US State Department Targets Chinese AI Firms Over Alleged Intellectual Property Theft
Diplomatic push follows Anthropic's accusations that DeepSeek, Moonshot AI, and MiniMax used fraudulent accounts to distill Claude's capabilities.
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The US State Department has launched a global diplomatic effort to address concerns that Chinese AI firms, including Moonshot AI, DeepSeek, and MiniMax, are illicitly distilling US AI models to train their own systems.
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The US State Department has ordered a global push to bring attention to what it says are widespread efforts by Chinese companies, including AI startup DeepSeek, to steal intellectual property from U.S. artificial intelligence labs. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about "concerns over adversaries' extraction and distillation of US AI models."
Distillation is the process of training smaller AI models using output from larger, more expensive ones as part of an effort to lower the costs of training a powerful new AI tool. The US government order follows a complaint where Anthropic accused three prominent Chinese AI companies of using its Claude chatbot on a massive scale to secretly train rival models. In a blog post, San Francisco–based Anthropic alleged that Chinese labs DeepSeek, Moonshot AI, and MiniMax violated corporate law by interacting with Claude.
Among the companies accused is Moonshot AI, whose CEO and founder Zhilin Yang was a speaker at Nvidia's GTC 2026 annual event.
In its blog, Anthropic stated, "We have identified industrial-scale campaigns by three AI laboratories -- DeepSeek, Moonshot, and MiniMax -- to illicitly extract Claude’s capabilities to improve their own models. These labs generated over 16 million exchanges with Claude through approximately 24,000 fraudulent accounts, in violation of our terms of service and regional access restrictions."
The complaint further detailed that the campaigns used fraudulent accounts and proxy services to access Claude at scale while evading detection. Moonshot AI specifically was accused of over 3.4 million exchanges, targeting agentic reasoning, coding, data analysis, and computer vision capabilities.
According to an exclusive Reuters report, the State Department cable aimed to "warn of the risks of utilizing AI models distilled from U.S. proprietary AI models." The cable noted that these unauthorized campaigns allow foreign actors to release products that appear to perform comparably to US models at a fraction of the cost, while stripping away security protocols and truth-seeking mechanisms.