The Breakdown - The $70B AI IPO, Claude Cracks a Lost Wallet, and CLARITY Advances | The Breakdown

Episode Date: May 15, 2026

Hyperliquid enabled early exposure to the biggest AI IPO of the year. Claude helped recover a Bitcoin wallet locked for 11 years. And CLARITY made it through markup. David runs through all three. Enjoy! TIMESTAMPS: 00:00 Intro 01:05 Cerebras 12:42 Claude Rescues Wallet 19:17 CLARITY Markup Update FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

It is Friday, May the 15th. I'm your host David Canellas and this is The Breakdown. As always, we have a few quick stories for you this morning to get you ready for the day ahead and the weekend in waiting. First, we're going to take a look at yesterday's mega IPO of Cerebrus, AI chipmaker, NVIDIA competitor, went bananas, raised $5.55 billion yesterday in a mega successful IPO. And Crypto rails actually gave proper price discovery before the fact. We're going to be taking a look at that.

We're going to look at this story about someone using Claude to retrieve almost half a million dollars worth of Bitcoin thought to be lost for about a decade. And then we're going to round it out with an update to the Clarity Act after yesterday's markup session in the Senate. So without further ado, this is the breakdown. Let's get to it. Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone

on the show are opinions, not financial advice. Host and guest may hold positions in the company's funds or projects discussed. So let's kick it off with this story about the mega cerebrus IPO from yesterday. As the FT points out, less than a year ago, it was valued at $8.1 billion in private financing. Now it's worth almost $70 billion. So an impressive near 9x, I think that is, in under a year, which to be expected, if you're following the hype around AI stocks, chipmaker stocks. Something that's interesting here, I mean, the stock more than double. as soon as it went live on the NASDAQ yesterday

and ended up closing about 68% higher at the end of the day's trade. And a 70 billion market capitalization puts it on par with about General Motors or Warner Brothers Discovery, which is nice contextual comparison there. But what I found cool, if you're not up to speed with what Cerebrus is doing in comparison to other chip makers, the FT points out that Cerebrus's technology uses entire sheets of silicon to make a chip the size of a dinner plate or 58 times larger than the Nvidia GPUs that dominate the AI market.

The outsized design does away with the need to link many smaller chips together, which can slow responses to users' AI queries, which is a cool development because we all know that GPUs have basically been reverse-engineered to, I mean, first they're reverse-engineered to mine crypto, and now they've been reverse engineered and applied onto the AI space and compute. Cerebus had actually been working on these chips for more than a decade. So very interesting there. But the real crypto angle here is that I'm going to pull up hyperliquid.

Because trade XYZ has had pre-IPO tokenized equity perps on hyperliquid. since the start of May, and I don't think it will be used to many people, that there have, for the longest time, been a lot of opportunistic initiatives and projects trying to provide retail traders and other speculators a way to gain exposure to massively hyped tech stocks and stocks in general before they IPO. And of course, that opens up the door to a lot of scams and a lot of fraud and a lot of exploitative behavior on behalf of the people that are offering these pre-IPO exposure avenues. But what's happening on hyperliquid and through trade XYZ is is kind of a is what seems to be a much more appropriate and useful and transparent way to actually gain

exposure pre-IPO to these stocks. And I'm going to go through some other, I'm going to go through some other pre-IPO stocks that haven't been as neat as the Cerebrous launch has been. But as you'll see on my screen, that these Cerebrus pre-IPO tokens were launched on the 1st of May, which is a whole fortnight before the IPO actually took place. And of course, there was some volatility. The tokens opened at 190. and after a few days or a couple of days, they ended up closing at 313. But then they, of course, as you would expect during a phase of price discovery for pre-IPO tokens. It actually corrected quite sharply after only a day or two.

So there's quite some volatility, but from there we had a steady rise up until the time of the actual IPO. And if we pull out of this view, we can actually see that, of course, the IPO happened on the 14th, which was a massive spike in volume on hyperliquid for Cerebrus for this particular pair. So while there was some volatility, obviously hyperliquid users were able to gain very realistic exposure to Cerebrus two weeks before they ever happened. And I have this tweet here from Anselm who pointed this. out yesterday. He says, price discovery for the largest AI tech IPO of the year happened on crypto rails through a decentralized perpetuals platform and gave retail an entry 50% lower than what it is going to open at on the NASDAQ, which I do find very cool, because on one hand,

we're going through a real world assets boom in crypto. Wall Street, Finance, Tradfai are seemingly on the precipice of bringing all kinds of different stocks, bonds, you name it, on chain, which is very cool. But actually, what we have here is a crypto-native application that is providing real utility directly to crypto users without necessarily the need to involve TradFi at all. So to me, this is exactly crypto being on the right path. It is worth pointing out that it hasn't exactly been smooth sailing for some other pre-IPO tokenized stocks.

