Two stories about the Claude maker Anthropic broke on Tuesday that, when combined, arguably paint a chilling picture. First, US Defense Secretary Pete Hegseth is reportedly pressuring Anthropic to yield its AI safeguards and give the military unrestrained access to its Claude AI chatbot. The company then chose the same day that the Hegseth news broke to drop its centerpiece safety pledge.

On Tuesday, Anthropic said it was modifying its Responsible Scaling Policy (RSP) to lower safety guardrails. Up until now, the company's core pledge has been to stop training new AI models unless specific safety guidelines can be guaranteed in advance. This policy, which set hard tripwires to halt development, was a big part of Anthropic's pitch to businesses and consumers.

“Two and a half years later, our honest assessment is that some parts of this theory of change have played out as we hoped, but others have not,” Anthropic wrote. Now, its updated policy approaches safety relatively, rather than with strict red lines.

Anthropic's quotes in an interview with Time sound reasonable enough in a vacuum. "We felt that it wouldn't actually help anyone for us to stop training AI models," Jared Kaplan, Anthropic's chief science officer, told Time. "We didn't really feel, with the rapid advance of AI, that it made sense for us to make unilateral commitments… if competitors are blazing ahead."

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But you could also read those quotes as the latest example of a hot startup’s ethics becoming grayer as its valuation rises. (Remember Google’s old “Don’t be evil” mantra that it later removed from its code of conduct?) The latest versions of Claude have drawn widespread praise, especially in coding. In February, Anthropic raised $30 billion in new investments. It now has a valuation of $380 billion. (Speaking of the competition Kaplan referred to, rival OpenAI is currently valued at over $850 billion.)

In place of Anthropic's previous tripwires, it will implement new "Risk Reports" and "Frontier Safety Roadmaps." These disclosure models are designed to provide transparency to the public in place of those hard lines in the sand.

Anthropic says the change was motivated by a "collective action problem" stemming from the competitive AI landscape and the US's anti-regulatory approach. "If one AI developer paused development to implement safety measures while others moved forward training and deploying AI systems without strong mitigations, that could result in a world that is less safe," the new RSP reads. "The developers with the weakest protections would set the pace, and responsible developers would lose their ability to do safety research and advance the public benefit."

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Neither Anthropic's announcement nor the Time exclusive mentions the elephant in the room: the Pentagon's pressure campaign. On Tuesday, Axios reported that Hegseth told Anthropic CEO Dario Amodei that the company has until Friday to give the military unfettered access to its AI model or face penalties. The company has reportedly offered to adopt its usage policies for the Pentagon. However, it wouldn't allow its model to be used for the mass surveillance of Americans or weapons that fire without human involvement.

If Anthropic doesn't relent, experts say its best bet would be legal action. But will the Pentagon's proposed penalties be enough to scare a profit-driven startup into compliance? Hegseths' threats reportedly include invoking the Defense Production Act, which gives the president authority to direct private companies prioritize certain contracts in the name of national defense. The military could also sever its contract with Anthropic and designate it as a supply chain risk. That would force other companies working with the Pentagon to certify that Claude isn't included in their workflows.

Claude is the only AI model currently used for the military's most sensitive work. "The only reason we're still talking to these people is we need them and we need them now,” a defense official told Axios. “The problem for these guys is they are that good." Claude was reportedly used in the Maduro raid in Venezuela, a topic Amodei is said to have raised with its partner Palantir.

Time's story about the new RSP included reactions from a nonprofit director focused on AI risks. Chris Painter, director of METR, described the changes as both understandable and perhaps an ill omen. "I like the emphasis on transparent risk reporting and publicly verifiable safety roadmaps," he said. However, he also raised concerns that the more flexible RSP could lead to a "frog-boiling" effect. In other words, when safety becomes a gray area, a seemingly never-ending series of rationalizations could take the company down the very dark path it once condemned.

Painter said the new RSP shows that Anthropic "believes it needs to shift into triage mode with its safety plans, because methods to assess and mitigate risk are not keeping up with the pace of capabilities. This is more evidence that society is not prepared for the potential catastrophic risks posed by AI."

Nevada is taking action against the rapidly growing Wild West of prediction markets. The state's gambling regulators and attorney general sued Kalshi on Tuesday. They accuse the company of bypassing Nevada law by operating a sports gambling market without proper licenses. In addition, they say Kalshi provides services to individuals under 21, which violates state law.

The lawsuit follows a federal appeals court’s rejection of Kalshi's request to prevent the state from pursuing legal action. And it comes a day after the Trump administration claimed that only the federal government has the right to enforce the industry.

Prediction markets, which allow users to bet on events such as sports, political outcomes and wars, have exploded in popularity. Business Insider reports that Kalshi did 27 times as much business during this year's Super Bowl as last year's. Some of that growth has been at the expense of regulated gambling; Nevada's gambling operations did less business during this year's game.

"Kalshi has continued to dramatically expand its business, rather than attempting to maintain any kind of status quo," Nevada regulators wrote in a letter this month.

Kalshi and rival Polymarket insist that their businesses are "event contracts" and should be regulated as financial investments rather than gambling. The Trump administration, rife with conflicts of interest in this area, agrees. The Chair of the Commodity Futures Trading Commission (CFTC) filed an amicus brief on Tuesday, claiming that it alone has the authority to enforce the prediction market.

"The CFTC will no longer sit idly by while overzealous state governments undermine the agency's exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products," CFTC Chair Michael Selig wrote in a Wall Street Journal op-ed.

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Not coincidentally, prediction markets are a growing part of the Trump family business. Donald Trump Jr. is a paid adviser to Kalshi. He's also an investor in and unpaid adviser to Polymarket. In January, his family's social media business said it would launch its own prediction market platform.

Prediction markets have the potential to be a hotbed of insider trading. According to blockchain analyst DeFi Oasis, fewer than 0.04 percent of Polymarket accounts have captured over 70 percent of the platform's total profits, totaling over $3.7 billion.

Last month, The Guardian highlighted the case of a Polymarket user who bet tens of thousands of dollars on "yes" to the question, "Israel's military action against Iran by Friday?" Within 24 hours, Israel bombed Iran, leaving hundreds dead. The user made $128,000 on that bet. The Guardian traced the blockchain data to a wallet associated with an X account. Its location on the social platform was set to Beit Ha'shita, a northern Israeli settlement. The user later transferred their bets to two other accounts, apparently to avoid detection. In January, the accounts held 10 live bets on Israeli military strategy.

Another anonymous user made over $400,000 by betting that Nicolás Maduro would be ousted by the end of January. The bets were placed in the hours and days leading up to the US strikes on Venezuela. In another case, eight jointly owned accounts collectively generated over $161,000 by betting on the country's María Corina Machado Parisca winning the Nobel Peace Prize. The accounts' handles used names such as "fmaduro," "madurowilllose," "striketheboats" and "trumpdeservesit".