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Anthropic CEO Dario Amodei publicly rejected the Pentagon’s demand on Thursday. The Defense Department wants unrestricted military use of the company’s AI technology. The deadline, just hours away, could see the $380 billion startup expelled from the US military’s supply chain.
The showdown marks the first time a major AI company has publicly defied a US government threat to seize control of its technology.
The Standoff
In a blog post published on Anthropic’s website, Amodei called the Pentagon’s threats “inherently contradictory,” noting that one designates Anthropic as a security risk while the other treats Claude as essential to national security.
“Regardless, these threats do not change our position: we cannot in good conscience accede to their request,” Amodei wrote.
The dispute centers on two conditions Anthropic placed on military use of Claude. The company bars autonomous targeting of enemy combatants and prohibits mass surveillance of US citizens. The Pentagon views these as unacceptable limitations on lawful military operations.
Anthropic said the Pentagon’s “final offer,” received overnight Wednesday, failed to address its core concerns. “New language framed as compromise was paired with legalese that would allow those safeguards to be disregarded at will,” an Anthropic spokesperson said in a statement, as reported by The Hill.
Defense Department spokesman Sean Parnell issued a public ultimatum on Thursday. He gave Anthropic until 5:01 pm ET on Friday to grant unrestricted access to Claude Gov — or face termination of the partnership and designation as a supply chain risk.
“We will not let ANY company dictate the terms regarding how we make operational decisions,” Parnell wrote on X.
Timeline of Escalation
On Tuesday, Amodei met directly with Defense Secretary Pete Hegseth, during which Pentagon officials outlined three consequences for noncompliance. First, removal from military systems. Second, supply chain risk designation that would bar other defense contractors from using Anthropic products. Third, the invocation of the 1950 Defense Production Act to legally compel the company to hand over its technology.
Amodei argued in the blog post that the refusal is also grounded in technical reality. “Frontier AI systems are simply not reliable enough to power fully autonomous weapons,” he wrote, adding that without proper oversight, such systems “cannot be relied upon to exercise the critical judgment that our highly trained, professional troops exhibit every day.”
Republican Senator Thom Tillis criticized the Pentagon’s handling of the dispute. “Why in the hell are we having this discussion in public? This is not the way you deal with a strategic vendor,” Tillis told reporters.
What’s at Stake
For Anthropic, the immediate exposure is a $200 million military contract. But the supply chain risk designation carries far broader implications. It would force every defense contractor to verify that they don’t use Anthropic products in their operations.
The competitive landscape is shifting fast. Elon Musk’s xAI signed a deal to use Grok in classified systems, according to Axios, accepting the ‘all lawful purposes’ standard for classified work. OpenAI and Google are accelerating negotiations to enter the classified space. Anthropic, once the only AI company cleared for classified material, risks losing that first-mover advantage entirely.
Why Crypto Should Pay Attention
The Pentagon’s willingness to invoke the Defense Production Act against a technology company sets a precedent that extends beyond AI. If the government can legally compel an AI firm to remove safety restrictions on national security grounds, the same framework could, in theory, be applied to compel crypto companies to modify privacy features or weaken transaction safeguards.
The standoff also strengthens the case for decentralized AI development. A centralized AI provider can be pressured — or legally compelled — to strip away guardrails at a government’s demand. That validates the thesis that decentralized alternatives offer more resilient infrastructure against state coercion.
Anthropic’s rapid growth has already raised concerns for crypto markets. The company’s $380 billion valuation and AI-driven disruption of traditional software revenue are putting pressure on private credit flows that correlate closely with Bitcoin.
Anthropic also has a historical link to crypto: FTX’s bankruptcy estate held a significant early stake in the company, which it later sold to help fund creditor repayments.
The Friday deadline will pass, but the real question begins after: whether the Pentagon follows through, and what that means for every technology company drawing a line between government contracts and product integrity.
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