U.S. Senators Target AI Companies’ Opaque Financing—Crypto Offers Transparent Alternative
Washington's digging into AI's black-box budgets—and finding exactly what crypto was built to solve.
The 'Innovation' Excuse Wears Thin
For years, AI giants operated like shadow banks—raising billions through complex, off-book structures that would make a derivatives trader blush. Senators finally called the bluff, demanding to know where the money flows when the algorithms learn. It's the same old Wall Street playbook: move fast, break rules, and hope regulators are too slow to connect the dots.
Blockchain's Built-In Ledger
Contrast that with decentralized finance. Every transaction lives on-chain—permanent, public, and auditable by anyone with a wallet address. No backroom deals, no hidden leverage, just math and code executing in the open. While AI firms obscure their funding, crypto projects can't hide their treasuries without breaking the very protocol that gives them value.
The Transparency Trade-Off
Sure, crypto has its wild west moments—but the ledger never lies. You can trace every token from mint to market. Try doing that with an AI firm's Series Z preferred shares held by a Cayman Islands shell company. The 'opaque financing' senators hate is a feature, not a bug, in the traditional system. It's how you get 100x returns without ever showing your cards.
The Bottom Line
When the next AI bubble pops—and it will—we'll spend years untangling who owed what to whom. When a DeFi protocol fails, the forensic trail is already written in immutable code. Maybe that's why they keep the old system so complicated: transparency is terrible for profit margins.
Funny how 'disruptive' tech still relies on financing tricks from the Gilded Age—while the truly disruptive ledger technology gets regulated into oblivion for being too honest.
Senators call out opaque financing used by AI companies
The senators specifically called out financing structures that allow companies to keep massive debt obligations off their balance sheets through special-purpose vehicles (SPVs), where external investors fund and own data centers that are then leased back to the technology companies.
The letter seen by Bloomberg was sent to Bessent, pointing out Meta’s $27 billion Hyperion data center project in Louisiana as an example of the trend.
The deal, which was announced in October 2025, saw Meta partner with Blue Owl Capital in a joint venture, with Blue Owl owning 80% and Meta the rest. Morgan Stanley served as the external financial advisor and bookrunner for the deal, which includes debt issued to PIMCO and other bond investors.
Meta will lease the completed facility from the SPV, and deals like this allow recording of rental obligations on financial statements rather than the total agreement.
Elon Musk’s xAI is also reported to have similar deals.
While the debt is usually rated investment-grade because of parent company backing, critics say the SPV model obscures the true scale of financial exposure across the system. This is because the deals are backed by rent payments tied to chips or equipment instead of traditional corporate assets, creating novel dependencies that regulators have yet to fully evaluate.
Why is Senator Warren calling for this investigation?
Warren’s letter stated that such off-balance-sheet structures “conceal the company’s true financial condition, allowing it to appear healthier and less Leveraged than it actually is and enabling it to borrow more than they otherwise could.”
The senators warned that AI companies unable to increase revenues and service their massive debt loads could cause “destabilizing losses for an interconnected set of financial institutions, triggering a broader financial crisis that harms the economy.”
The letter also notes the risk that this kind of deal poses to retail investors and retirement savers, noting that equity markets have become reliant on a handful of large AI companies. Should the AI industry falter, it could “crush retirement savers and retail investors exposed to the AI industry,” according to the letter.
The letter arrives as Democrats find themselves in the Senate minority. Warren, the top Democrat on the Senate Banking Committee, has emerged as a persistent critic of the TRUMP administration’s financial regulation approach.
Bessent, confirmed as Treasury Secretary in January, has previously advocated for looser FSOC regulations, pushing to reorient the council toward economic growth rather than stringent oversight.
The FSOC, established after the 2008 financial crisis, has acknowledged AI as an emerging concern in recent reports but has not examined these specific financing structures.
Meta stated in November 2025 that it plans to invest over $600 billion in infrastructure and jobs in the US in three years, with a major focus on AI data centers.
Goldman Sachs projects that AI companies may spend more than $500 billion in 2026 alone, while Moody’s Ratings expects that in the coming five years, $3 trillion will be spent on data center-related investments.
It will not be surprising that some of those investments will use the same model. With Senator Warren calling for such deals to be investigated, the next line of action will be how Bessent responds and acts on the letter.
For now, that is yet to be seen; however, investors and companies seeking to raise funds will be monitoring the development.
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