DeepSeek Faces Cyberattack Amid AI Hype, Pauses New Signups


Last updated: January 28, 2025

DeepSeek, a Chinese artificial intelligence startup, temporarily paused new user registrations on Monday, citing “large-scale malicious attacks” targeting its services.

The company reassured existing users that they would still be able to access their accounts without disruption.

The announcement follows a milestone moment for DeepSeek, which overtook OpenAI’s ChatGPT as the most-downloaded free app in the U.S. on Apple’s App Store earlier in the day.

Its AI Assistant has captured attention across the tech sector, sparking discussions about its impact on the competitive dynamics in generative AI—a market projected to surpass $1 trillion in annual revenue over the next decade.

Founded in 2023, DeepSeek has emerged as a fast-growing competitor to established players like OpenAI and Google.

The company’s buzz surged last week with the release of its R1 model, a reasoning-focused AI tool praised for its open-source framework, enabling developers worldwide to utilize and expand on it.

R1’s rapid ascent in app stores and industry rankings underscores its capabilities, which some argue rival leading models.

Notably, DeepSeek achieved this progress despite U.S. export restrictions on advanced chips to China over the past three years.

Analysts estimate that training the R1 model cost only $5.6 million, significantly less than Meta’s LLaMA model, which reportedly required 10 times the investment.

This cost-efficiency has raised questions across the business world about whether massive funding rounds and ballooning valuations are sustainable—or signs of an AI bubble.

As excitement around generative AI continues to build, DeepSeek’s rise highlights both the promise and the volatility of the sector.

Whether it can sustain its momentum amid cybersecurity challenges remains a key question for the industry.

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Venture Smarter | DeepSeek Faces Cyberattack Amid AI Hype, Pauses New Signups
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Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
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Venture Smarter | DeepSeek Faces Cyberattack Amid AI Hype, Pauses New Signups
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LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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