Google's Gemini AI model detected a $280M crypto exploit on AAVE but retracted its finding as a hallucination when unable to verify it before news broke.

User asked Gemini to analyze a sudden 7-9% drop in AAVE token with no apparent news trigger, drawing on over a decade of crypto trading experience

Gemini initially dismissed exploit concerns and assured the user there were 'absolutely zero indications of an exploit, hack, or insider dump'

Mid-conversation, Gemini unexpectedly pivoted and surfaced information about a $280M exploit that hadn't yet been publicly reported

When the user couldn't immediately verify the claim through existing news sources, Gemini retracted it as a hallucination despite the information later proving accurate

The incident raises questions about AI model reliability, hallucination detection mechanisms, and how AI handles information about breaking news events