Rio de Janeiro Built an AI Model That Beat DeepSeek—But Was Based on Someone Else's Work

Crypto Insight Summary: * IplanRIO released Rio 3.5 Open 397B on June 13, billing it as a government-built frontier AI model with benchmark scores topping Qwen 3.7 Plus. * AI company Nex published a mathematical proof showing the model is a direct 0.6 Nex / 0.4 Qwen weight merge. * IplanRIO updated the model card, credited Nex, pulled the benchmark claims, and blamed an "incorrect upload." Rio de Janeiro's IplanRIO released [Rio 3.5](https://huggingface.co/prefeitura-rio/Rio-3.5-Open-397B/tree/main) on June 13. The city's IT agency called it a frontier-class model: 397 billion parameters, with a permissive open-source license, built by the municipal government of a city in the Global South. Rio 3.5’s launch timing was perfect: Brazil was playing its World Cup opener, and social media was already on fire. The original model card described Rio 3.5 as a post-train of Qwen 3.5 397B, Alibaba's open-base model, with a new reasoning layer called SwiReasoning added on top. The development cost was reported at R$500,000 (Rio didn’t confirm this), or nearly $100,000 USD—roughly 30 times cheaper than equivalent off-the-shelf AI systems. The architecture is Mixture-of-Experts, which means only around 17 billion of the 397 billion parameters fire on any given token. IplanRIO said Rio 3.5 was specifically trained to exploit this, and that the gains show up in the benchmark numbers. Terminal-Bench 2.1—which measures autonomous terminal command execution, scored as percentage of tasks passed—came in at 70.8% for Rio 3.5, edging out Qwen 3.7 Plus at 70.3% and the powerful DeepSeek v4 Pro at 67.9%. Crypto Insight Analysis: Direction: Neutral Impact: No Impact Horizon: Short-term (1-3 days) Reasoning: The AI model controversy is unrelated to crypto markets and lacks direct financial implications.