[BUG] API Error: Claude Code is unable to respond to this request

Environment

• [ ] Anthropic API via CLAUDE CODE

Bug Description

Gives API error for no reason.

Steps to Reproduce

Just say "hi" to claude code.

Expected Behavior

Response with no error.

Actual Behavior

Response with error.

ACTUAL COMMAND LINE:

hi

⏺ Hello! How can I help you today?
⎿ API Error: Claude Code is unable to respond to this request, which
appears to violate our Usage Policy
(https://www.anthropic.com/legal/aup). Please double press esc to edit
your last message or start a new session for Claude Code to assist with
a different task.