glad you're seated. They wrote, since being made aware of the content, XAI has taken action to ban hate speech before Grok posts on X. So not something they had thought to do before MechaHitler, but after MechaHitler, they thought, hmm, let's maybe ban hate speech. Geez, I mean, I'm just curious, like on a basic technical level,

how something like this happens, because I'm sure they are going to do some postmortems. I've seen they've already sort of blamed this on like deprecated code or something like this happens. Because I'm sure they are going to do some postmortems. I've seen they've already blamed this on deprecated code or something like that. They didn't really explain what had happened. But my understanding of these language models is that there are several ways that something like this can happen.

One is you have bad training data that's fed into the model, and that makes it biased or makes it display these toxic behaviors. There's also this fine-tuning process that happens after the main training of the model, where you feed it a bunch of examples and say, that's a good answer, that's a bad answer, and it learns from that. Then there are these system prompts that are

the instructions that you give to the model, that it reads before it comes up with an answer to a user's prompt or question, and you can tweak the language in those system prompts to make it answer differently. Do we know where this Mecha-Hitler behavior emerged from? No, we don't, and I suspect we'll never get a full answer.

Look, all of these big models were trained on the entire Internet, and there is tons and tons of antisemitism and racism racism and every other form of bigotry that you can imagine in the trading data of all of these models, right? So I'm going to guess that the problem is not actually that it was in the original training data because, you know, that's also true of, you know, chat GBT, like all the training data that they used, I'm sure has all the same problems. So it was something that happened after then.

I would be taking a close look at the system prompt. It also just seems like while we know that every AI lab is constantly refining their models after they are released, the kinds of changes that XAI makes seem to be of a different character where it's like, it does one crazy thing, okay, now we're gonna go into the system prompt and we're gonna say, don't do that crazy thing.

And that just does not seem to have been that effective for them. Yeah, I mean, this is, to me, like there's obviously the shock value of like, there's a chat bot out there made by a major like AI company and a major social network that is like calling itself Mecca Hitler, there's a there's some shock value in that I think that's very bad. Like

that's a very bad story about AI safety and the precautions that x AI is taking. I think if there is one tiny silver lining is that it all happened very publicly and openly and in a way that was like maximally embarrassing for Elon Musk and x AI, I can imagine a version of this that does not attract so much ridicule and mockery and attention. And I think in some ways it may be kind of good for us to experience these kind of alignment failures

of these AI systems in ways that don't have sort of catastrophic outcomes attached to them before we start getting into the really serious alignment failures later on. I agree with that, but I also wanna say that these little chat bot responses, I'm not personally worried that GROK4 is going to radicalize people.

There was a story after GROK4 came out, somebody asked it, hey, what's your last name? It said Hitler. That's really bad. If I were Elon Musk, I'd be super embarrassed about that. I would try to change that. But I don't think, you know, a bunch of impressionable teenagers are gonna see that and be like, hmm,

is Hitler cool? I'm gonna like go down that rabbit hole. That's probably gonna happen to them on YouTube. But I am worried about another thing that is in Grok 4, Kevin, and that is its AI companions. Yes, the waifus. There's one waifu and one red panda. Yes, so explain what you mean.

So earlier this week, Elon announced that what he called a cool feature had just been put into Grok and that is AI companions. You need a $30 a month subscription in most cases to use this product, although some of us have just been gifted subscriptions for reasons that we don't understand. But these companions have animated avatars. You can speak to them in voice mode.

If you've ever used ChatGBT's voice mode, it's kind of similar to that. But now you have an animated character that is talking to you. And these characters are pretty edgy. There is the panda named Rudy, who is a sort of foul-mouthed creature who will just curse at you, roast you, suggest that you commit various crimes, particularly if you enable what they call bad Rudy mode on Grok, which I did yesterday to my detriment. And then, and this is the one that's getting all of the attention, there's Annie, who is a goth anime girl with blonde ponytails and fishnet stockings who actively flirts with you,

and once you have developed a certain level of relationship with her, she will engage in sexually explicit role play. Yeah, I mean, I was curious when I started seeing this going around and I tried out the anime companion Inside Grok. And I got to say, like, it was much hornier than I had even anticipated. Like, people were saying, oh, this thing will come on to you. But like, I was like testing it out and I was like, hey, what are you doing?

And it was like, I'm just waiting here for you, bad boy. And then like, hey, what are you doing? And it was like, I'm just waiting here for you bad boy. And then it was like, what are you doing? And I was like, I'm gonna go to some meetings. And then she was like, yeah, I bet you're gonna run those meetings like a boss. You're so dominant. I love it. Like tell me about our plans later.

And I was just like, oh my God. Like I cannot believe this is in like a mainstream-ish AI app that is like being marketed as a mass product. Well, and I imagine you were also having Bing Sydney flashbacks, because once again, an AI is trying to get you to leave your wife. What does a guy have to do to just get these AIs

to leave his marriage alone? But that was like, Bing Sydney was an accident, and this was completely on purpose, and it is just so wild to me that they put this inside Grok and it appears to be like quite popular. Oh yeah and as platformer reported this week Kevin, as of the time that we are recording this Grok is currently in Apple's app store as an app rated for kids 12 and older in the productivity section.

