[BUG] # Memory Mode not intercepted in Claude Code CLI (iTerm)

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

I'm currently in the Anthropic Partner Basecamp and going through the steps in https://claude-code-workshop.netlify.app/

In the course content, there is a section that states:

Three ways to edit the CLAUDE.md file Method 1 — Use # Memory Mode (recommended) Press # at the prompt to enter Memory Mode. This lets you write directly to CLAUDE.md without consuming any tokens — Claude doesn't need to process the request. # Always document non-obvious logic changes with comments

Environment

• OS: macOS (Darwin kernel 25.3.0)
• Terminal: iTerm2
• Claude Code version: 2.1.116
• Interface: CLI (launched via claude in terminal)

Expected behavior
Typing or pasting a message prefixed with # at the Claude Code prompt should enter Memory Mode — writing directly to CLAUDE.md without sending the input to the model or consuming tokens.

Actual behavior
The #-prefixed input is passed through to the model as a regular message. The model processes it, consumes tokens, and responds — treating it as a normal prompt.

Observed result: All three variants are received and processed by the model as normal prompts.

What Should Happen?

Expected result: Claude Code CLI intercepts the # prefix and writes the content directly to CLAUDE.md without invoking the model.

Error Messages/Logs

Steps to Reproduce

1. Open iTerm2 on macOS and launch Claude Code with claude
2. Navigate to a project with a CLAUDE.md file
3. At the Claude Code prompt, try each of the following:

• Paste # Always document non-obvious logic changes with comments via Cmd+V
• Type # Always document non-obvious logic changes with comments manually
• Type #Always document non-obvious logic changes with comments (no space)

1. Press Enter after each attempt

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.116

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

iTerm2

Additional Information

https://github.com/beck-source/inventory-management - for the app that we're working on in training.