Michael Kratsios, the Science and Technology adviser to President Donald Trump, accused the Chinese firm Moonshot AI on Wednesday of using 'distillation' to extract capabilities from Anthropic’s Fable AI model. In a social media post, Kratsios alleged that Moonshot undertook a large-scale effort to integrate capabilities from American AI models into its own Kimi K3 model. He also claimed that the Beijing-based company obtained access to restricted Nvidia Grace Blackwell servers to train its systems.
The allegations follow comments from Treasury Secretary Scott Bessent, who stated on Tuesday that the U.S. government would investigate whether Chinese companies are engaging in industrial-scale intellectual property theft via AI distillation. Bessent noted that sanctions would be considered if such activity is confirmed. Distillation is a process where a smaller or 'student' AI model learns to replicate the outputs and logic of a more advanced 'teacher' model.
Moonshot AI has not yet issued a formal response to the claims. The Chinese government has previously stated that its progress in the artificial intelligence sector is the result of domestic effort and international cooperation rather than theft. Moonshot recently announced that it intends to release the Kimi K3 model as open-source software on July 27.
The dispute occurs amid existing U.S. export controls, established in 2022, which restrict the sale of advanced Nvidia semiconductors to China. Anthropic previously urged U.S. lawmakers in June to implement penalties for distillation attacks, specifically citing similar concerns regarding models developed by Alibaba.