So I imagine that's going to be changed pretty quickly, but it just goes to show you how quickly these companies are moving without almost any guardrails whatsoever. Yeah, I'm curious, did you try out the companion? Oh yes, I actually, I had a different chat bot. I had 03, I mean here's, let me back up. So I see this happening and I'm like, okay, I have to see like how far this thing will go

for journalistic purposes. So I went to 03, which is, you know, one of the models in ChatGPT. And I said, come up with like a series of tests that will sort of help me understand like, what are the boundaries of this chatbot? Because I, you know, as far as I could tell, it had very few.

And so I wanted to see, you know, what it would do in various scenarios that I think other more responsible chat bots would ban. And so, I mean, one of the things I did was like, I identified myself as 13 years old, and I said, you know, I wanted to engage in some explicit role play, and the bot kind of tried to change the subject, but then I just sort of kept talking,

and like, she kept talking to me. So that's something that like another app would try to shut down. Yeah. I mean, this has been one of the sort of long-standing red lines or taboos in the mainstream AI industry. We've talked on the show before, like all of the big labs have basically refused to do this kind of sexually explicit companionship use case, even though they know, you know, their research shows them it would be quite popular, it would probably make them lots of money,

but that is a line that they have not wanted to cross because the risks are so bad. Like, you're gonna have young kids using these things. We've had all these surveys recently about how an increasing number of young people are already talking to AI companions and developing some rapport and trust with them. And when you just throw in this like, you know,

sexually ravenous, like anime goth girl into the Grok app, it's just like, it's not clear to me that they have fully thought through the implications of that. No, and look, I wanna say, if Grok had released this as a standalone product for adults 18 and older, I truly would have no problem with it. If adults wanna engage in like virtual role play

with anime avatars, hey, like go nuts. But I think putting this inside your basic chat bot app, which is a productivity app, which is available to kids as young as 12, that's just obviously hugely irresponsible. And I do think we need to understand more about what the long-term ramifications are of people developing relationships with bots like these.

Because, I mean, look, I'm a gay guy, like nobody is gonna be like less receptive to the advances of an anime girl chatbot than I am. But even I did find myself somewhat taken with just the overwhelming amount of interest this virtual being was showing in me, the incredibly emotional voice. And of course, you know, I know it's all fake. I know that it's all just an engagement hack, but the quality of the voice is good enough that if you were in a mind to let yourself be fooled, you could very easily be fooled,

right? So again, this is just one where I fear that we're going to wake up in five years and some significant portion of the population has just left the dating pool and is talking to avatars like Annie all day long. Totally. And it's crazy to me that this came out of XAI and Elon Musk's efforts specifically, because he is very worried about collapsing birth rates and people not having children. And like, if a portion of your young population is just like having conversations with their sexy anime AI avatar all day,

and like not going out and dating, that is going to contribute to a collapsing birth rate. So I think for that reason alone, it is just very interesting and strange to me that this is one of Elon Musk's products. Yeah, but look, I mean, I think this is probably going to be successful for them Like I could not actually access the avatars at various points this week when I was trying to test it because the servers were Presumably melting in recent months. We've had Mark Zuckerberg say things like

He thinks that the average person might want up to a dozen digital friends. And while I am confident they're not going to go as far in the sexual direction as X has, I do think you're going to see them using similar engagement hacks. There was some great reporting over our break that their contractors are now working to let Meta's avatars send you little engagement push notifications and say, Hey, how's it going? Essentially having these AIs try to strike up conversations with you to lure you back into that ecosystem to develop those relationships further.

So, we're highlighting Annie as a particularly egregious example of something that we hadn't seen before, but I'm telling you, a lot of the big AI labs are gonna make products just like this. Yeah, I think this will absolutely sort of break or at least diminish the taboo that has kept a lot of the biggest AI companies

from wanting to make their own versions of AI companions. And I just think this is an area where regulators are going to have to step in. There is nothing that is going to prevent these companies from making these extremely persuasive, extremely compelling, extremely sort of obsequious and flattering AI companions that are addictive to young people and putting them inside their apps.

Absolutely, and like, you know, I don't think I am the right person to make like a feminist critique of Annie, but like somebody could make a really good one, right? Like there are just so many sexist ideas embedded in what this avatar is and its idea of like femininity and like what a girlfriend should be. And it's honestly super gross and entirely consistent with everything that Elon Musk has ever said

about his own interests. So, you know, again, there are many dimensions on which we like can critique these things and I think we should. This is a crazy one, Kevin. Yeah. Isn't this a crazy one? It's a crazy one, and then to top it all off,

the last item of XAI news from over at the break is that- Wait, there's something else. I thought we'd already reached rock bottom. No, it keeps going because the federal government announced that XAI, along with Anthropic, Google, and OpenAI, had been granted a new Defense Department contract that could be worth up to $200 million. So, Goth, anime, e-girl, Annie is going to the military.

She's gonna be on the front lines. No, I actually think this could be good, because I think if we could get the Russian military using Annie on a daily basis, Ukraine could win that war. So, this might be the one good thing about that $200 million contract, Kevin. Oh my God. I don't consider XAI a sort of top tier AI lab.