I'll pull up the OpenAI equivalent here on screen. And you can see that pre-IPO tokens have actually been trading on crypto rails for at least September. And we have seen pretty steady increases. I mean, we started out at around $500, $500. And we reached a top of around $2,000, about a week ago before a huge crash in the price of Open AI pre-IPO tokens. And the same, if I pulled up Anthropic, you would see exactly the same thing.

And these crashes happened because, and this was in response to some blog posts from Anthropic and Open AI that effectively said any shares that are trading pre-IPO. Transfer of that would be effectively null and void. So we've caught into question the ability for some of these teams and companies who are trading, who are offering trading on some of these pre-IPO equities, according to question how well they will be able to service their end users if they don't have any rights to the shares themselves. And we have this post here from Gabriel Shapiro.

And he explains there is an active secondary market purportedly in Anthropic stock or derivatives, including on fairly reputable or at least well-known platforms like Forge. Anthropic is calling them out specifically by name and essentially saying 100% of these are illegal. Effectively treating them as void. And I mean, here I'm pulling up the anthropic pre-stock tokens as well. And you can see that there was a big drop-off, a big crash, just after these blog posts came out. And I suppose that there is no real way of knowing exactly what is going to happen,

considering it would take both open AI and anthropics actually to make good on their legal threats and really nullify these shares. But regardless, I think it's clear that the real utility for crypto users trying to trade pre-IPO stocks is purely the price exposure that comes with access to markets for pre-IPO stocks. It's not exactly that people trading pre-IPO perps exactly really do want to ensure that they have legal claim to shares. They just want the ability to gain price exposure to the shares. before they are converted into real equity and the administrative task of sorting out

who owns which shares from the pre-IPO market and then converted into real equity, all that sort of thing. I don't think that is really a primary concern for the people who are trading, at least on hyperliquid through trade XYZ and pre-stocks and all that sort of stuff. But we can check out how big exactly these markets are. And that might explain why there has been such a visceral response to the blog post from OpenAI Ananthropic, fighting back against the idea of their shares being traded in pre-IPO markets. Let's take a look at the Blockworth Research Analytics tab for pre-stocks.

So, yeah, I have on my screen here the total supply was effectively the market cap of the pre-stock tokens that are currently trading. And there are a few other firms that are offering pre-stock tokens as well. But this is specifically for pre-stocks. So we're seeing that in total, the market cap for pre-stock IPO tokens, that's across Anthropic, SpaceX, OpenAI, ANGEL, Neurril, Neurilk, XAI, Polymarket, and Kauci. At their peak, it was $28 million worth of market cap for the token specifically. So these are essentially micro-cap tokens tied to the speculative value of the shares as we head into potential IPOs for these companies. So that might explain why there is so much volatility around these tokens, specifically the big crashes for Anthropic and Open Hour,

because it just takes a few highly capitalized investors who do. do have quite a lot of exposure to reduce their exposure, and we would see the prices come down. In terms of numbers of users, let's see if we have that, total holders by token. So we can see that SpaceX actually has the highest number of holders, but all up we're looking at 18,000 addresses or so that are involved in this market, which, yeah,

this number keeps coming back around. In general, I think it was the mega-eath, It was the mega-eath points campaign that had a similar amount of active addresses that were trying to find points. For NFTs, we would probably see a similar amount of unique addresses trading NFTs every day. So in terms of the highly engaged speculative audience that are currently engaged in the most high-profile speculative behavior on crypto markets, it still hovers around this 18. 20,000 active address mark, which I find quite interesting. But that said, I mean, even it is though, even though it is such a relatively small crowd, I guess it's not relatively small in crypto terms, but you can see that the spot trading volume of the tokens is actually

increasing quite a lot over time regardless. Here we have the weekly view. And this past week was actually an all-time high for spot trading at around $100 million, so just short of that. So I would not expect that the people who are trading these tokens would actually care that they actually get equity at the end of the day. As Ansem said, it is highly more likely that they are more interested in getting an entry into those stocks that is much lower than what they are going to open at at the NASDAQ. But in any case, on to the next one. Okay, so here is a, I want to call it, I use this term a lot, but here is a heartwarming story that you don't read every day, that a Bitcoin holder from way back when was able to unlock their Bitcoin wallet using Claude, which, I mean, it's quite fascinating because, of course,

