US: A $50 million AI chip smuggling ring connected to China is busted by the US
US: After dismantling what they described as a significant smuggling operation with ties to China that secretly transported cutting-edge Nvidia AI processors out of the nation, US authorities seized more than $50 million in GPUs and cash and detained several people who were allegedly in violation of export regulations.
The Justice Department announced the findings of “Operation Gatekeeper,” which claimed that the network used wire transfers from the People’s Republic of China to route payments, falsify paperwork, and mislabel shipping documents in order to funnel high-end AI chips to China, Hong Kong, and other restricted destinations.
Assistant Attorney General for National Security John A. Eisenberg said, “The United States has long emphasized the importance of innovation and is responsible for an incredible amount of cutting-edge technology, such as the advanced computer chips that make modern AI possible.” “This advantage isn’t free but rather the result of our engineers’ and scientists’ hard work and sacrifice.”
“A sophisticated smuggling network that threatens our Nation’s security by funnelling cutting-edge AI technology to those who would use it against American interests” was revealed by the inquiry, according to US Attorney Nicholas J. Ganjei of the Southern District of Texas. He said, “These chips are the building blocks of AI superiority and are integral to modern military applications.”
According to the FBI, the plan used purposeful deceit and convoluted procurement procedures to transport prohibited items.
According to Roman Rozhavsky, Assistant Director of the FBI’s Counterintelligence Division, “Gong and his companions allegedly led a complex scheme to smuggle high-performance graphic processing units to China in violation of US export laws.”
On October 10, Alan Hao Hsu, 43, of Missouri City, Texas, and his business, Hao Global LLC, entered a guilty plea to charges of smuggling and unauthorized export operations, according to unsealed court records. Hsu and others shipped or tried to export at least $160 million worth of Nvidia H100 and H200 Tensor Core GPUs, some of the most cutting-edge AI processors in the world, between October 2024 and May 2025, according to the prosecution.
Hsu and his colleagues are accused of fabricating shipment documents and hiding the chips’ actual destination. The plan was financed by more than $50 million in wire transfers from China to Hao Global. When Hsu is sentenced on February 18, he may spend up to ten years behind bars.
Two more have been taken into custody. The CEO of a Beijing-based company’s IT subsidiary in Sterling, Virginia, Benlin Yuan, 58, was detained on November 28 and accused of plotting to violate the Export Control Reform Act of 2018. Brooklyn-based Chinese national Fanyue “Tom” Gong, 43, was detained and accused on December 3 with planning to smuggle items out of the United States.
According to the papers, Yuan reportedly organized inspectors and spoke about providing authorities with fraudulent information, while Gong allegedly employed straw buyers and rebranded Nvidia GPUs under the fictitious name “SANDKYAN.”
The enforcement action coincides with increased US export controls on cutting-edge AI processors due to worries that they would hasten China’s cyber and military modernization.