DOJ Busts $160 Million Smuggling Ring That Relabeled Nvidia Chips to Dodge China Export Controls

Two more perps apprehended over smuggling of $160 million of Nvidia chips to China -- DOJ says H100 and H200 shipments were relabelled with a fictional brand to dodge export controls

Two men freshly apprehended, joining a third who has already pleaded guilty to similar charges. Two more men have been apprehended for allegedly violating export control laws regarding the supply of Nvidia H100 and H200 AI chips to China, reports Bloomberg. The DOJ already had a Houston business owner in its back pocket who had pleaded guilty to its charges. Now two fresh scalps, one based in New York and another in Ontario, are facing heat for allegedly facilitating this high-tech smuggling operation. The smuggling gang's ruse was as follows: shipping labels on Nvidia H100 and H200 AI chip cartons/packages/pallets were changed to bear the name of a fictional brand, 'Sandkyan.' The troublesome trio was then alleged to have collaborated with employees from both a Hong Kong-based shipping company and a China-based AI tech company to slyly ease the forbidden cargo through U.S. export controls. This smuggling operation was busted as part of Operation Gatekeeper, explains Bloomberg. The DOJ operation was set up to block exactly this kind of underhanded trading behavior and stop the spread of U.S. AI tech to those who may use it against American interests. Strict AI tech export rules have reportedly cost Nvidia billions in revenue, but the Trump administration has recently extended an olive branch to the company by relaxing export controls somewhat. In brief, Hopper-architecture chips like H100 and H200 are now 'last generation,' with Blackwell chips currently the desirable choice of AI data centers, and another generational upgrade planned for 2026. Thus, the US government reckons that giving China access to older (late 2022) chips like Hopper won't adversely impact American technical superiority. This easing of AI chip export rules is good news for Nvidia, which has lobbied for allowing China unrestricted access to its products. Its CEO, Jensen Huang, has long argued that letting Nvidia become the established default AI chip choice worldwide would create an unassailable American technology stack. Throughout 2025, we have seen Nvidia's established lead being eaten away by Chinese tech initiatives, very likely inspired by export restriction pressures. It remains to be seen how big an appetite the Chinese have for chips like H200 as we approach 2026. It will depend on how much China boasts about its homegrown AI technologies are really vaporware and/or wishful thinking.

US Detains Two Men Accused of Smuggling Nvidia AI Gear to China

The US Department of Justice has detained two men for allegedly violating export control laws by attempting to smuggle at least $160 million worth of Nvidia Corp. AI chips to China. A third, the owner of a Houston company, has already pleaded guilty. The department alleges the men operated a smuggling network that spanned the Houston business, run by Alan Hao Hsu, and several warehouses across the US, which replaced Nvidia labels from H100 and H200 AI chips with the fictional "Sandkyan" brand before shipping them. Fanyue Gong, a Chinese citizen residing in Brooklyn, New York, and Benlin Yuan, a Canadian from Ontario, are alleged to have conspired with employees of a Hong Kong-based logistics company and a China-based AI technology company to circumvent US export controls.

U.S. uncovers scheme to reroute Nvidia GPUs worth $160 million to China despite export bans