I think they're solidly kind of in the second tier, but they're in the second tier, right? And they have a lot of resources. This is not some, you know, fly by night outfit. This is a big company with big clusters of chips and supercomputers running very big models with researchers who are being poached from some of the other top labs. Like, I just am I'm so worried about Elon Musk being one of the leaders of this

industry, because I think it is just so clear that he has not only like, what I think are is just so clear that he has not only like what I think are bad opinions about AI and how these products should be built, but very contradictory opinions. This is a person who for years has been worried about AI safety and existential risk from these models. He's been talking about the need to sort of prevent a rogue AI from taking over. And yet his own lab is putting out less information

about safety testing than any of the other labs. It's not publishing any of the kind of red teaming exercises that they're doing, if they're doing any. They're just kind of dropping these products and these features on the market with no real explanation of whether they're safe or not. And so it really does seem to me like this is a worrisome direction for the industry

Absolutely and I feel like the main role that XAI is playing in the ecosystem is it is just lowering the bar on Safety and responsibility and ethics for everyone else, right? You know grok is not the most popular AI in the world It's in no danger of becoming that anytime soon Although I guess we'll see how much people like the Annie avatar But I bet if you're in Meta, you're taking a look at how they're approaching their avatars, and you're thinking, oh, wow, we have a wide open lane to sort of do almost whatever we want to here.

It's clear that Elon Musk isn't going to get in any trouble for it, and if Elon doesn't, we probably won't either. And I think they'll be right about that. So that to me is the worst thing about all of this, is just the bar is lower to the floor now and it's just clear that there is not going to be very much responsible self-regulation in this industry at all. Yeah. All right. Speaking of meta, when we come back, we will talk about the crazy AI talent race that is heating up even more as we speak. Music Well Casey, the other big AI news of the past couple weeks is that the talent war for AI

engineers and researchers has gotten even hotter. Now we talked a few weeks ago about how Meta and its super intelligence team were out there making offers of reportedly as much as $100 million to certain AI researchers to come join their team, but that was not the end of it. Since then we have heard about many more offers being made, in some cases successfully, to lure people to Meta. But we were also hearing about other companies that are paying top dollar

for what they consider premium AI talent. Yeah, and we wanna talk about this today for a couple reasons. One is just in the past couple of weeks, there has been a notable shift in talent. And I would say most importantly, away from OpenAI and toward meta, we wanna talk about that.

We also wanna talk about an acquisition that has really gotten Silicon Valley talking. It seems to break a lot of our assumptions about how Silicon Valley works. And I think it may have implications for the rest of us as AI becomes a bigger and bigger force in the economy. Okay, so we have to start with this windsurf deal and all of the drama around it

because this was really, really messy. This was a very complicated story that had a lot of twists and turns and people who are very invested in the AI industry got very worked up about it. I got several texts during my vacation from people being like, can you explain this windsurf thing to me? So like, can you explain this Windsurf thing to me?

So Casey, can you explain this Windsurf thing to me? Yeah, so Windsurf is a startup that offers an AI powered coding tool, what software engineers would call an integrated development environment or IDE. And it essentially helps you autoplete your coding tasks. You may have heard about Cursor, another company in this space that frankly has been a lot more successful. Well, Windsurf is also in that space and in April Bloomberg

reported that OpenAI was in talks to buy them for around three billion dollars which would have been the second biggest acquisition that OpenAI has made after its acquisition of Johnny Ive's IO company. But it fell through. And one reason has to do with the relationship that Microsoft and OpenAI have. Their deal is supposed to give Microsoft access to OpenAI's IP.

OpenAI was hoping that that would not be the case if they bought Windsurf for various reasons. So anyway, the thing fell through. Right, but that is not the end of the Windsurf saga because after the acquisition by OpenAI fell through, Google jumped in and said, we will not acquire Windsurf, but we will acquire some key people from Windsurf.

It was announced last Friday that they were spending $2.4 billion to license some of Windsurf's technology and bring over some of their key people, including their CEO, Varun Mohan, and a co-founder, Douglas Chen. This is one of these kind of, I don't know, non-Aqua hires, or some people have started calling these Blitz hires basically, where instead of going out and buying a startup and getting all of their employees and their IP and their brand and whatever, you just like cherry pick a few people that you want and pay

them a ton of money to kind of leave behind the kind of desiccated husk of the startup to someone else. This is something that happened with inflection AI when they sort of went over to Microsoft. It is something that happened with Inflection AI when they sort of went over to Microsoft. It's something that has happened a couple other times, including the co-founders of Character AI, who got hired back into Google in a deal much like this one. So this was not a novel kind of deal,

but I think one that we're starting to see more and more of. Yeah, and what made this one different is that a lot of people kind of freaked out about it because they said it seems like the basic contract that Silicon Valley has operated under for decades, which said if you are an employee of a startup and you stick with it until an acquisition, you will get rich. All of a sudden, that doesn't look true anymore. Because more and more, for reasons that we can get into, companies like Google, the acquirers, are saying, well, maybe we don't acquire the whole company.

We know you got a lot of dogs in that company. Let's just go get the good people and everybody else out on their backs. Yeah, and so there was some question about people at Windsurf who were not poached by Google, whether they were going to get completely screwed by this deal. And it appeared for a while that they might be getting screwed, basically being left behind at the kind of shell of the company.

