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Dear QF Community, This is a special post following Anthropic’s recently published report (https://www.anthropic.com/news/detect...) , which outlines what it describes as large scale “distillation” campaigns targeting its Claude models. According to the report, three Chinese AI labs, namely DeepSeek, Moonshot AI and MiniMax, generated more than 16 million exchanges with Claude using approximately 24,000 accounts, allegedly in violation of Anthropic’s terms of service and regional access restrictions. In a nutshell, distillation is a standard and widely used machine learning technique in which a smaller model is trained on the outputs of a stronger one. Frontier labs routinely use it internally to produce smaller, cheaper, and more efficient versions of their own systems. The issue arises when the same technique is used without authorisation. In that context, distillation can become a means of replicating advanced capabilities without incurring the full research, compute, and data costs required to develop them independently. Anthropic argues that the campaigns it identified were not typical API usage, but rather structured efforts to extract model capabilities at scale. According to the report, the patterns observed included: High volume, repetitive prompt structures Coordinated activity across large numbers of accounts Targeted elicitation of reasoning traces and tool use behaviours Proxy-based “hydra cluster” traffic distribution to evade detection Anthropic attributes specific areas of focus to each lab: DeepSeek: Over 150,000 exchanges targeting reasoning capabilities, rubric based grading tasks, and the generation of step by step reasoning traces. Moonshot AI: Over 3.4 million exchanges focused on agentic reasoning, coding, data analysis, and computer use agents. MiniMax: Over 13 million exchanges centred on agentic coding and tool orchestration, including rapid traffic shifts following new model releases. Anthropic also states that its attribution was based on IP correlation, request metadata, infrastructure indicators, and corroboration from industry partners. Economic and National Security Implications The report highlights an asymmetry inherent in API based frontier models. Labs invest billions in compute infrastructure and data pipelines to train large foundation models. However, if competitors are able to extract high quality outputs at scale, they may compress development timelines and reduce costs through distillation. Anthropic also frames distillation as a national security concern. The company argues that models derived through illicit distillation may not retain the original safety safeguards and could therefore be deployed in ways the originating lab would not permit. The report links this issue to export controls, suggesting that distillation may weaken policy mechanisms designed to preserve competitive and technological advantages. In Anthropic’s view, restricting access to advanced chips could limit both direct model training and the scale at which large scale distillation efforts can occur. Defensive Measures Anthropic outlines several countermeasures that are now in place: Detection classifiers and behavioural fingerprinting systems Monitoring for coordinated account activity Detection of chain of thought elicitation patterns Intelligence sharing with other AI labs and cloud providers Stronger verification requirements for account types commonly used to establish access The company emphasises that no single organisation can fully address the issue on its own and calls for coordinated responses across both industry and policymakers. Zero-Knowledge Proofs for “Proof of Training” At Quantum Formalism (QF), we believe the industry may eventually move toward some form of Zero Knowledge Proofs (ZKPs), as a mechanism for “Proof of Training.” In simple terms, a Zero Knowledge Proof allows one party to demonstrate that a statement is true without revealing the underlying data. More specifically, Zero Knowledge Succinct Non Interactive Arguments of Knowledge, known as ZK SNARKs, make it possible to generate compact, publicly verifiable proofs that a particular computation was carried out. For those who prefer a more concrete and relatable analogy, imagine Pepsi announcing that it has invented an entirely new soft drink formula that just happens to taste remarkably similar to Coca Cola’s flagship product. In an ordinary commercial setting, Pepsi could simply state that it developed the formula independently. However, if the stakes were significantly higher, involving intellectual property disputes, regulatory scrutiny, or even national trade restrictions, a verbal assurance would not be enough. The central question would then become clear: how can Pepsi prove that it did not reverse engineer or copy Coca Cola’s formula without revealing its own secret recipe? This is pre...