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Nvidia Corp. NVDA CEO Jensen Huang says American companies should “absolutely” use Chinese AI models. The White House disagrees: within hours of his comments, it accused Moonshot AI of stealing from Anthropic and accessing export-restricted Nvidia chips to build Kimi K3.
The pressure started Tuesday, when Treasury Secretary Scott Bessent told Fox Business the administration is finding “watermarks of our U.S. large language models on many of the Chinese models” and may act within weeks.
The practice at issue is distillation: bombarding a frontier model with prompts and training a cheaper model on its answers, capturing much of its capability at a fraction of the cost. The technique is a normal part of AI development when done openly. The White House alleges Moonshot did it covertly, at industrial scale, in violation of Anthropic’s terms.
Huang sees it differently. “Distillation, learning from AI, learning from other sources of knowledge, is fundamental to intelligence,” he told Axios.
He added that U.S. labs have little to fear from open rivals. “There’s no scenario where China runs U.S. companies off the road,” Huang said. “Zero possibility.”
The White House Names Names
Hours after Huang’s comments published, White House science chief Michael Kratsios escalated. “We have information that Moonshot AI distilled Anthropic’s Fable for the development of its K3 model,” he posted on X, alleging Moonshot built an internal platform that switched access methods to avoid detection and accessed Nvidia GB300 chips in Thailand.
Anthropic reportedly traced 3.4 million exchanges with its models to Moonshot earlier this year, routed through hundreds of fake accounts.
Anthropic itself recently had a $1.5 billion settlement approved over pirated books used in training.
The accusation lands days after Kimi K3’s release rattled chip stocks and prompted David Sacks and Bill Ackman to sound the alarm on America’s narrowing AI lead.
Huang’s logic may be commercial. Cheap open models expand AI’s audience, he argued, which likely drives more demand for the chips and data centers Nvidia sells.
What Prediction Markets Say
Anthropic, whose Fable 5 model just disproved a math conjecture that stood for 87 years, trades at 65% on Polymarket to hold the best AI model at year-end, with Moonshot the top Chinese lab at 2%.
The next flashpoint may come in September, when Bessent is expected to lead the first official U.S.-China AI dialogue ahead of Xi Jinping’s planned visit.
NVDA Stock Price Activity: NVIDIA shares were up 3.10% at $213.72 at the time of publication on Wednesday, according to Benzinga Pro data.
Image: Shutterstock
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This article Bessent Wants Chinese AI Sanctioned, But Jensen Huang Says Distillation Is Learning originally appeared on Benzinga.com.