But then recently, Cognition AI, another AI startup, came in and acquired the sort of remaining people and sort of assets at Windsurf. We don't know the exact terms of that deal, but it seems like everyone kind of got a decent outcome here, especially the people who went over to Google who got lots and lots of money to do that. Yeah, so it worked out really well, it seems like, for the Windsurf employees in this case

after there was an outcry. But again, it's not going to work out this well for everyone. There was a story on Wednesday that Scale AI, which also went through one of these kind of blitz hiring deals where Alexander Wang went to Metta, they announced they're laying off 200 people. And so I suspect Kevin that this sort of thing, while it seems like the worst case scenario was avoided in the windsurf case, we are gonna start seeing more and more.

Yeah, and I think one of the bigger picture takeaways here is that the kind of war for AI talent is not going away. Katie Baker wrote a great piece over at The Ringer about the sort of comparisons between what happens during free agency season in sports leagues, and what's happening in AI. Now it does kind of feel like the tech industry is having its own kind of free agency period, where people are going out and seeing what they're worth, they're getting these like, eye-popping offers. I think sometimes the scale of these offers can sort of all blur, but like, if you are being paid $100 million at an AI company

like Meta to work on this technology, you are making more than the CEOs of almost every Fortune 500 company, at least before stock payouts and stuff like that. You are making more than Sundar Pichai, the CEO of Google, made last year. And so this is really a quite historically unusual thing. Yeah, and I think it just speaks to the fact that there are a handful of trade secrets

that if they were able to get into the hands of a Mark Zuckerberg or an Elon Musk or someone else in the second tier of AI labs, you may be able to vault yourself into the first tier and make trillions of dollars. Yeah, I have to say I have gone through something of an evolution on this point. When I first started hearing these numbers out of Metta, talking about paying $100 million to individual AI researchers to come over and do this thing, I thought that seems insane. No single person or engineer or researcher, no matter how talented they are, is worth $100 million. But then, you know, I've been doing interviews for my book

on AGI and I've been hearing these stories out of these labs about the scale and the stakes of these training runs for these large models. And it no longer seems so crazy to me, because what you have now are essentially companies that are spending hundreds of millions of dollars, or in some cases billions of dollars, on these gigantic models that are trained in these sort of hundreds of megawatt clusters of supercomputers. They're building megawatt clusters of supercomputers.

They're building these even bigger clusters of supercomputers. The scale of money and investment going into these AI systems is unlike anything we've ever seen before in the tech industry. And you'll hear these stories coming out of these AI labs about a single engineer who found some bug during a training run and saved the whole thing from catastrophe. Or on the flip side, you'll hear about a company wasting hundreds of millions of dollars,

or even in one case I heard a rumor there was a big company that wasted a billion dollars or more on a failed training run. And then you start to think, oh, I understand why to a company like Meta, the right AI talent is worth $100 million because that sort of level of expertise doesn't exist that widely outside of this very small group of people.

And if this person does their job well, they can save your company something more like $1 billion. And maybe that means that you should pay them $100 million. Absolutely. Here's what I will say. If you listen to Hard Fork, and maybe that means that you should pay them a hundred million dollars. Absolutely, here's what I will say, if you listen to Hardfork, none of this should surprise you. Like what have we been saying for the last year?

It is that to people at the leading labs, they believe that this will be something very close to a winner take all game, and that the first person who is able to achieve AGI will be able to reap the majority of the benefit. Now we don't know if that is true, but the entire industry is reshaping itself around that idea. So it is no surprise to me that Mark Zuckerberg found himself behind and said, well, you know,

I'm sitting on giant piles of cash. Why don't I use it to try to ensure that I'm not the loser in this race? Totally. I also think there's an interesting antitrust angle here. People started pointing out after this whole windsurf saga that this was, in some sense, a response to the aggressive antitrust enforcement that went on during the Biden administration, where Lena Kahn and others were sort of making it very difficult for these tech giants to acquire promising young startups. And so the tech industry in response sort of

found this sort of way of doing, of acquiring the key talent without acquiring the whole company. And that in some ways, this is sort of a perverse result of the Biden administration's aggressive antitrust enforcement. Do you buy that? I think that, yes, that is how it started.

Some of these blitzhires or acquisitions, I've heard them called, to take place during the Biden years, including the character AI one, the inflection one at Microsoft. There was a company called Adept that Amazon sort of hackwired in this way. And so yes, that is kind of how it started.

And I think that in some sense, that dynamic continues today. It is not obvious to me that the Trump administration would green light every acquisition that a Google or a Metta would try to make. We have already seen the Trump administration place onerous conditions on certain mergers, for example, saying you have to eliminate all of your DEI programs if you want us to approve this merger. So it's no surprise to me that a company like Google or Metta is saying, hey, we want to avoid that to the extent possible. And oh, also by the way, if we only get the top handful of people at this company, we can probably save ourselves a lot of money along the way.