NVIDIA AI Computing Card captured in Hangzhou, Zhejiang Province, China on Dec. 9, 2025. U.S. authorities announced Tuesday that they have shut down yet another China-linked smuggling network that trafficked or attempted to traffic more than $160 million in export-controlled Nvidia AI chips. According to a press release from the U.S. Attorney's Office, two businessmen were taken into custody, while a Houston-based company and its owner have already pleaded guilty to chip smuggling as part of the wider investigation. The case comes as Washington steps up its enforcement of export controls aimed at curbing China's access to advanced AI technologies, including Nvidia's Graphics Processing Units. The operation, dubbed "Operation Gatekeeper," exposed efforts to funnel cutting-edge AI chips -- with military and civilian applications -- to entities that could undermine U.S. national security, according to a statement from U.S. Attorney Nicholas J. Ganjei for the Southern District of Texas. Newly unsealed documents show that Alan Hao Hsu, 43, of Missouri City, Texas, and his company, Hao Global LLC, pleaded guilty to smuggling and unlawful export activities on Oct. 10. Officials said Hsu and associates had exported or attempted to export at least $160 million worth of Nvidia H100 and H200 GPUs between October 2024 and May 2025. The H200 and H100 models, while not Nvidia's most advanced chips, still require a special license to be shipped to China under current controls. Hsu's operation allegedly falsified shipping documents to misclassify the GPUs and hide their true destinations, including China, Hong Kong and other prohibited locations. Investigators traced more than $50 million in funds originating from China to help fund the scheme by Hsu and Hao Global. Hsu, who remains free on bond, faces up to 10 years in prison at his Feb. 18 sentencing, while Hao Global could be hit with fines up to twice its illicit gains plus probation. In a statement shared with CNBC, an Nvidia spokesperson said that export controls remain rigorous and that "even sales of older generation products on the secondary market are subject to strict scrutiny and review." "While millions of controlled GPUs are in service at businesses, homes, and schools, we will continue to work with the government and our customers to ensure that second-hand smuggling does not occur," the spokesperson said.

2 businessmen detained over scheme to smuggle Nvidia chips to China, DOJ says

The alleged smuggling network "threatens our Nation's security by funneling cutting-edge AI technology to those who would use it against American interests," U.S. Attorney Nicholas Ganjei said in a Monday statement. * "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 edge." Driving the news: Fanyue Gong, aka Tom Gong, 43, a Chinese citizen who lives in Brooklyn, New York City, and Benlin Yuan, 58, a Chinese-born Canadian citizen who lives in Mississauga, Ontario, are accused of being part of a "sophisticated smuggling network" that the DOJ said U.S. authorities had "shut down," per a Monday statement from U.S. Attorney Nicholas Ganjei. * They were detained in a DOJ investigation dubbed "Operation Gatekeeper," which the Justice Department said seized more than $50 million in advanced graphic processing units (GPUs) "destined for China and other restricted locations." * Gong and Yuan are accused of conspiring with employees of a Hong Kong-based logistics company and a China-based AI technology firm to "circumvent U.S. export controls," according to a DOJ statement. Zoom out: The pair was charged after Houston man Alan Hao Hsu aka Haochun Hsu, 43, and his company, Hao Global LLC, both pleaded guilty in October to smuggling and unlawful export activities, per the DOJ. * "Hsu and others knowingly exported and attempted to export at least $160 million worth of export-controlled Nvidia H100 and H200 Tensor" GPUs, according to the DOJ. What they're saying: "The Chinese government requires Chinese citizens abroad to strictly abide by local laws and regulations, while also legally protecting the legitimate rights and interests of Chinese citizens overseas," a spokesperson for the Chinese Embassy in Washington said, per Reuters. * A Nvidia spokesperson noted to Reuters that security and reviews are "strict" in regards to selling "older generation" items on the secondary market. * "While millions of controlled GPUs are in service at businesses, homes, and schools, we will continue to work with the government and our customers to ensure that second-hand smuggling does not occur," the spokesperson said. * Representatives for Yuan and Gong could not be immediately reached for comment. What we're watching: "Hsu faces up to 10 years in federal prison at sentencing Feb. 18, while Hao Global LLC could be fined up to twice the gross gain from the offense and given a term of probation," per the DOJ.

