Did you notice the silence?

Last week, a report emerged that the US government is negotiating equity stakes in top AI labs — OpenAI, Anthropic, DeepMind — while the same agencies draft the regulatory rulebook that will define their future. In my 16 years watching markets — first as a junior quant in Lagos during the 2017 ICO bubble, then as a community founder through the DeFi summer and the Luna collapse — I have seen many conflicts of interest. But this one is different. This one is systemic. It’s like the referee buying a stake in the home team before the final whistle.

Here is what I mean.

Context: The New Player on the Field

For years, the US government positioned itself as a distant regulator — setting broad guidelines, funding basic research, and letting private markets innovate. That model is dead. Today, the government is becoming a direct equity investor in the most capital-intensive AI companies. Through agencies like the Defense Department’s Strategic Capital Office and the U.S. International Development Finance Corporation (DFC), Washington is quietly taking seats at the cap table.

At the same time, the White House Office of Science and Technology Policy, the Commerce Department’s AI Safety Institute, and the Federal Trade Commission are designing the regulatory frameworks that will govern AI safety, data privacy, and export controls. The same government that owns shares in an AI firm will soon decide whether that firm is allowed to export its model, or whether its algorithm is “safe enough” for public deployment.

This is not theory. In February 2025, the White House issued a memorandum authorizing the DFC to invest directly in “critical emerging technologies,” including AI. No disclosure limits, no firewall between the investment arm and the rule-writing arm. The market barely blinked. But I blinked — because I have audited smart contracts where the same team controlled both the oracle and the lending pool.

Core: The Forensic Dissection of a Conflict

Let me break this down the way I break down a DeFi protocol before I allocate my community’s capital. We have three facts:

1. The US government is a shareholder in select AI companies.
2. The same government is the primary regulator for AI products and services.
3. There is no legally mandated separation between the investment team and the regulatory team.

This is not a bug — it is a feature. The government’s stated goal is to “ensure American leadership in AI.” But leadership without supervision is just permission to print monopoly. When you own equity, your incentive is to maximize the company’s value — through higher revenues, fewer restrictions, and favorable regulatory treatment. If you are also the regulator, you will write rules that protect your investment, not the public.

I saw this exact pattern in 2020 during the DeFi yield trap. The SushiSwap and Curve pools had oracle manipulation vulnerabilities, and the teams that created them also controlled the governance. When the sETH/ETH pool experienced unexpected slippage, I rallied my Telegram group to withdraw funds before the bug bounty hunters could fully exploit the vulnerability. We saved 85% of our capital. But the lesson stuck: when the referee owns the ball, the game is rigged.

Now apply that to AI. Imagine an AI model used in hiring or law enforcement. If the government holds equity in the company that built it, will it audit that model as rigorously as it audits a competitor’s? Of course not. The shareholder interest will whisper, “This company is a national champion — let’s not slow it down with compliance costs.” That whisper becomes a regulatory gap. And that gap becomes a systemic risk.

Every scar in the market teaches a new rule. The rule here is simple: separate capital from control. If the government wants to invest in AI, it must create an independent oversight body — a “regulatory Chinese wall” — with no ties to the investment arm. Without that, we are building a casino where the house owns the dice.

Contrarian: The Retail Blind Spot

Most traders see government investment as a bullish signal. They think, “If the US government is buying equity, this company must be safe. It has a backstop. It’s too big to fail.” That narrative is already spreading across crypto Twitter, where AI tokens like FET and AGIX are pumping on speculation of government involvement.

But smart money knows better. When the state becomes a shareholder, innovation slows. The company becomes a quasi-public utility, required to align with geopolitical priorities rather than market signals. It will avoid high-risk, high-reward research. It will prioritize lobbying over building. Its best talent will leave for startups that don’t have a government minder.

I’ve seen this play out in the crypto space. After the Terra collapse, many projects that accepted government or institutional backing became bureaucratic, slow, and less responsive to community needs. They traded agility for a false sense of security. The same will happen to AI companies that welcome government equity.

We don't walk away from greed, we stay for trust. But here, trust is being sold. The investor — the retail trader — sees a government label and buys the hype. The insider — the former White House advisor, the D.C. lobbyist — knows the real game: the government is not investing to make a profit; it is investing to control. And control always comes at the expense of freedom, including the freedom to fail, innovate, and compete.

Takeaway: What This Means for Your Portfolio

So what do you do with this information? First, stop treating “government-backed” as a buy signal. Instead, ask: Does this company have regulatory independence? Is there a clear separation between the investment arm and the rule-making arm? If not, the stock carries a hidden tax — the risk of political interference, compliance delays, or worse, a scandal when the conflict is exposed.

Second, watch for the signals. If the US government announces a “national AI equity fund” without also announcing an independent AI auditor, that is a red flag. If the same officials who draft the AI Bill of Rights are also board observers at OpenAI, that is a conflict of interest the size of Mount Everest.

Transparency is the shield against the next bubble. Right now, that shield is missing. The market is pricing in optimism; I am pricing in skepticism. Because history teaches that when the referee and the player are the same person, the game always ends in a scandal.

Trust is the only asset that survives the crash. And in this game, trust is the first thing being leveraged.

I’ll leave you with a question: Who audits the auditor when the auditor owns the audit? If you can answer that, you know where to place your next trade.

As a trader, I’ve learned that the most dangerous positions are the ones where everyone agrees. When the crowd cheers government intervention, I check the exits. Right now, the exits are getting narrow. Protect the flock, not just the profits.