Nvidia Faces Crisis After CEO’s Departure and $600 Billion Loss

Latest "Deconstruction" text version.

This week’s “Deconstruction” focuses on Nvidia’s CEO stepping down, Bitcoin’s drop below $69,000, Congressional pressure on Donald Trump’s crypto projects, and the collapse of Web3 startups due to LLM-jacking.

Nvidia’s Crisis

The resignation of Jensen Huang over workplace affairs quickly escalated into a U.S. national security issue. His relationship with a subordinate exposed a large-scale scheme to smuggle AI chips to China, bypassing sanctions, triggering three parallel Justice Department investigations and a significant sell-off in the stock market. Nvidia lost $600 billion in market capitalization, dragging down global tech indices and shifting capital to direct competitors.

For the crypto industry, this crisis tests the resilience of the entire AI bubble. With Nvidia’s leadership change, the company risks falling behind schedule, leading to an infrastructure shortage for Web3 startups. Funds are withdrawing capital from AI tokens, factoring in political risks, and only projects that find alternative computing power suppliers are likely to survive.

Crypto Market Crash

Corporate upheavals and high inflation in the U.S. triggered a cascade of liquidations in the futures market, pushing Bitcoin down to $68,600. The negative macroeconomic backdrop led to a record $14.2 billion reduction in stablecoin supply since June 2022, indicating a mass investor shift to fiat.

A concerning signal was MSCI’s decision to exclude Strategy, a company using Bitcoin instead of an operational business, from global benchmarks. Wall Street is deliberately pushing shell companies holding cryptocurrencies out of traditional indices, dealing a severe blow to the idea of corporate adoption of digital assets and forcing passive funds to liquidate billions in securities.

Subpoenas for Trump’s Projects

The aggressive policy of U.S. authorities has become a strong deterrent for institutional capital. The threat of receiving a subpoena after public hearings on investor losses had an immediate effect: even Donald Trump was forced to publicly distance himself from his family’s crypto business. This situation demonstrates the effectiveness of regulators’ strategy of pressure through lawsuits.

The U.S. Securities and Exchange Commission (SEC) has joined forces with the Commodity Futures Trading Commission (CFTC), eliminating startups’ last chance to navigate between jurisdictions. For crypto projects, this means a significant increase in legal budgets, already causing a long-term massive outflow of capital and developers from the U.S. to regions with clearer regulations, such as the EU and UAE.

LLM-Jacking Epidemic

A new type of attack at the intersection of AI and the crypto market has been recorded in cybersecurity — LLM-jacking. Hackers steal access keys to paid language models and within hours rack up huge cloud service bills for the owners, reaching $1 million.

The main danger is that stolen AI resources create a shadow market for automating new attacks. Algorithms, without human intervention, scan foreign infrastructure for private keys to crypto wallets. If a Web3 startup stores access to AI and blockchain in a single environment, such a breach leads to the immediate loss of all cryptocurrency and simultaneous bankruptcy due to debts to cloud providers.

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