Chinese AI Company Moonshot Has Achieved Major Milestones. The White House Accused Of Taking From Anthropic

A White House official accused Moonshot AI of distilling Anthropic's Fable model to help develop K3, which made key technological breakthroughs.

Michael Kratsios, director of the White House Office of Science and Technology Policy, said in a social media publication that the company "developed a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of access to avoid detection."

"Legitimate AI distillation used to create smaller, more efficient models plays a vital role in this open innovation ecosystem. However, large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable," he added.

The remarks come a day after Treasury Secretary Scott Bessent said the U.S. could sanction China over the "theft" of American AI models.

"If we see, especially that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft," Bessent said in an interview with Fox News on Tuesday.

Bessent went o to say that "we are finding watermarks of our U.S. large language models on many of the Chinese models, and that's unacceptable." He added that the administration will "be looking at that in the coming days or weeks."

Moonshot has seen demand for its K3 model skyrocket after communicating its most recent breakout. The Beijing-based company has temporarily suspended new paid subscriptions to its recently launched Kimi K3 model after overwhelming demand pushed its computing infrastructure to the limit.

Unlike many consumer AI applications, Kimi K3's advanced capabilities place exceptionally heavy demands on hardware. Coding assistants and autonomous AI agents typically require repeated interactions with the model, significantly increasing inference costs compared with standard chatbot conversations.

Although Kimi K3 is released as an open-weight model, allowing developers to download and customize it, analysts say relatively few organizations are likely to operate the system independently because running a model of that size requires enormous amounts of specialized hardware.

Anthropic had already accused Moonshot of distillation. In February, it mentioned the company along with DeepSeek and MiniMax as those seeking to conduct such efforts.

It also recently accused Chinese technology giant Alibaba of conducting a large-scale campaign to extract capabilities from its Claude artificial intelligence models as well, alleging that operators linked to the company used thousands of fraudulent accounts to gain access to its systems.

In a June 10 letter sent to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Anthropic alleged that Alibaba carried out what it described as "the largest known distillation attack on Anthropic to date."