DoJ takes down sophisticated network smuggling $160m worth of AI chips to China

Despite the crackdown, President Trump authorized Nvidia to sell its GPUs to China legally The US Department of Justice (DoJ) took down a major smuggling operation that saw Nvidia chips being shipped to China, despite the export ban. Two people were arrested in the process. In October 2025, US law enforcement arrested one Alan Hao Hsu, of Missouri, Texas. He confessed using his company, Hao Global LLC, to smuggle Nvidia chips worth at least $160 million, to China. The models being shipped included H100 and H200 Tensor Core GPUs, both used for AI apps and high-performance computing. Now, in a continuation of that activity, the DoJ said two people were arrested: Benlin Yuan, a CEO of a Virginia IT services company and a subsidiary of a Chinese tech firm, and Fanyue Gong, an owner of a New York tech firm. Together with a Chinese logistics company, and an AI technology firm, the duo worked hard to conceal the contents of the shipments, and where they were sending the hardware to. They would reportedly ship the Nvidia chips to a warehouse in the US, where they would then strip them of all Nvidia labels, and replace them with fake "SANDKYAN" ones. From there, they would try to ship them overseas, but not before obfuscating their true destination. It's not clear how this was done, but the DoJ did explain that Yuan lied to the authorities when asked. The AI game seems to be heating up, and the US is doing all it can to prevent China from taking the lead: "Operation Gatekeeper has exposed a sophisticated smuggling network that threatens our Nation's security by funneling cutting-edge AI technology to those who would use it against American interests," said U.S. Attorney Nicholas J. Ganjei for the Southern District of Texas. "These chips are the building blocks 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 edge."

US authorities catch 'trafficking network' smuggling $160M of NVIDIA AI chips to China

TL;DR: US authorities dismantled a Houston-based network smuggling $160 million worth of NVIDIA H100 and H200 AI GPUs to China by falsifying export documents and rebranding shipments. This operation highlights the US commitment to enforcing export controls and protecting advanced AI technology critical to national security and global technological leadership. US authorities have busted an AI chip trafficking network that was attempting to send $160 million worth of NVIDIA H100 and H200 AI GPUs to China, as the smugglers were changing the shipments' final destination. In a press release issued by the U.S. Department of Justice, authorities reported a trafficking network in Houston, Texas, that has been convicted of smuggling NVIDIA AI chips to China using a "complex scheme". Court documents reveal two individuals -- Alan Hao Hsu, and those who worked for his company, Hao Global LLC -- attempted to export NVIDIA H100 and H200 AI GPUs worth $160 million by manipulating official paperwork and hiding the "ultimate destination of the GPUs". The network itself was busted by the discovery of a wire transfer that began in the People's Republic of China (PRC), with the NVIDIA AI GPUs shipped to US warehouses and then rebranded as "SANDKYAN", allowing the group to misclassify the AI GPUs and then export them. 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. The National Security Division, along with our partners, will vigorously enforce our export-control laws and protect this edge". Assistant Director Roman Rozhavsky of the FBI's Counterintelligence Division, said: "Gong and his accomplices allegedly led a complex scheme to smuggle high-performance graphic processing units to China in violation of U.S. export laws. This case highlights the importance of interagency cooperation to protect U.S. technology; the FBI, alongside our partners, will continue to aggressively investigate these violations and bring those responsible to justice. We ask our private sector partners to remain vigilant to this increasing threat as our adversaries try to match U.S. artificial intelligence breakthroughs". U.S. Attorney Nicholas J. Ganjei for the Southern District of Texas, added: "Operation Gatekeeper has exposed a sophisticated smuggling network that threatens our Nation's security by funneling cutting-edge AI technology to those who would use it against American interests. These chips are the building blocks 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 edge".

