White House: Moonshot utilized prohibited Nvidia chips for Kimi K3.

      The model that shook Silicon Valley last week has now captured the attention of Washington. A senior official from the White House has alleged that China’s Moonshot AI violated US export controls while developing Kimi K3. According to him, this involved accessing restricted Nvidia chips and relying on American models. Kratsios, who leads the White House Office of Science and Technology Policy, made this assertion in a post on X, as reported by Bloomberg. He stated that Moonshot "acquired GB300-equipped servers and gained access to GB300s in Thailand, likely for training its AI models," which constituted a breach of US export regulations and the labs’ terms of service. The GB300 is part of Nvidia’s Blackwell series, which the US prohibits from being sold to Chinese companies.

      This accusation follows months of official concerns. Trump administration officials have been investigating whether businesses exploited a loophole to ship advanced chips to Chinese subsidiaries overseas. A memo from May reaffirmed the prohibition on selling Blackwells to Chinese firms.

      The post also made claims regarding software. Kratsios indicated that Moonshot distilled Anthropic’s Fable model to create K3, running a "sophisticated internal platform" for "large-scale distillation against US models," and altering access methods to avoid being detected. Distillation involves training a more affordable model using the outputs of a competitor's model. Kratsios emphasized that while legitimate distillation is acceptable, covert theft of US technology is not. Nvidia and Moonshot have not responded to requests for comments.

      Kimi K3 is at the center of this controversy. The open-weight model, unveiled last week, quickly rose in rankings, with Moonshot claiming it ranks just behind Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6 in overall capability. Its arrival caused a significant drop in tech stocks, reminiscent of the response to DeepSeek a year prior, and sparked widespread alarm in the US.

      Kratsios was joined by Treasury Secretary Scott Bessent, who told Fox Business that Washington might impose sanctions on Chinese labs for intellectual property theft. These allegations align with long-standing complaints from OpenAI and Anthropic, which have accused Moonshot of distilling their models previously. "This administration supports open-source models, but we do not condone IP theft," Bessent stated, as quoted by Bloomberg. He subsequently warned in a post on X that sanctions and entity-list designations "will be considered."

      In contrast, Nvidia CEO Jensen Huang expressed a different perspective, calling open models like Kimi "excellent" and urging the US to accept them rather than impose bans, as reported by Fortune. He argued that isolating China will only lead it to develop its own technology stack. Z.AI has already established a data center consisting exclusively of Chinese chips.

      The timing is critical. Moonshot is hurrying to finalize a funding round, potentially valuing the company at $50 billion, with a Hong Kong listing possible this year. US sanctions would not prevent the model's distribution, as it is currently available for download. However, they could restrict American investments. Kratsios did not provide evidence for his claims, but there is no doubt about the model's existence. What has changed in the discussion is no longer about China’s ability to compete, but rather how it achieved its current status.