White House OSTP Director Michael Kratsios says “we have information that Moonshot AI distilled Anthropic's Fable for the development of its K3 model”

We have information that Moonshot AI distilled Anthropic's Fable for the development of its K3 model. To do this they developed a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of

@mkratsios47 2026-07-23 Director Michael Kratsios

Context & Ripple Effects

The allegation comes as U.S. officials are also tracking Moonshot AI's reported access to GB300-equipped systems, tying model-development concerns to the infrastructure used to train and operate frontier AI.

Attribution remains contested: OpenAI's Greg Brockman said it was too early to determine whether OpenAI models were involved. Kratsios's statement therefore elevates an alleged Anthropic-specific case without resolving the broader evidence base publicly.

First-order effects

Anthropic and Moonshot AI become the immediate focal points of a public U.S. government allegation over the provenance of K3's development; the claim is not, on the supplied record, an adjudicated finding.
The reported internal platform for large-scale distillation makes the allegation about a repeatable development capability rather than a single disputed model interaction.

Second-order effects

Frontier-model providers may put greater weight on detecting and constraining automated extraction through their model interfaces, since large-scale distillation can turn access to leading models into a development input for rivals.
The overlap between the allegation and reported access to high-end training systems makes compute access and model-use controls complementary concerns for policymakers, rather than separate policy tracks.

Third-order effects

If similar claims are substantiated, competitive advantage in frontier AI may depend increasingly on controlling both compute and the ability to learn from leading models, pushing model governance toward a more strategic, state-mediated posture.
Public attribution by U.S. officials could make cross-border model competition more institutionalized, though the available record does not show what legal or commercial response will follow in this case.

The trend: This is one data point in the convergence of frontier-model IP controls, strategic compute access, and state-led oversight of AI competition.

