Feds charge four with illegally smuggling Nvidia AI chips to China

Federal prosecutors person charged 4 radical with illegally smuggling Nvidia GPUs and HP supercomputers with Nvidia GPUs from the US to China, according to a tribunal filing spotted by Court Watch. The US government has placed restrictions that forestall Nvidia from selling its astir almighty chips for AI grooming to China, but Chinese companies similar DeepSeek person inactive created competitory AI models. After DeepSeek released its R1 exemplary earlier this year, Scale CEO Alexander Wang said helium thinks China has acold much of Nvidia’s H100 AI chips than radical whitethorn think, contempt the export controls, and operations similar this whitethorn assistance explicate how. 

Nvidia, which reported quarterly net of a grounds $57 cardinal successful gross on Wednesday.

According to the documents, lone 1 idiosyncratic has been arrested truthful far, portion the 4 are facing charges including smuggling, conspiracy, and wealth laundering. The 4 radical charged — Mathew Ho, Brian Curtis Raymond, Tony Li, and Harry Chen —  allegedly conspired to export the GPUs starting successful precocious 2023, including shipping 50 of Nvidia’s coveted H200 GPUs, and respective batches of the earlier H100 GPUs without a license.

The filing explains that 1 portion of the strategy was an alleged beforehand institution called Janford Realtor, LLC:

Despite its name, Janford Realtor, LLC was ne'er progressive successful immoderate existent property transactions. Instead, the institution served arsenic an intermediary for respective unlawful and unlicensed exports to the People’s Republic of China (“PRC”) of precocious and highly-controlled U.S.-origin Graphics Processing Units (“GPUs”) with artificial quality (“AI”) and supercomputing applications.

Ho, a US citizen, was the registered cause of the company, and Li, a Chinese national, was identified arsenic a manager of the company.

Bryan Curtis Raymond of Huntsville, Alabama, is listed successful the filing arsenic the CEO and sole proprietor of “U.S. Company 1,” which was paid astir $2 cardinal by Janford Realtor. On his LinkedIn, Raymond says helium is the CEO of Bitworks, which helium describes arsenic an AI infrastructure institution that “provides income and enactment for Nvidia and AMD solutions,” and successful another post said helium was precocious hired arsenic CTO for different AI unreality computing company, Corvex. Ho and the different co-conspirators bought GPUs from vendors, including Raymond and his company, utilizing wealth sent via ligament transportation from slope accounts successful China, portion utilizing fake shipping letters and contracts to evade export controls.

“The export strategy is rigorous and comprehensive,” Nvidia spokesperson John Rizzo says successful a connection to The Verge. “Even tiny income of older procreation products connected the secondary marketplace are taxable to strict scrutiny and review. Trying to cobble together datacenters from smuggled products is a nonstarter, some technically and economically. Datacenters are monolithic and analyzable systems, making immoderate smuggling highly difficult and risky, and we bash not supply immoderate enactment oregon repairs for restricted products.”