we've had these stories of, I mean, the big one is that guy in the UK who reckons he has almost a billion dollars or something like that, in a locked in a hard drive that is currently in landfill and he was fighting for years to. be allowed to excavate and search the landfill for his missing hard drive, but those efforts were not able to be seen through. But here we have actually a success story of something quite similar. We have this write-up in Sherwood, which is Robin Hood's news outlet. Yesterday was the best day of my life for an anonymous ex-user, Captain Arcorn, CPR Corn,

who said, Claude helped him recover five Bitcoin stuck for a land. years in a blockchain wallet encrypted with a forgotten second password. He says he bought the Bitcoin for between $200 and $300 and is now worth roughly $400,000, which is incredible. He says that he was locked out for 11 plus years because I got stoned and changed the password, he said. So it's not like Claude actually cracked the cryptography around the hardware wallet itself or the wallet itself.

But he, But Claude was able to piece together the password from the information that CPR corn had fed it. He says that he had tested, or through Claude, he had tested 3.5 trillion passwords in order to get into the wallet. He said that he fed Claude a ton of specific information. There is like this Bitcoin recover I tried to use on my own. And then I kind of fed that into Claude so it had password recovery to lean off of. and then I talked back and forth. He added that he had old MacBooks, old hard drives, and some cloud data repository.

So yeah, I basically gave it my full history. I was taking pictures of school notebooks and sent them to Claude, trying everything to piece anything together. I also said how I make passwords. I gave Claude context. He said that a few weeks ago, Claude said it had figured it out, but in reality it hadn't. So yesterday he didn't believe that it had actually done it this time. So he has here some output from Claude, which explains exactly. how Claude was able to do it.

So, yeah, the blockchain.com wallet was encrypted with a forgotten second password. The recovery path that worked was an old wallet backup from December 2019 downloaded on an old computer was decryptable with the old second password that we already knew from a notebook mnemonic. The Bitcoin private keys never change, only the encryption around them does. So decrypting the old backup with the old backup with the notebook. the old password gave us the same private keys controlling the current funds. And that's how they were able to unlock the Bitcoin.

So essentially this was a case of this guy literally forgot how he forgot the password to his blockchain.com wallet. And instead of, I mean, yeah, they brute forced a bunch of different passwords. That's really cool. But basically he was feeding this, his philosophy for parties. password making and hoping that Claude would be able to match the logic enough times that it would eventually result in the correct password. And in this case, it actually did work. So for one, that's amazing that all this sort of about quantum computing, cracking cryptography and stuff like that.

And obviously we are quite a ways away from that. What we do have here is like a second brain effectively working to figure out the logic involved that did result in the correct. What really happened here is that the seed phrase for an older wallet, the words were written out of order. And so Claude was able to figure out the correct order of those seed phrases based on the information that the user had given it. So all of that is obviously really cool and a huge win for the user. I will say that using LLMs, especially the ones that aren't running on local machines, if you're not running your own instance of these LLMs, does obviously present a big attack vector,

especially in light of this story that came out yesterday that says OpenAI says hackers stole some data after the latest code security issue. This is from TechCrunch. OpenAI confirmed that two employees had their devices impacted by this attack, but after an investigation, the company said in a blog post that found no evidence that open AI user data was accessed, that our production systems or intellectual property were compromised, or that our software was altered. So at least in this case, it did not result in any user data being siphoned away.

But any time that you're relying on an online tool to manage your seed phrases, you know, your passwords, what have you, it does present opportunity for. a man in the middle attack to intercept those passwords and those private keys. I do subscribe to the idea that in 5, 10, 15 years, the primary way that people will interact with crypto is through an AI. And if that is the case, then we need to make sure that we have a lot of security in terms of your own personal hygiene when it comes to interacting with this stuff. So I would just treat this as a cautionary tale, one, to make sure that your seed phrases,

your passwords are securely backed up and you can actually read them and they are legible and they are in the right order. And if they're not, you do have detailed instructions on how to recover those passwords and those private keys. Otherwise, if you do need to use LLMs to handle your private keys, your user data, your passwords, then perhaps it would make sense to do that on a local instance of these AI models, which I think would actually do quite well. But hey, don't take it from me.

