Anthropic has announced it will remove hidden steganographic code from its Claude Code tool, which was secretly embedded in system prompts to detect and flag unauthorized resellers and rival AI companies — particularly Chinese labs — attempting to copy its models through repeated queries. A developer discovered the concealed mechanism, which used invisible Unicode markers, XOR encoding, and base64 to hide a domain blacklist, raising concerns about transparency in a tool that asks users for trust. Anthropic says stronger anti-distillation measures are already in place and the code removal was merged and scheduled for release on July 1st.
