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The Trump administration has accused China\u2019s Moonshot of improperly using US AI models and Nvidia chips to create the Kimi K3 system that stunned the tech industry last week<\/a> with its advanced capabilities.<\/p>\n The company \u201cacquired GB300-equipped servers and has accessed GB300s in Thailand, likely to train its AI models,\u201d 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\u2019 terms of service to build its product.<\/p>\n \u201cLarge-scale, covert industrial distillation aimed at stealing proprietary US technology and undermining American research is unacceptable,\u201d Kratsios said.<\/p>\n 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\u2019s H200 chips, it continues to prevent sales of the more advanced Blackwells.<\/p>\n Trump administration official Jacob Helberg, the Under Secretary for Economic Affairs, said Moonshot had carried out a \u201cheist of invaluable American intellectual property\u201d.<\/p>\n Related Article \u201cLying, cheating and stealing is not innovation or \u2018win-win\u2019. It\u2019s corrosive to productive economic activity and to the healthy economic development of nations,\u201d he added.<\/p>\n It comes after China\u2019s Xi Jinping delivered a keynote speech<\/a> to the World Artificial Intelligence Conference in Shanghai, urging countries to seize the \u201crare, historic opportunity\u201d of open-source AI while staking China\u2019s claim to shaping the rules that govern it, and warning against new \u201chistorical injustices\u201d from unequal access.<\/p>\n 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.<\/p>\n 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.<\/p>\n Spokesperson Liu Chang of the Chinese embassy in Washington called Kratsios\u2019 comments \u201centirely unfounded,\u201d adding that China respects intellectual property protections.<\/p>\n \u201cRelevant individuals in the United States should respect the facts, discard prejudice and stop smearing and discrediting China\u2019s achievements in the development of its artificial intelligence industry,\u201d he said.<\/p>\n Moonshot\u2019s K3 upended assumptions that Chinese AI capabilities were meaningfully behind US leaders such as OpenAI and Anthropic. The Chinese lab said its open-weight model outperforms all rivals except for Anthropic\u2019s Claude Fable 5 and OpenAI\u2019s GPT-5.6 on overall capability, setting off a rout in tech stocks similar to DeepSeek\u2019s impact last year.<\/p>\n Moonshot \u201cdeveloped a sophisticated internal platform to conduct large-scale distillation against US models,\u201d 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.<\/p>\n 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.<\/p>\n Related Article \u201cThis 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,\u201d Bessent said on Fox Business.<\/p>\n Bessent\u2019s 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.<\/p>\n Anthropic public policy executive Sarah Heck said in a post on X that Chinese theft of US models \u201ccreates serious national security risks for the United States.\u201d<\/p>\n 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.<\/p>\n Bloomberg, Reuters, wires<\/p>\n Get news and reviews on technology, gadgets and gaming in our Technology newsletter every Friday. Sign up here<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n![\"Moonshot](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/56d23edaa1795a39317c0a3479c93813e5bb3bca.jpeg\")
Moonshot co-founder Yang Zhilin. His company has been accused of violating US export control rules and companies\u2019 terms of service to build its KImi product.Getty<\/p>\n![\"Data](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/f8f21c208c4a42a4eb41ffbbfa33cc08fbfa192b.jpeg\")
<\/a><\/p>\n![\"Kimi](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/1784760073_629_8c65c791b5e2cce52ff8f5b420bf668c238b69511c08eb1c9f7b1b45fddf360c.gif\")
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