US Justice Department Accuses Two Chinese Men of Trying to Smuggle Nvidia Chips

WASHINGTON, Dec 8 (Reuters) - Two Chinese men are in custody for allegedly smuggling Nvidia H100 and H200 chips to China, the U.S. Justice Department said on Monday, as President Donald Trump gave the green light for Nvidia to export its H200 chips to Beijing. Prosecutors allege that Fanyue Gong, 43, a Chinese citizen living in New York, and Benlin Yuan, 58, a Canadian citizen from China, independently conspired with employees of a Hong Kong-based logistics company and a China-based AI technology company to circumvent U.S. export ⁠controls, according to the Justice Department. In court documents, prosecutors said that Gong and his co-conspirators obtained the Nvidia chips through straw purchasers and intermediaries, and falsely claimed that the goods were for U.S. customers or customers in third countries like Taiwan and Thailand. The chips were shipped to multiple U.S. warehouses, where individuals removed the Nvidia labels and affixed labels bearing the name of what prosecutors believe was a fake company, according to the criminal complaint. The chips were then prepared for export, according to the complaint. In a separate complaint, ⁠prosecutors said Yuan helped recruit and organize individuals to inspect the mislabeled chips on behalf of the Hong Kong logistics company. Yuan allegedly agreed to direct inspectors not to say the goods were destined for China, prosecutors said, adding that he also directed discussions regarding crafting a story his company could use to get chips and other equipment released after federal law authorities detained it. Prosecutors estimate that the scheme operated since at least November 2023, according to court documents. Another man, Alan Hao Hsu, 43, and his company pleaded guilty in October to smuggling and unlawful export activities as part of the scheme, according to the Justice Department. Hsu and his company received more than $50 million in wire transfers from China to help fund the operations, which exported and attempted to export at least $160 million worth of export-controlled Nvidia chips, the department said. "Operation Gatekeeper has exposed a sophisticated smuggling network that threatens our Nation's security by funneling cutting-edge AI technology to those who would use it against American interests," Nicholas J. Ganjei, the U.S. attorney for the Southern District of Texas, said in a statement. "While millions of controlled GPUs are in service at businesses, homes, and schools, we will continue to work with the government and our customers to ensure that second-hand smuggling does not occur," a Nvidia spokesperson said, calling the sale of older generation products on the secondary market "subject to strict security and review." The Chinese Embassy in Washington and a lawyer for Yuan could not be reached for comment. In 2022, the U.S. government implemented export controls cutting China off from certain semiconductor chips made anywhere in the world with U.S. equipment. The Trump administration in September expanded its restricted export list to automatically include subsidiaries owned 50% or more by a company on the list.

U.S. Authorities Bust AI Chip "Trafficking Network" Trying to Smuggle $160 Million in NVIDIA AI Chips to China by Hiding the Shipments' Final Destination

The U.S. authorities have caught an AI chip smuggling network that was reportedly intending to send NVIDIA's H100 and H200 AI chips to China in an unlawful manner. Export controls have been a major concern for the US ever since AI has become a matter of national security, and since the Biden administration, we have seen US authorities attempt to close in 'export loopholes' by blocking NVIDIA's highest-end AI chips being sold to nations like China, but despite such attempts, smuggling networks have managed to find ways to send these chips to 'hostile nations'. In a press release by the U.S. Department of Justice, it is reported that a trafficking network in Houston has been convicted of smuggling AI chips to China through a "complex scheme". Gong and his accomplices allegedly led a complex scheme to smuggle high-performance graphic processing units to China in violation of U.S. export laws. This case highlights the importance of interagency cooperation to protect U.S. technology; the FBI, alongside our partners, will continue to aggressively investigate these violations and bring those responsible to justice. - Assistant Director Roman Rozhavsky of the FBI's Counterintelligence Division Court documents reveal that two individuals, Alan Hao Hsu and those involved within his company, called Hao Global LLC, had attempted to export NVIDIA's H100 and H200 AI chips worth $160 million by manipulating official paperwork and hiding the "ultimate destination of the GPUs". The network was ultimately exposed by the discovery of a wire transfer initiated by the People's Republic of China (PRC). Interestingly, the NVIDIA GPUs were shipped to US warehouses and then rebranded as "SANDKYAN", which allowed individuals to misclassify the goods and ultimately export them. Judging by how desperate China is for AI compute power, the nation has implemented workarounds to US export controls, including rental services, deploying data centers in countries like Singapore, and even establishing a smuggling network that utilizes third-world countries. The situation has been a matter of legal concern for the US, which is why the current adminstration has been proactive in identifying smuggling networks within the AI segment, and then patching them out.

