White House Advisor Accuses Chinese Moonshot of Stealing Anthropic's Model, Experts Skeptical

White House science advisor Michael Kratsios said that Chinese company Moonshot, behind the Kimi K3 model — the largest available open-source LLM — built it by copying Anthropic's Fable model, using chips not authorized for export to China. Kratsios called this a "large-scale covert industrial distillation" and "unacceptable." Moonshot did not respond to requests, and Kratsios provided no details. Treasury Secretary Scott Bessent also claimed to have found "watermarks" of American LLMs in Chinese models, but did not specify what they were. Experts, however, are skeptical of the distillation narrative. Braden Hancock from the Laudow Institute and co-founder of Snorkel AI said strict distillation could not have produced such a powerful model so quickly, since Fable was only available from July 1, and Kimi K3 was released two weeks later. Nathan Lambert from the Allen Institute for AI believes that distillation loses relevance as Chinese models approach state-of-the-art, and that replicating Fable's capabilities requires RL, not just SFT. Labs would need to use APIs of frontier labs for massive RL runs, which would be extremely expensive and slow. Previously, Anthropic had already accused Moonshot, DeepSeek, and MiniMax of systematic distillation, detecting millions of exchanges from IP addresses of these companies. Yet distillation is considered a common practice: Elon Musk acknowledged that SpaceXAI distilled OpenAI's models to create Grok. Hancock also noted that Americans underestimate the technical expertise of Chinese teams, and that one of Moonshot's founders is a CMU graduate. Separately, accusations are mentioned that Moonshot had access to advanced Nvidia Grace Blackwell 300 chips and servers with GB300 in Thailand, which is prohibited, but a black market exists.