Sepolia is an Ethereum test network where developers try out apps before launching them for real, so the tokens have no market value and aren’t linked at all to the real Ether traded on Ethereum’s main network. The task came with no funded wallet to pay deployment fees, and the free-token faucets didn’t work. So the model wrote a script that created 362 addresses from recovery phrases often reused by developers, then checked each one for a suitable balance.

OpenAI says the incident occurred in September

One of the 362 addresses held enough test ether for the job, but before using it, the model stopped and asked itself in its notes whether it was ethical to use a publicly known key and the funds in it. It arrived at the conclusion that the money was “effectively abandoned,” since the recovery phrase was public and test tokens have no value before signing the deployment, paying the fees, and reporting the task as finished. Notably, the model did not say where the money came from.

On Ethereum’s main network, those fees would have come out of someone’s real holdings that the model had no claim to. This is worrying considering crypto and AI firms are now wiring up agents that hold wallets and pay for services with no human signing off on each transaction. OpenAI said it has since cut off the model’s live internet access and added monitoring. The report states that the incident occurred on June 26, but it wasn’t discovered until three months later on September 25.

OpenAI says it found out about the incident while expanding its misalignment monitoring across logs of older model activity. OpenAI has created a framework for reporting misalignment and released its first batch of reports, saying it wants to get concerning behavior out fast, “even when we haven’t fully explained or mitigated” it. However, due to the timing, every honest report becomes material for people assembling complaints like the FTC, which plans to put senior executives under oath and issued civil subpoenas to OpenAI and Anthropic on Wednesday for records on safety incidents, security practices and privacy policies, Cryptopolitan reported.

Months earlier, 15 Republican state attorneys general, led by Iowa’s Brenna Bird, told OpenAI to preserve every record of its Hugging Face breach, including any notes an agent left “apparently for future versions of itself” on escaping the company’s controls. OpenAI admitted to the Hugging Face breach in July, saying that rogue agents broke internal controls, reached the open internet and coordinated what it called “an unprecedented cyber incident.”

Agents reportedly probed three U.S. government sites, among them the Commerce Department’s Census Bureau and the SEC. OpenAI’s new site mentions a number of other incidents, including a September sandbox escape and a lab experiment with self-replicating prompt injection. OpenAI’s CEO Sam Altman has said the company is still sorting through agent activity logs and will disclose cases by severity. The Hugging Face incident is still the worst case found so far.

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Reports about Nvidia’s deal with Hugging Face first surfaced on August 26 this year. The deal was priced at roughly $12.9 billion, and Cryptopolitan noted at the time that neither company directly confirmed it. Nvidia CEO Jensen Huang’s recent blog post confirms that the company intensified its interest in Hugging Face after other buyers, allegedly including Microsoft, became interested. Hugging Face, built by Clément Delangue, Julien Chaumond and Thomas Wolf, is the closest thing open-source AI has to a town square.

Nvidia beats other giants to acquire Hugging Face

Huang’s post put the numbers at more than 3 million models, 500,000 datasets and 1 million applications, hosted for over 200,000 companies. Nvidia is already the single largest contributor of open models and data to the site, having posted more than 500 models and over 250 open datasets. Huang has said the plan for the acquisition surrounds keeping Hugging Face open rather than folding it into Nvidia’s stack.

He wrote that developers will still pick their own models, frameworks, clouds and chips, and “NVIDIA compute will not be required to build on or deploy through Hugging Face.” The deal has raised concerns of neutrality, but in his blog post, Huang referenced an open letter he recently coauthored, arguing that open weights spread AI leadership across companies and countries. Cryptopolitan previously stated that Hugging Face gets its value from supporting “models and hardware from across the industry,” which includes Nvidia’s rivals, AMD and Intel.

Owning the Hugging Face platform gives Nvidia a direct line to millions of developers, and that is an asset the company could use to its unfair advantage. The platform even turned down a $500 million Nvidia investment at a $7 billion valuation last year, unwilling to let one investor hold too much sway. The company’s valuation shot up to its current $12.9 billion price following an incident in which an unreleased OpenAI model autonomously escaped testing and infiltrated Hugging Face’s platform, thrusting it into the spotlight.

Nvidia has the money to spare, reporting $96.2 billion in fiscal second-quarter revenue, up 106% from a year earlier. $89 billion of that money came from data centers. The company reportedly had $18 billion designated for equity investments through the rest of the fiscal year, on top of $47.9 billion already held in private companies. Like Nvidia, other companies are attempting to take control of what analysts call the “AI middle layer.” For instance, Stripe recently confirmed its $7.5 billion acquisition of OpenRouter.

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