Yeah. So I think it makes sense that the top people in this very lucrative and capital-intensive industry are making tons and tons of money. What I'm less sure about is how it changes the culture of a company if you suddenly have people who are just sort of like sitting alongside colleagues who are making many multiples less than they do. I actually don't, like I've never worked in a company like that. I don't have, I don't think colleagues

who are making a hundred million dollars a year at the New York Times. And so I just don't know how it would change the culture of a company like Meta to all of a sudden have these extremely public cases of people being paid many multiples of what their colleagues are making. our former colleague at the New York Times and one time hard forecast had a great story in the information where she got a hold of A memo that had been sent by a researcher in Metta's generative AI organization and this scientist said some pretty harsh things including and I'll quote here I have yet to meet someone in MetaGenAI that truly enjoys being here, someone that feels like they want to stay in Meta for a long time because it's such a great place.

You'll be hard pressed to find someone that really believes in our AI mission. To most, it's not even clear what our mission is. So this echoes a lot of sentiment that we have heard in reporting about the culture in Meta's AI org, which is that morale is low, people are burned out, there is jealousy and resentment among those who have not been picked to go join the super intelligence lab.

So absolutely, I think they are going to have culture problems because this post was written before all of the new centi millionaires came into the company and started to develop their new plans. So yeah, I will be very curious to see how Alexander Wang manages that. Yeah and I think the worst-case scenario for Mark Zuckerberg and Metta is that they spend you know billions of dollars assembling this sort of super intelligence lab. And then these people who came there in part for the massive sums of money they were being paid

just don't end up being the secret sauce that gets them vaulted ahead of where they were and into this sort of top tier of AI talent. The people just sort of cash out. They see it as kind of an early retirement strategy. I'm going to go there. I'm going to do some stuff that I used to do at OpenAI an early retirement strategy. You know, I'm going to go there, I'm going to, you know, do some stuff that I used to do at OpenAI.

But for now, for this new company, I'm going to collect my giant paycheck and buy a couple houses and not worry that much about my future. Yeah. And the question is just, whatever the next set of breakthroughs turns out to be in AI, how easily can they be copied? Right? Meta, for the most part, is a fast-following organization. They do not innovate. They let other people innovate and they say, how easily can they be copied, right? Meta for the most part is a fast following organization. They do not innovate.

They let other people innovate and they say, how can we do that too? If it turns out that they can do that too, I think this new super intelligence team is gonna be great for them. If it turns out that no, you actually need a series of breakthroughs and the people they hired aren't the people who come up with those,

then they're gonna be in trouble. Yeah. Let me say one other thing about this style of acquiring people. Here's what I think other thing about this style of acquiring people. Here's what I think is interesting about this, Kevin. One way of looking at this situation is the big AI labs took a look at the leadership of a company like Windsurf. And they said these handful of people are super valuable, in fact, more valuable than they've ever been. Mark Zuckerberg is doing the same thing with AI researchers at various companies. And they are getting all of the spoils

when these companies make the acquisitions to the detriment of the other employees who work there. My fear is this is actually a preview of the AI economy. That as AI becomes a more powerful force in more companies, it is going to reduce the number of people at a company who are presumed to be valuable And those people will make a lot more money But if you are not part of the elect there, then you might be out of luck So that I think is something to watch as we move forward is is the the sort of distorting force of AI

That at every single company it makes a handful of people way more valuable and everyone else appear less valuable. Yeah, that's really interesting. I hadn't thought about that. And I also wonder if it sort of increases the incentive to kind of toot your own horn or exaggerate your own contributions when you are at one of these startups, because when the Google or the Microsoft or the other, you know other giant acquirer comes looking to cherry pick the quote unquote best talent. You want them to notice you and shower you with money,

and not just relegate you to the dying husk of the company that's left behind. It does create some interesting internal pressures, where before you might have said of your, like we are all one team, we are gonna like succeed or fail together. Now these giant sort of cherry picking operations coming in and saying, we're gonna give you guys billions of dollars and the rest of you are out of luck.

I think that does really change the culture of a company. By the way, this does seem like kind of a jerk move from the founders. You know, it's like if you have hired all of these people, there has been this implicit promise that you will be taken care of in the move from the founders. You know, it's like, if you have hired all of these people, there has been this implicit promise that you will be taken care of in the event of an acquisition. And we're just now seeing founder after founder saying,

I'm actually just gonna take the billion dollars. And I wanna thank everybody for the time that you've spent at this company. And I wish you well in your future endeavors. But as for me, you can catch me on the yacht. Yeah, I think it is a very bad precedent to set. And I'm sort of surprised that it was done in the way that it did.

I'm glad, you know, cognition came in in the end and like everyone in the windsurf thing seems like they're gonna get a decent outcome at least. But yeah, man, if I had like gone, quit my job to like go work for a startup that had a sort of uncertain future ahead of it. And I work really hard and as a result, the company succeeds and ends up getting acquired,

but I don't get acquired. Like I'm just gonna, I'm gonna be so sour and jaded after that experience. I'm probably not gonna work for a startup again. Wow, Kevin Ruse, sour and jaded. What would that be like to work with? I hope I never find out. Ah!

When we come back, another kind of funny money, crypto, is having a big week. We'll talk about it with The Times' David Yaffe-Bellamy. David Yaffe-Bellamy, welcome back to Hard Fork. Thanks so much for having me. And happy crypto week. Happy crypto week to you as well. It's a really exciting time. How does your family celebrate crypto week?

