The Trump administration has accused Chinese AI startup Moonshot AI of using Anthropic’s Claude Fable 5 model to develop Kimi K3. We break down the details and its impact on the AI sector.
White House Office of Science and Technology Policy Director Michael Kratsios said Moonshot AI “developed a sophisticated internal platform for large-scale distillation of US models.” Treasury Secretary Scott Bessent said sanctions could be imposed on developers found to have stolen US intellectual property.
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Chinese embassy spokesman Liu Chang called the allegations “pure slander.” AI experts questioned the technical feasibility of distillation in just 15 days between Fable 5’s re-launch and Kimi K3’s release.
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White House Strikes, China Rejects Allegations
Kratsios said Moonshot AI “acquired servers equipped with GB300 and gained access to GB300 in Thailand, likely for training its AI models.” He distinguished ordinary distillation from the alleged industrial extraction of US model capabilities. He said legitimate use of the method plays a key role in the open innovation ecosystem, but large-scale, concealed distillation is unacceptable.
Bessent told Fox Business that US authorities are finding “watermarks” in Chinese models that may indicate the use of US large language model outputs.
“If we see foreign models stealing technology from our major companies, we have the ability to impose sanctions on them,” he said.
US Trade Representative Jamieson Greer also said the administration is investigating whether China is using unfair practices to strengthen its position in the global AI race.
Chinese embassy spokesman Liu Chang rejected the accusations, calling them an attempt to “discredit China’s AI industry achievements.” He said China supports intellectual property protection. Beijing has repeatedly denied such claims, pointing to a lack of evidence.
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Experts Question the Technical Basis of the AI Conflict
Anthropic released Claude Fable 5 on June 9. The US government imposed export restrictions on June 12, and Anthropic suspended access. The restrictions were lifted on June 30, and Anthropic restored global access on July 1. Moonshot AI unveiled Kimi K3 on July 16–just 15 days after Fable 5’s re-launch.
Prime Intellect researcher Eli Bakush noted that such a short window makes it hard to explain Kimi K3’s performance, even if Moonshot AI used distillation. OpenAI Head of Strategic Futures Dean Ball also said Kimi K3’s quality can’t be explained by distillation alone. A screenshot circulated showing the Chinese model allegedly identifying itself as Claude, but its authenticity hasn’t been independently verified.
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