A senior official from the U.S. government has accused China’s Moonshot AI of developing its Kimi K3 model by distilling technology from Anthropic. This allegation comes from Michael Kratsios, the Assistant for Science and Technology under the Trump administration, who made the claims via social media.
The Kimi K3 model, which boasts 2.8 trillion parameters, was released on July 16, 2026. Its impressive capabilities have led to a decline in the value of U.S. AI stocks, as investors express concern over potential competition from Chinese AI advancements.
Details of the Allegations
Kratsios stated that the Kimi K3 model is the result of a distillation process, a method that involves querying one model extensively to train another. He asserted that Moonshot AI developed a sophisticated platform to conduct large-scale distillation against U.S. models, enabling them to evade detection while accessing proprietary technology.
Furthermore, Kratsios claimed that Moonshot AI gained access to Nvidia’s GB300 accelerator servers, which are restricted from being sold in China, through operations in Thailand. This raises significant questions about the means by which Chinese firms are acquiring advanced technology.
U.S. Government Response
In response to these allegations, U.S. Treasury Secretary Scott Bessent emphasized the importance of protecting American intellectual property. He stated that while the U.S. supports open-source AI and the innovations it fosters, it will not tolerate covert industrial-scale distillation that crosses into IP theft. Bessent indicated that sanctions and designations could be considered against firms engaging in such practices.
Despite existing sanctions against major players in China’s tech sector, the effectiveness of these measures is in question, as Chinese companies continue to grow and develop sophisticated technologies. Reports suggest that these firms have established “evasion routes” to access banned technology, including renting GPU farms outside of China.
Broader Context of Industrial Espionage
Anthropic had previously accused Moonshot AI of similar distillation practices in February 2026, alleging that other Chinese firms, such as DeepSeek and MiniMax, also engaged in this technique. The U.S. and its allies have frequently accused China of industrial espionage, a claim that Beijing consistently denies.
According to the 2025 Australian Strategic Policy Institute’s Critical Technology Tracker, China is currently leading in 66 out of 74 rated technologies, underscoring the competitive landscape in which these allegations are unfolding.
This article was produced by NeonPulse.today using human and AI-assisted editorial processes, based on publicly available information. Content may be edited for clarity and style.