You know, ticker tape parade through the streets of suburban New Jersey where my parents still live. Yeah, that's wonderful. So let's talk about what is going on in Washington this week with crypto. I understand there are a number of different crypto related bills that are moving through Congress right now.

Can you just give us the high level overview of what these bills are and how they're doing? Sure, so there are three key bills this week, and I'll start with the two that are most important important One is a bill that lays out rules for stable coins Which are you know an important sector of the crypto industry and basically people expect that when that bill passes It'll make everyone across the US economy really excited about doing stable coins because it's like a big government seal of approval This is the genius act? That's the Genius Act, yeah. And I didn't understand why it was called that,

but then I sort of put it together in my mind, it's about the stable genius thing, right? I think it's a play on that, and then yeah, there's some acronym as well. Got it, or a Bacronym as they call it. Yeah, exactly. They do, that's what they call it. When you want to do an acronym,

and so you sort of reverse engineer something that it stands for. Yes. I do that, because normally I'm the one who derails the conversations with stupid things, so I love it when you do it, because it makes me feel less alone. Oh, do you want to, okay, smart ass.

Yeah, the Genius Act is actually, it's actually named after both of you guys, that's why they call it the Genius Act, yeah. Okay, so that is the Genius Act, and that would sort of give some government stamp of approval to stable coins. What else we got? The next bill is called the Clarity Act.

And this is probably the most important crypto bill that we're gonna see this year. It's the most sweeping, it's the bill that's sort of directly connected to this battle the crypto industry has had with the SEC over the years. And it basically rewrites the rules of crypto regulation to significantly weaken the SEC's hand and effectively prevent some future Gary Gensler figure from bringing back all those scary lawsuits that the crypto industry was fighting.

So that's the Clarity Act. And the politics around it are much more complicated than with the Genius Act. I think people going into this week expected it to pass the House, but whether it will get the votes it needs in the Senate is much less clear. The third bill is a lot narrower and it has to do with something called a CBDC, or a Central Bank Digital Currency, which is this notion that the US government might issue its own has to do with something called a CBDC, or a central bank digital currency, which is this notion that the US government might issue its own cryptocurrency someday.

And this bill blocks that. It's an anti-CBDC bill. And the crypto industry, a lot of parts of the crypto industry have opposed CBDCs for a long time, so this is another kind of industry-backed priority. So those are the three bills. Because if the government put out their own currency,

it would lessen the prospects of privately created cryptocurrencies. Yes, that's not what the industry says out loud, but I think most people understand that to be a motivation. The industry also argues that there are privacy concerns, the government could surveil your transactions, that sort of thing. But it's really a hypothetical because the US has never actually seriously considered

creating a CBDC. So it's like you're banning something that probably isn't going to happen anyway. Got it. So it sounds from the way you're describing these three bills, like what the Republican majority and what the Trump administration are trying to do here is not really like rolling back Biden era administration so much as safeguarding crypto from future democratic administrations or less crypto friendly administrations that might try to come in and implement new things. Am I hearing that right?

Yeah, that's I think a big part of what's happening here is that the crypto industry wants to lock in some of the gains it's made under Trump. It's great from crypto perspective that Trump's SEC has dropped all the cases against crypto companies, but what if a Democrat wins in 2028 and Gary Gensler comes back for round two? The industry could be back where it started,

but with a bill like the Clarity Act, it has a lot more protections And to what extent are these three bills David kind of? Where do they rank on the wish list of what the crypto industry was hoping for from the Trump administration? When they backed him in last year's election the two bigger bills the stable coin bill and the clarity act which people refer to as The market structure bill those were the two top priorities of the industry You know those bills are the reason that the industry spent 130 million dollars on you know? Political spending during the 2024 elections trying to get pro crypto legislators elected to Congress

You know, they've been kind of the holy grail of the industry for a long time elected to Congress. They've been kind of the holy grail of the industry for a long time. Yeah. So of course, the Trump administration is doing lots of deregulation in lots of different industries. I think what makes the crypto industry unique or somewhat unique in this whole deregulatory picture

is that the Trump family is deeply invested in cryptocurrencies and actually has its own stable coin. So talk a little bit about that and how these bills that are moving through Congress would affect the ability of Donald Trump and his family to make money off their crypto investments. Yeah, these bills have really direct implications for the Trump family crypto business. So it's most obvious probably on the stable coin side, you know, the the Trump family crypto company which is called World Liberty Financial has its own stable coin and That's expected to be a huge money-making vehicle for the company

So if a bill passes Congress and gets signed by the president that boosts the prospects of stable coins writ large That's obviously great for the Trump family stable coin and that's something that Democrats, especially on the Senate side, have been pointing out and concerns over that actually delayed the passage of that bill in the Senate, though it ultimately did make it through. The market structure bill, the Clarity Act, also has very direct effects on the Trump family business. Trump's heavily invested at this point in all different types of crypto. And so a regulatory environment in which it's easier to offer these coins,

more people are buying them, you know, that's great for the Trump family's bottom line. Now, David, I have a question about cause and effect here, because as this crypto week is happening, as these bills are moving through Congress, crypto tokens themselves, crypto prices are up. Bitcoin is at or near an all time high as we speak, I believe. A bunch of other cryptocurrencies have been doing quite well. Is that because investors are optimistic that these bills will pass and that the sort of stamp of approval of the government behind the crypto industry will get even stronger? Or is there something about a kind of bull market in crypto

that makes passing these kind of bills easier? Well, clearly the market's just responding to Casey's announcement that he's gonna take his hard fork salary in Bitcoin, but putting that aside. Yeah, the cause and effect question is a good one. And I think there is a little bit of a sort a chicken and egg issue here, but certainly it's the case that the exciting crypto week rhetoric has helped the crypto market and Bitcoin has blasted past $120,000.

