Just days after Chinese AI start-up Moonshot unveiled a massive new model it claims can rival America's best, senior White House officials have accused the company of stealing proprietary US technology.
Moonshot released Kimi K3 on July 16, a model containing 2.8 trillion parameters that third-party evaluations from Artificial Analysis and Arena.ai show performing on a par with OpenAI's GPT and Anthropic's Claude. In independent blind human-preference tests, Kimi K3 even outperformed Anthropic's Fable system in web interface engineering.
“US officials accuse China's Moonshot AI of stealing Anthropic's technology for its new Kimi K3 model.”
But Michael Kratsios, Donald Trump's Assistant for Science and Technology, alleged on social media that Kimi K3 is the result of distillation – a technique that involves bulk queries of one model to train another – rather than innovation.
“We have information that Moonshot AI distilled Anthropic’s Fable for the development of its K3 model,” Kratsios wrote, adding that the Chinese company “developed a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of access to avoid detection.”
Kratsios also accused Moonshot of accessing servers packing Nvidia’s GB300 accelerator – a model the US does not allow to be sold in China – and of running GB300s in Thailand.
US Treasury Secretary Scott Bessent weighed in with his own social media post: “We support open-source AI and the innovation it unlocks. But open source is not open season on American IP. When PRC firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table.”
Anthropic had already accused Moonshot of distillation in February 2026, along with Chinese peers DeepSeek and MiniMax. The new accusations come weeks after the US government forced Anthropic to temporarily withdraw its flagship Fable and Mythos models due to cybersecurity concerns – a move that highlighted how Washington now views frontier models as vital national security assets.
Moonshot, heavily backed by Alibaba and Tencent, plans to release Kimi K3 as an open-source model on July 27, making it the world's first in the three-trillion-parameter class that can be freely downloaded and customised. The announcement has already hit Moonshot's domestic competitors: shares in Zhipu and MiniMax tumbled sharply in Hong Kong, by about 27% and 16% respectively.
Kratsios said the US “strongly supports the free and fair development of AI, including a thriving competitive ecosystem,” but added that “large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable.” With US sanctions already targeting much of China's tech ecosystem, Bessent's warning suggests further measures could be on the horizon.