Rio's $100K AI Flex Outscored DeepSeek—Turns Out It Was Alibaba in a Poncho 🌮

Rio de Janeiro's municipal IT agency IplanRIO released an open-source artificial intelligence model called Rio 3.5 on June 13, claiming the system outperformed leading commercial models on multiple benchmarks at a reported development cost of roughly R$500,000 (approximately $100,000 USD), about 30 times cheaper than comparable off-the-shelf AI systems. The model, described in its original model card as a post-trained derivative of Alibaba's Qwen 3.5 397B open-base model, contains 397 billion parameters using a Mixture-of-Experts architecture, of which approximately 17 billion activate per token. It supports vision and text input, handles more than a dozen languages, and is released under a permissive MIT license.

IplanRIO called Rio 3.5 a frontier-class model and highlighted a custom inference framework dubbed SwiReasoning, a training-free system that switches dynamically between standard text reasoning and latent reasoning based on the entropy of the model's next-token probability distribution. Self-reported benchmark results include 70.8% on Terminal-Bench 2.1, ahead of Qwen 3.7 Plus at 70.3% and DeepSeek v4 Pro at 67.9%; 89.5% on IMOAnswerBench; and 36.5% on HLE (Humanity's Last Exam), compared with 34.7% for Qwen 3.7 Plus.

Rio de Janeiro Mayor Eduardo Cavaliere promoted the launch on social media on June 14, writing: "An open AI model trained in Rio and publicly funded over the last year by [the Municipality of Rio] has just surpassed all other models. Today, the world is talking about an open AI model trained in Rio." The timing coincided with Brazil's 2026 World Cup opener, helping the announcement gain traction online. Questions about authorship emerged quickly, with reports indicating the underlying base model came from Alibaba and that a Shanghai-based open-source organization, Nex-AGI, was involved in the technical work. IplanRIO did not confirm the reported R$500,000 development cost, and the model's provenance remains a point of dispute as the story develops.