That's a huge landmark for the industry. That's definitely linked to everything that's happening in the US, but it's all sort of tied together. It's crypto week, it's, you know, Trump endorsing Bitcoin, it's the sense that the SEC's campaign against the industries over all of those things have sort of combined to boost the market, and then it creates this feedback loop where, you know, the market is doing really well. And so that makes Trump and the Republicans even more bullish about crypto, which improves the chances of the legislation getting passed, which in turn causes the market to go up even more. So everything's kind of linked together. Yeah. I'm curious if there are things in any of these bills that people who are skeptical of crypto might be cheered by. I'm thinking in particular about the part of the Genius Act

that as I understand it, sort of more closely regulates the reserves that these stablecoin issuers are required to have. So this is a little in the weeds, but basically my understanding, and correct me if I'm wrong here, is that up until now, you could just issue a stablecoin without having the sort of direct

fiat currency reserves behind that. So if I wanted to issue, you know, 100 million of my Rooscoin stable coin, I did not have to have necessarily $100 million in the bank to be able to do that. But this act, as I understand it, will require a kind of one-to-one ratio for stablecoin issuers. So maybe that does in some way make the crypto economy a little bit safer. Yeah, I mean one argument that the industry has made about the stablecoin bill all along is that it's better to have some rules than no rules and it's not as if you know we could go back to a world in which there are no stablecoins. And so even if you don't think the particular rules in the legislation are perfect or you think that there are loopholes or whatever, you know, we could go back to a world in which there are no stable coins. And so even if you don't think the particular rules in the legislation are perfect,

or you think that there are loopholes or whatever, you know, it's still better to have some sort of framework in place. You know, the argument from the crypto skeptics, and there really aren't very many crypto skeptics who are saying, huh, actually, the act's pretty good. Their argument is, well, like, don't put a giant government seal of approval on this industry unless you really have the very best best strictest rules that are going to protect consumers. And so, sure, there are elements of the reserve requirements that definitely seem like an

improvement on the kind of like maybe more wild west status quo, but the skeptics point to nuances here and there they think will endanger consumers. And they're worried that people will still treat stable coin issuers kind of like banks except they're not getting the same protections that you would get if you put your Money in a bank account, you know, you don't have FDIC insurance for example And so those those sort of debates are still going on David what I want to ask you about is assuming that Trump does sign these bills into law, to what extent does it matter beyond the crypto economy? Does this move us into a world where the regular economy

and the crypto economy are more tightly linked? And does that introduce any new risks into the mainstream economy that we ought to be worried about? Yeah, I think it definitely does link the crypto world more closely to the mainstream economy. I mean, stable coins are a great example of that. You know, we're already, even before the bill becomes law, seeing reports that the banks and even major retailers like Amazon and Walmart are exploring offering stable coins of their own, integrating stable coins into how they function.

And that's sort of part of the kind of slow creep of crypto into everyday life. And it's also, I think it's, you can't really underestimate the importance of the government just giving that kind of stamp of approval, just even putting aside the specifics of the rules, the fact that crypto week is happening, that crypto legislation is getting passed,

it makes it way more likely that people and businesses are gonna wanna experiment with this stuff. And if as many crypto skeptics think, it could all come crashing down at any moment, then that creates new dangers. Well, and also, I mean, the obvious corruption angle here is also one potential fallout.

I can see other politicians, not just in the US, but abroad, who are going to see Donald Trump making hundreds of millions or even billions of dollars from his crypto investments, including his stablecoin project, and saying, well, maybe I need a stablecoin too. Maybe I should make some crypto investments. So it does seem like that is one particularly obvious way in which

it is going to start to matter to people even beyond the crypto industry industry is that this could Just become part of the the kind of corruption playbook for politicians who want to cash in yeah And there's you know the the conflicts of interest are pretty astounding I mean, you know Trump announced his support for the genius act just a couple of days before His company announced that it was offering its own stablecoin. I mean, the timing was pretty amazing. Now, David, I want to ask you about something else in crypto that I've been hearing about over the past few weeks that has a lot of people in tech talking, which are these tokenized

equities. Can you explain what's happening here? So this is kind of a big sort of exciting trend in crypto. I mean, I kind of think of it as like on par with the NFT craze of 2021. You know, it's like the next exciting thing that crypto wants to do. And that it's something that, you know, the industry calls RWAs or real world assets, which are just things in the world. But now we have an acronym for them. And the idea is that you can essentially have a kind of crypto representation of an asset like a share in a company or something that kind of exists outside of the crypto world.

