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

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DoJ dismantled a smuggling ring moving $160M worth of Nvidia H100/H200 GPUs to China, arresting two suspects
Operation Gatekeeper revealed chips were relabeled “SANDKYAN” to evade export controls, threatening U.S. AI security
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.

Nvidia gets the OK

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.”

At the same time, US President Donald Trump gave Nvidia the green light to sell its chips to China - legally.

Via Cybernews

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Sead is a seasoned freelance journalist based in Sarajevo, Bosnia and Herzegovina. He writes about IT (cloud, IoT, 5G, VPN) and cybersecurity (ransomware, data breaches, laws and regulations). In his career, spanning more than a decade, he’s written for numerous media outlets, including Al Jazeera Balkans. He’s also held several modules on content writing for Represent Communications.

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