A White House adviser has directly accused Beijing-based Moonshot AI of orchestrating a “large scale” theft of intellectual property from one of America’s leading artificial intelligence firms, escalating tensions between the two countries’ tech sectors on the eve of a potential summit between Donald Trump and Xi Jinping.
Michael Kratsios, President Trump’s science and technology adviser, said on Wednesday that Moonshot AI had carried out the campaign through a technique known as distillation – where a weaker AI model extracts answers from a stronger one. He alleged that the Chinese company “distilled” capabilities from Anthropic’s Fable AI for the development of its own K3 model.
“Trump adviser Michael Kratsios accused Moonshot AI of large-scale distillation from Anthropic for its K3 model.”
Kimi K3, unveiled last week, has been seen as narrowing the gap between Western and Chinese AI, with Moonshot claiming it can rival top US technology. Kratsios also stated that Moonshot likely gained access to restricted cutting-edge Nvidia servers powered by the GB300 Grace Blackwell computing platform to train its models. Washington banned the export of Nvidia’s most advanced chips in 2022 over military concerns, and governments worldwide have since cracked down on chip smuggling.
The accusations come just a day after Treasury Secretary Scott Bessent said the US would examine whether Chinese AI models had stolen capabilities from American rivals. On Wednesday, Bessent warned that sanctions “will be on the table” when Chinese companies “cross the line” into intellectual property theft by conducting “industrial-scale distillation attacks”. “We support open-source AI and the innovation it unlocks. But open source is not open season on American IP,” he wrote on social media.
Moonshot is scheduled to release Kimi K3 as an open-source model on 27 July, making it the first of its scale freely downloadable and customisable by developers and the public. The BBC has sought comment from Moonshot, the Chinese embassy in Washington, Anthropic, the White House, and Nvidia but has so far received none.
The Chinese government has not yet issued a public statement on the latest allegations, but has previously insisted that its AI development “is the result of its own dedication and effort as well as international cooperation”. The increased scrutiny also comes as Trump is expected to meet Xi Jinping in September. Moonshot’s case is not an isolated one: in June, Anthropic accused Chinese e-commerce and tech giant Alibaba of “illicitly” extracting the capabilities of its Claude AI models using distillation attacks, and urged Congress to penalise the companies behind such attacks.