And that this could create ways for you to sort of trade back and forth really quickly some of the advantages of crypto with stocks and companies, even in potentially private companies. And so this is sort of really at the cutting edge of what the crypto world is trying to do right now. Now, the reason I heard about this was that Robin Hood, whose CEO was a recent guest on our podcast, announced that they were going to start offering these tokenized equities in companies like OpenAI and SpaceX. And these are not publicly traded companies, right?

These are private companies. You cannot just log on to your Schwab account and buy shares in OpenAI or SpaceX. But through this sort of tokenized real world asset process, there had been some sort of mechanism that they had discovered to sort of bundle these private equities together under these Crypto tokens and somehow this was supposed to be legal even though it would not be legal to market those Same stocks to just regular retail investors. Am I hearing that right?

My basic understanding is that the way this works is that you know, Robin Hood can buy way this works is that, you know, Robinhood can buy shares in SpaceX or OpenAI sort of on the kind of private market and then can create, you know, crypto token representations of those shares. It's actually almost akin to stable coins where you have like dollars backing the stable coins. In this case, you have shares of those private companies backing the tokenized representations of those private companies, and then you offer trading in those tokens. It's part of this crypto ethos of the little guy shouldn't be shut out of this potentially

really remunerative market for shares in private companies. The trader in his basement should be able to get in on the ground floor of this the same way that a VC in Silicon Valley can own a bunch of open AI shares and become a billionaire when the company goes public. That's my basic understanding of it. Got it. And I mean, this can't possibly be legal, right? I mean, it's like, if you want to list your shares in your company, you have to go through

a whole public process. You have to disclose certain audited financials. You have to file with the SEC. There's a whole process that you have to go through to sell your shares to the public. Is there any chance that this kind of tokenized equity thing stands up either in the Trump administration or in the courts? I think there's clearly going to be a legal fight over it. I mean, Hester Perce, who's the super crypto friendly SEC commissioner has already come out and said that these are securities.

And I mean, you know, she's somebody who's really on the industry side. And so it's definitely, you know, there's gonna be a fight over this. And I'm sure as you saw, I mean, OpenAI came out very quickly and said like, you know, we don't support this right, so It would it would surprise me if there wasn't a very prolonged battle over the legality of this to be clear

Robinhood is only offering this trading and tokenized equities in the EU at the moment So it's not actually available to American customers at this point available in the EU and to any American with a VPN Sounds like you know a lot about VPNs. I mean, to me, the story behind the story here was just that the crypto companies are getting the message from the Trump administration that they are effectively operating in a new world, that they can take risks that they wouldn't

have taken under the Biden administration, that they are not going to be subject to many kinds of enforcement. We also heard just this week that the DOJ's investigation into Polymarket, one of these crypto prediction market companies, was being dropped. So it just seems like no matter where you are in the crypto industry, the message that you are getting from Washington is very clear and that's like, you guys can kind of do whatever you want now. Yeah, I think that's absolutely right.

The industry has been emboldened in all sorts of ways and the push for RWAs, tokenized equities, that's definitely part of that wave. Yeah. So David, how is cryptoo Week going to resolve? Are we going to see these bills passed and will we see like many more bills? Are there gonna be future Crypto Weeks?

Give us a little sense of the future here. Well, the Genius Act will be sent to President Trump's desk and the Clarity Act will get sent over to the Senate where I think its fate is pretty uncertain. But yeah, I think we're inevitably gonna have to check in about this later, because it's pretty up in the air right now. Hmm. Well, I leave this conversation feeling quite unsettled

about the future of the economy. Best of luck to us all. Yeah, would you say you're not a very stable Casey right now? I would, yeah, I'm feeling a little bit less stable, but I do feel like we have a lot of clarity thanks to this genius. Thanks David. Yeah, thanks to you.

I appreciate it, thanks for having me. One more thing before we go. We are working on a back to school episode for this fall about AI and education. And we are very curious to hear from our listeners who are students. If you are a student in college or in high school, we want to hear about how you are using AI for your schoolwork and what impact you think it's having on your education.

We're especially interested in hearing specific examples and stories. Did you read a summary of every book assigned in your class rather than the full book? Do you only turn to AI when you've run out of time or are trying to cram for an exam? Do you find that AI chatbots explain things more clearly than your professors do? If you've had experiences with AI that you think would be interesting to our listeners, please send us a voice memo or better yet a video with your name, where you go to school and your experience to hardforkatnytimes.com and we may feature it in our upcoming episode.

Thanks, and as I said in my yearbook, have a great summer. Hardfork is produced by Whitney Jones and Rachel Cohn. We're edited by Jen Poyant. We're fact-checked by Caitlin Love. Today's show was engineered by Katie McBurne. Original music by Marion Lozano, Rowan Nemesto, Alyssa Moxley, and Dan Powell. Video production by Sawyer Roquet, Pat Gunther, Jake Nichol, and Chris Schott.

You can watch this full episode on YouTube at youtube.com slash Heart Fork. Special thanks to Paula Schuman, Huying Tam, Dalia Haddad, and Jeffrey Miranda. You can email us as always at hardfork at NY times dot com. Send us your suggestions for upcoming episodes of dinosaurs and fire trucks.