TLDR
- Chinese startup Moonshot AI launched Kimi K3, a free open-weight AI model matching top US systems like OpenAI’s GPT and Anthropic’s Claude
- Demand was so high Moonshot suspended new subscriptions within two days of launch
- White House official Michael Kratsios accused Moonshot of stealing Anthropic’s Fable model through distillation
- Moonshot and China’s embassy denied the allegations, calling them “entirely unfounded”
- US Treasury Secretary Scott Bessent warned sanctions and trade blacklisting are on the table
Chinese AI startup Moonshot AI launched Kimi K3 on Friday, describing it as a 2.8 trillion-parameter open-weight model. The company says it delivers performance close to Anthropic’s Fable, one of the most advanced US AI systems available.
🚨JUST IN: White House technology chief Michael Kratsios accuses Chinese AI startup Moonshot of illegally accessing US technology to develop its Kimi K3 model.
Kratsios alleges the company obtained servers using NVIDIA GB300 chips and routed workloads through infrastructure in… https://t.co/i2M8rPDdY0 pic.twitter.com/GBZhvuRcVr
— Coin Bureau (@coinbureau) July 22, 2026
Unlike most US models locked behind subscriptions, Kimi K3 is free to download, modify, and run on your own servers. That made it instantly attractive to developers worldwide.
Demand was so strong that Moonshot suspended new subscriptions within two days. The company’s servers could not keep up.
Kimi K3 performed near the level of OpenAI’s GPT and Anthropic’s Claude on several benchmarks. In some tests, it outperformed them.
Analysts at Counterpoint Research say the general gap between Chinese and US AI models has narrowed to around three to six months.
US Accuses Moonshot of IP Theft
The launch triggered a quick response from Washington. White House tech official Michael Kratsios posted on X that Moonshot distilled Anthropic’s Fable model to build K3, calling it “large-scale, covert industrial distillation.”
Anthropic’s policy head Sarah Heck backed that claim, calling it “IP theft and industrial espionage” that poses “serious national security risks.”
Treasury Secretary Scott Bessent said sanctions and placement on a US trade blacklist are being considered for firms that cross into IP theft.
Moonshot denied the accusations. A spokesperson for the Chinese embassy in Washington called the claims “entirely unfounded.”
Most independent analysts were skeptical of the distillation theory. Counterpoint’s Wei Sun said the timeline did not add up. Moonshot would not have had enough time to train K3 using Anthropic’s latest models before launch.
Background and What Comes Next
Moonshot was founded three years ago by Yang Zhilin, a Chinese engineer who studied at Carnegie Mellon and turned down a job connected to Apple’s Tim Cook to start his own company.
The company raised nearly $300 million in its first two funding rounds in 2023.
Kimi K3’s launch follows a pattern set by DeepSeek in early 2025, when that Chinese model shocked the industry. Analysts say China’s AI progress is becoming more consistent and harder to dismiss.
“DeepSeek was a surprise. K3 is evidence that China’s progress is becoming more repeatable,” said Poe Zhao, founder of Hello China Tech.
The launch also came just a month after Anthropic’s Fable and Mythos models were pulled by the US government over security concerns. China’s open AI ecosystem is moving fast.
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