AI outfit DeepSeek, along with over a hundred other Chinese companies, was slated for addition to the Department of Commerce’s Entity List last year, according to a new report. An interagency committee purportedly recommended the addition of the Chinese AI startup after a senior U.S. State Department official said that the firm supported Chinese military and intelligence operations. Alongside DeepSeek, Chinese memory maker CXMT was also slated for the blacklist that prevents American institutions from doing business with them. However, Reuters reports that the White House has held off updating its blacklist to avoid escalating trade tensions with Beijing, especially in the lead-up to President Donald Trump’s three-day state visit to China.
Aside from being accused of helping the Chinese military, Anthropic also claims that DeepSeek and two other frontier Chinese models distilled Claude to improve the capabilities of its models, making 16 million exchanges with 24,000 fraudulent accounts. The American AI company said in its statement on X, “Distillation can be legitimate: AI labs use it to create smaller, cheaper models for their customers. But foreign labs that illicitly distill American models can remove safeguards, feeding model capabilities into their own military, intelligence, and surveillance systems.” There have also been reports that the AI firm has been using shell companies to acquire banned Nvidia chips.