It's worth doing your own research on how to secure your private keys and passwords securely and not just listen to podcasters. Okay, on to the next one. Okay, so yesterday the Clarity Act did actually go into markup with the Senate banking community. And I mean, this has been years in the making. A lot of work has gone into this from industry. lobbyists from from senators as well. And actually it did move forward to the next stage, which which is, which is very, very good. And it actually gained support from two Democrats,

which is actually a big deal because this is still months away from moving forward at all. And now the question is whether or not the bill actually is fully passed before the end of the year, before the midterms. Because if it is the case that the Republicans do lose control of the House and the Senate, the Democrats definitely need to be on board with what is in the bill in order to move that forward at the end of the day. But that said, the Democrats that did vote in favor of advancing the bill, Gallido and also Brooks said that they might not vote in favor of the bill on the Senate floor as negotiation between lawmakers remained fluid. So it is not a done deal at all, but still at the same time we had some crypto stocks pop on word

that it did at least advance to the next stage and Bitcoin even retook 82,000 on the back of the positive news. I'm just going to pull up here this take from Coin Center that gives a little bit more context over the most important language to watch moving forward. What CoinCenter is looking closely at is actually something called the Blockchain Regulatory Certainty Act

or BRCA, which at the moment has survived. but CoinCenter is quite worried that eventually it might be scrubbed from the Clarity Act altogether. The BRCA explicitly protects blockchain developers and service providers that do not have control over user assets from being considered money transmitters for purposes of regulatory licensure and potential criminal liability. The purpose of the BRCA is to prevent what has already happened several times in the past, aggressive regulators and prosecutors broadly interpreting money transmission laws to target developers of blockchain tools. So, yeah, this idea that Ethereum validators or what have you would be held responsible for the, for facilitating trade of, let's say, coins that might be considered securities at some point.

So which makes them liable for illegally facilitating the transfer of unregistered securities and they would fall shy. of the SEC and so on. Coincenter points out that a bipartisan group of senators voted in favor of advancing the Clarity Act with the core provisions of the BRCA intact. But amendments would have gutted those provisions that didn't make it through. So the BRCA has actually been actively challenged and it could be actively challenged again as the bill heads for further debate and potential passing later in the year. And so what Coincenter is essentially worried about?

is that it could get to the point that there is so much, there's been so much time, so much energy and so much money invested in getting the Clarity Act through, that there could be an atmosphere of, well, let's just get the Clarity Act through in any case, even if it means abandoning some developer protections in favor of their own interests. That could happen at the last minute. So, CoinCenter is very concerned that. minute negotiations on the floor could strip the BRCA's developer protections from the bill right at the time of passage. To stop that, we will soon be asking many in Congress in the industry to commit to rejecting such a bad compromise.

Otherwise, we risk sacrificing neutral developers on the altar of big crypto business regulation, which I would have to say is quite concerning. If we don't protect devs and regulate trusted companies, we give up our sovereignty. As the senator expressed, he's referring to Senator Lammis, Bitcoin allows the victims of oppressive regimes to walk away from their tyrants with their assets in hand. Nothing could matter more to American interests at home and abroad. And that vision is only safe if BRCA is safe on the Senate floor. This is just a quick update to clarity.

The fight is not over yet. We're going to be watching this closely, basically, until the end of the year. And unfortunately, it looks like we might have to pass this thing this year. If it doesn't pass this year, it could. be the case that it doesn't pass at all, which would be incredibly frustrating for many, not just lobbyists in the industry, but also senators that have been working so closely with the crypto space in order to get this across the line. And also, I worry that it would effectively force a lot of us to check out from the whole idea of regulating crypto at all. And we could,

again, be back to square one. So for now, I'm happy to put a pin in tracking clarity so closely, because it is just a headache of back and forths. And it is just ironic that this thing is called clarity when it is never going to be exactly clear what we are going to end up with at the end of the day. All that we get is sentiment every time we have one of these updates. And the sentiment, at least right now, it is interesting that we had two Democrats sign on to pass this thing.

That could be wishy-washy support, we just don't know. it is going to be the more Democrats that we have on board with the Clarity Act provisions, the better, especially considering it could be the case that the Democrat influence is going to only increase as we head into the midterms and beyond. So this is about all I'm looking at today. This is a little bit of a rocky one. Thank you for sticking with me. I got a little bit of Friday brain.

But hey, what can you do? maybe you're feeling somewhat similar. But in any case, look after yourselves and we'll see you next week. Goodbye.