US Arrests Chinese Duo In Nvidia Chip Smuggling Scheme As Trump Loosens China Export Rules - NVIDIA (NASDAQ:NVDA)

Two Chinese nationals have been arrested by the U.S. Justice Department for allegedly smuggling Nvidia Corp (NASDAQ:NVDA) chips to China. Gong And Yuan Arrested The Justice Department has charged Fanyue Gong, a New York-based Chinese citizen, and Benlin Yuan, a Canadian national originally from China, for allegedly helping smuggle Nvidia's H100 and H200 chips into China. The two men allegedly collaborated with staff at a Hong Kong-based logistics firm and a China-based AI technology company to evade U.S. export controls. Prosecutors claim that Gong and his associates acquired the Nvidia chips through intermediaries and straw purchasers, falsely asserting that the goods were intended for U.S. or third-country customers. The chips were subsequently shipped to multiple U.S. warehouses, where workers removed the Nvidia labels and replaced them with labels from a company believed to be fictitious. According to a separate complaint, Yuan coordinated individuals to examine the mislabeled chips on behalf of the Hong Kong logistics firm. He allegedly instructed the inspectors to hide the chips' intended destination and to fabricate a narrative for the company to present if U.S. authorities seized the goods. The Justice Department estimates that the smuggling operation has been ongoing since at least November 2023. See Also: Shaq Refused To Spend $80,000 On A Security System. Instead, He Invested In A Startup Jeff Bezos Eventually Bought For $1B Previous Crackdown On Nvidia Chips Smuggling The arrest of Gong and Yuan comes at a time when President Donald Trump confirmed that NVIDIA can export its H200 chips to approved customers in China and other countries, while its advanced Blackwell and future Rubin chips remain restricted to the U.S. market. In a related case, the Justice Department charged four individuals, including two American citizens and two Chinese nationals, for conspiring to illegally export restricted Nvidia AI chips to China. The chips were allegedly routed through Malaysia between October 2024 and January 2025. China's efforts to reduce its reliance on U.S. technology have also been evident in its customs crackdown on Nvidia's AI chips. In October 2025, China reportedly launched a sweeping customs crackdown on Nvidia's AI chips, with a focus on the H20 and RTX Pro 6000D chips, which were designed to comply with U.S. export controls. These incidents underscore the growing competition between the U.S. and China in the tech sector, with Nvidia at the center of this geopolitical struggle. The outcome of these cases could have significant implications for the future of U.S.-China relations and the global tech industry. READ NEXT: 'The Money Is Very, Very Clear:' BlackRock Says The Biggest Winners Of AI Revolution Are Hidden In Plain Sight -- And Investors Are Missing Them Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$189.90-%OverviewMarket News and Data brought to you by Benzinga APIs

US accuses two Chinese men of smuggling Nvidia chips... However, Trump just allowed to export them

The US Justice Department has charged two Chinese nationals for allegedly orchestrating a long-running scheme to smuggle Nvidia's restricted H100 and H200 AI chips to China. Prosecutors say the network relied on straw buyers, false paperwork and relabelled hardware to bypass export controls in place since 2023. The suspects are accused of working with a Hong Kong logistics company and a China-based AI firm, moving mislabeled chips through United States warehouses before preparing them for export. Officials describe the case as part of a wider operation that attempted to ship at least $160 million worth of controlled GPUs overseas. Another participant in the network pleaded guilty in October after investigators found tens of millions in wire transfers used to fund the operation. Washington continues to tighten export restrictions on advanced semiconductors, even as the Trump administration has recently allowed, as of today, some Nvidia H200 exports to proceed. "We will protect National Security, create American Jobs, and keep America's lead in AI. NVIDIA's United States Customers are already moving forward with their incredible, highly advanced Blackwell chips, and soon, Rubin, neither of which are part of this deal." "I have informed President Xi, of China, that the United States will allow Nvidia to ship its H200 products to approved customers in China, and other Countries, under conditions that allow for continued strong National Security."