US accuses Chinese AI company of stealing secrets

Maggie Eastland

July 23, 2026 — 6:22am

Save

You have reached your maximum number of saved items.

Remove items from your saved list to add more.

AAA

The Trump administration has accused China’s Moonshot of improperly using US AI models and Nvidia chips to create the Kimi K3 system that stunned the tech industry last week with its advanced capabilities.

The company “acquired GB300-equipped servers and has accessed GB300s in Thailand, likely to train its AI models,” White House Office of Science and Technology policy director Michael Kratsios said in a social media post, making the case that Moonshot violated US export control rules and companies’ terms of service to build its product.

Moonshot co-founder Yang Zhilin. His company has been accused of violating US export control rules and companies’ terms of service to build its KImi product.Getty

“Large-scale, covert industrial distillation aimed at stealing proprietary US technology and undermining American research is unacceptable,” Kratsios said.

The semiconductor servers Kratsios referenced are part of the Blackwell generation of Nvidia products, which the US forbids from sale to Chinese companies. Though the Trump administration has allowed some sales of Nvidia’s H200 chips, it continues to prevent sales of the more advanced Blackwells.

Trump administration official Jacob Helberg, the Under Secretary for Economic Affairs, said Moonshot had carried out a “heist of invaluable American intellectual property”.

“Lying, cheating and stealing is not innovation or ‘win-win’. It’s corrosive to productive economic activity and to the healthy economic development of nations,” he added.

It comes after China’s Xi Jinping delivered a keynote speech to the World Artificial Intelligence Conference in Shanghai, urging countries to seize the “rare, historic opportunity” of open-source AI while staking China’s claim to shaping the rules that govern it, and warning against new “historical injustices” from unequal access.

A May memo affirmed that the US Bureau of Industry and Security, which is responsible for export controls on AI chips, restricts sale of advanced processors to Chinese companies outside of China. Trump officials are now looking into whether some companies took advantage of a loophole to ship advanced AI chips to subsidiaries of Chinese firms.

An Nvidia spokesperson earlier dismissed the idea of a loophole and said it has operated as though it does not exist. The company did not respond to a request for comment on the Kratsios post.

Moonshot’s K3 upended assumptions that Chinese AI capabilities were meaningfully behind US leaders such as OpenAI and Anthropic PBC. The Chinese lab said its open-weight model outperforms all rivals except for Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6 on overall capability, setting off a rout in tech stocks similar to DeepSeek’s impact last year.

Moonshot “developed a sophisticated internal platform to conduct large-scale distillation against US models,” Kratsios said, referencing a technique in which AI researchers use the outputs of a so-called teacher model to train a student model and replicate some of its capabilities.

Treasury Secretary Scott Bessent voiced similar distillation concerns, though not specific to Moonshot, about open-source Chinese AI companies engaging in what he called intellectual property theft to create AI models.

“This administration supports open-source models, but what we do not support is IP theft. If we see, especially, that overseas models are stealing from our great companies, we have the ability to sanction them,” Bessent said on Fox Business.

Bessent’s comments echoed growing accusations from OpenAI and Anthropic that their Chinese rivals have made systematic and unauthorised use of results from leading US models to develop a rival generation of chatbots at a fraction of the cost. Anthropic has previously accused Moonshot specifically of distilling its models. Moonshot has not responded to those allegations.

In April, the Trump administration vowed to take further steps to address the practice, known as adversarial distillation, including weighing steps to hold foreign actors accountable. Lawmakers in the House and the Senate have advanced legislation with similar aims of blacklisting or sanctioning Chinese firms found to be improperly distilling from US models.

Bloomberg, wires

Get news and reviews on technology, gadgets and gaming in our Technology newsletter every Friday. Sign up here.

Save

You have reached your maximum number of saved items.

Remove items from your saved list to add more.