DeepSeek under scrutiny in Germany, AI tokens falter

DeepSeek under scrutiny in Germany, AI tokens falter originally appeared on TheStreet.

The AI crypto industry was shaken on June 28, with the market cap decreasing by 1.97% in the last 24 hours to $26.92 billion.

Overall traded volume was up more than 30% and indicated increased volatility. Bitcoin maintained a level of stability, trading at $107,036.51 and down only 0.31% on the day.

The decline deepened following the news that Germany's top privacy regulator had officially declared the Chinese AI chatbot DeepSeek "illegal".

The regulator invoked the EU's Digital Services Act and warned Apple and Google to remove DeepSeek from their app stores or face consequences, according to Bloomberg.

After the Chinese app refused to cooperate, the Berlin agency used the EU's Digital Services Act, which requires internet platforms like Apple and Google to remove illegal content.

DeepSeek was also developed in Hangzhou in January of 2025. It shocked the tech industry with the R1 model, a lean but powerful large language model.

However, Meike Kamp, Berlin's privacy watchdog, explained that "Chinese authorities have extensive rights to access personal data" and indicated that the app did not comply with the standards set out in EU data protection laws.

Join the discussion with Scott Melker on Roundtable here.

AI and Crypto

The regulatory action sparked immediate anxiety in the AI and crypto space. Short-term charts show erratic swings from various AI-linked tokens.

Virtua Protocol (VIRTUAL) was down over 15% over the past week and only showed a minor daily rebound to close the week, while other tokens like ai16z and PAAL AI were down over 9% over the week. Larger-cap players like Render (RENDER) and NEAR Protocol also had downward action.

Former Binance CEO Changpeng Zhao (CZ) offered a pointed criticism, saying, "Too many AI agent developers focus too much on their token and not enough on the agent's usefulness,” on April 2.

Join the discussion with Mario Nawfal on Roundtable here.

CZ also suggested, at the Token2049 summit, that crypto would eventually be the financial backbone of AI agents — "crypto is going to be the currency for AI" — but added it needed product-market fit, not hype-driven token launches.

With Grok 4 also anticipated from Elon Musk's xAI post-July 4, the AI token market may continue to be erratic as narratives collide with regulations.

DeepSeek under scrutiny in Germany, AI tokens falter first appeared on TheStreet on Jun 27, 2025

This story was originally reported by TheStreet on Jun 27, 2025, where it first appeared.