- The Justice Department dismantled a smuggling ring moving $160 million worth of Nvidia H100/H200 GPUs to China and arrested two suspects.
- Operation Gatekeeper revealed that chips were relabeled “SANDKYAN” to evade export controls, threatening US AI security.
- Despite the crackdown, President Trump authorized Nvidia to sell its GPUs to China legally
The US Department of Justice (DoJ) busted a major smuggling operation in which Nvidia chips were being shipped to China, despite an export ban. Two people were arrested in the process.
In October 2025, American law enforcement arrested Alan Hao Hsu, from Missouri, Texas. He confessed to using his company, Hao Global LLC, to smuggle Nvidia chips worth at least $160 million into China. The models shipped included H100 and H200 Tensor Core GPUs, both used for high-performance computing and artificial intelligence applications.
Now, in a continuation of that activity, the Justice Department said two people have been arrested: Benlin Yuan, CEO of a Virginia IT services company and subsidiary of a Chinese technology company, and Fanyue Gong, owner of a New York technology company.
Nvidia gets the nod
Together with a Chinese logistics company and an artificial intelligence technology company, the duo worked hard to conceal the contents of the shipments and where they were sending the hardware.
They would reportedly ship the Nvidia chips to a warehouse in the US, where they would then remove all Nvidia labels and replace them with fake “SANDKYAN” ones.
From there, they would try to send them abroad, but not before confusing their true destination. It is unclear how this was done, but the Justice Department explained that Yuan lied to authorities when questioned.
The AI game seems to be heating up and the United States is doing everything it can to prevent China from taking the lead:
“Operation Gatekeeper has exposed a sophisticated smuggling network that threatens the security of our nation by funneling cutting-edge artificial intelligence technology to those who would use it against American interests,” said United States Attorney Nicholas J. Ganjei for the Southern District of Texas.
“These chips are the pillars of AI superiority and are integral to modern military applications. The country that controls these chips will control AI technology; the country that controls AI technology will control the future. The Southern District of Texas will aggressively prosecute anyone who attempts to compromise America’s technological advantage.”
At the same time, the president of the United States, Donald Trump, gave the green light to Nvidia to sell its chips to China, legally.
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