Treasury Threatens Sanctions as White House Accuses Moonshot of Distilling Anthropic's Model
The U.S. Treasury Secretary Scott Bessent warns that sanctions remain on the table for Chinese AI companies accused of intellectual property theft. The threat follows allegations from White House science and technology policy chief Michael Kratsios that Moonshot conducts large-scale distillation attacks against American AI models, including Anthropic's Fable. "Open source is not open season on American IP," Bessent declares, signaling potential Entity List designations for firms that cross the line.
The accusations extend beyond distillation to possible export control violations. Kratsios claims Moonshot acquires Nvidia's GB300-equipped servers, which belong to the banned Blackwell generation, and accesses them in Thailand to train its models. However, some experts question whether Moonshot's Kimi K3 model could realistically be distilled from Fable, which has only been publicly available since July 1, given that Moonshot releases K3 the very next week with remarkably advanced capabilities.
The controversy intensifies an ongoing debate in Washington over the growing influx of Chinese open-weight models. The release of Kimi K3 as an open-weight model raises doubts about whether U.S. AI labs can continue justifying the enormous capital requirements of the frontier AI race. Former White House AI adviser Dean Ball now argues that the U.S. should consider restricting or banning Chinese open-weight models entirely to preserve America's technological edge and address national security concerns.