Discussion

@secscottbessent Treasury Secretary Scott Bessent on x
We support open-source AI and the innovation it unlocks. But open source is not open season on American IP. When PRC firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table.
@undersece @undersece on x
This is more than a heist of invaluable American Intellectual Property. It is an assault on every economy that prizes the entrepreneur, rewards private capital, and relies on fair and honest competition. Lying, cheating, and stealing is not innovation or “win-win”. It's corros…
@sarahkheck Sarah Heck on x
Thanks @mkratsios47 for speaking out on this important issue. Illicit, adversarial distillation is IP theft and industrial espionage that supports adversary military and intelligence capabilities. It is a national challenge that creates serious national security risks for the U…
@eliebakouch Elie on x
there are only 15 days between fable 5 ban removal and kimi K3 release. i don't think claiming that K3's performance comes from fable distillation (even if they did it) makes sense technically
@parkerconrad Parker Conrad on x
A set of politically-connected growth investors are mobilizing to protect their bag in Anthropic. They will secure bans on chinese open source models, when no crime has been proven—or even alleged—and without any act of congress. All to protect a set of wealthy investors.
@kimmonismus @kimmonismus on x
This reads to me as if preparations are being made to ban models like Kimi K3 in the future. I would be very interested in the evidence that leads to the assumption that Fable 5 was distilled for Kimi K3.
@kevinbankston Kevin Bankston on x
I'd be curious to understand what IP is being stolen? According to your (C) office, LLM outputs aren't copyrightable, and courts have long held reverse engineering to be a fair use; trade secret is a stretch since the company's model is directly disclosing the info. Easy to say
@ramez Ramez Naam on x
Yup. The federal government signalling that they'll sanction Moonshot and make it hard for Americans to use Kimi, the lowest cost frontier AI model and de facto best cyber defense model. Foreign adversaries & hackers will still be able to use it, of course. But maybe not you.
@steve_yegge Steve Yegge on x
When are people going to figure out that intelligence can't be contained? It's been leaking for millennia, it's going to keep leaking at an exponential rate, and there's nothing you can do about it.
@xinyu2ml Xinyu Yang on x
While others write stories, we're busy writing code. Getting our models ready to open-source for the world. Stay tuned.
@teknium @teknium on x
I have information that Anthropic scraped my github twitter reddit discord and facebook posts for the development of it's Fable model. To do this they developed a sophisticated internal platform to conduct large scale scraping and obfuscation of their actions.
@ednewtonrex Ed Newton-Rex on x
We have information that Anthropic distilled millions of creatives' work for the development of its Fable model. To do this they developed a sophisticated internal platform to conduct large scale training on U.S. copyrighted work, allowing them to quickly train on millions of
@fujikanaeda Eric W. Tramel on x
Allegations like this need to get precisely technical if they are to be taken seriously. E.g. how many tokens, during what timeframe, with what inputs, used for what purpose, in what stage of training, and to what effect? What do we mean by “distillation”, even? Is it SFT, RL
@sophiacai99 Sophia Cai on x
Instead of banning Chinese AI models by putting them on a Commerce entities list, the Trump administration is zeroing in on Chinese models being “distilled” from — or copying — U.S. models. Bessent yesterday floated sanctions.
@haider1 Haider on x
@mkratsios47 we have information that Anthropic distilled humanity's entire internet for the development of Fable 5
@krishnanrohit Rohit on x
Could this be true re the scale? Fable was barely out for any time before it was shut down and Kimi came out.
@eliebakouch Elie on x
(even if they did it)* i personally have 0 information about whether they did it or not, i'm just saying that even if they had some distillation pipeline for prompts or judge, i'm having a hard time thinking that this would significantly boost performance in this very short
@jack_raines Jack Raines on x
Wait til you figure out what the frontier labs trained on!
@bubbleboi Bubble Boi on x
Isn't going to college like literally distilling from your professors? What's the big deal.
@emollick Ethan Mollick on x
I have no inside information, but every sign so far is that there is growing tension about open weights models between the US & China: the US announcing that they reserve the right to act against distilled models, then saying Kimi distills. Contradictory reports from China, etc.
@nathancgy4 Nathan Chen on x
every day rn i go on x to learn something new about this company
@matthewstoller Matt Stoller on x
Anthropic ‘distilled’ millions of copyrighted books without asking. They knowingly used pirated materials for training. The entire U.S. ecosystem of AI is based on similar theft and extraction. But it's unfair when China does it to us? Grow up.
@krishnanrohit Rohit on x
Jun 9: Fable's out Jun 12: Fable revoked Jul 1: Fable's back with stronger classifiers Jul 15: Kimi's out
@kevinsxu Kevin S. Xu on x
As of today's America, an AI model's output or chain of thought is not copyrighted nor treated as trade secrets. So it is not IP. You may *feel* like it is because of something you've read. But it isn't. Thus, alleging distillation as “IP theft” is not a serious legal
@kimmonismus @kimmonismus on x
„sanctions and Entity List designations will be on the table." Yeah, bans on Chinese open source are coming. Pretty sure at this point. If Scott Bessent, who pushed through similar measures against Anthropic, raises this as a possibility, we know where things are headed.
@joshua_saxe Joshua Saxe on x
1) It's going to be extremely hard to stop AI companies from training on each other's model outputs from a technical POV because ... *the model behaviors are the product the model companies are selling* and you don't need that many of them to get leveraged gains in posttraining
@rakeshsfnyc Rakesh Agrawal on x
The funniest thing here is that he thinks the president will (or is capable of) reading a document this long. He wouldn't have the attention span to read the tl;dr.
@danprimack Dan Primack on x
“They used my stuff without permission.” “Whatever. That's just distillation.” — “China used my stuff without permission.” “Thieves!!!!!”
@randyxian Randy on x
yes, Fable went public on July 1 and K3 launched on July 15. We trained a brand new frontier model in JUST 15 DAYS. Guinness World Record stuff.
@curtis_yarvin Curtis Yarvin on x
Solution: no wires to China. Great Firewall facing inward. Trade still legal but must be conducted by clipper ship. Sail power only
@ednewtonrex Ed Newton-Rex on x
If AI training is just like human learning (as the AI bros love to tell us), why should Chinese AI companies not learn from US AI companies' outputs?
@martin_casado @martin_casado on x
Very sensible position provided the allegations are true.
@phl43 Philippe Lemoine on x
I think concerns about distillation from US models by Chinese companies are legitimate, although nobody really knows how much it actually matters, but it's kind of funny to see a US official complain that a Chinese company has violated export controls on chips and, in the same
@kevinbankston Kevin Bankston on x
This seems like a poorly tailored content- and speaker-based restriction on speech. And while Chinese company Moonshot may not have a direct 1st amendment right to publish its weights and outputs, we in the US likely have a 1st am right to receive them.
@chrisgpt Chris on x
Kimi K3 was already in internal evaluation by April/May, before Fable 5 had been available long enough to be a plausibly distilled. I'll wait for the evidence from the USG if they'll publish it. However Kimi already outperformed Fable on BrowserComp, so if K3.1 beats Fable 5 on…
@andrewcurran_ Andrew Curran on x
Scott Bessent alluded to this yesterday and specifically mentioned sanctions. It's possible they may be gearing up to use Kimi as a test case for new penalties. US-China AI talks are planned for September, with Bessent leading the US side. Things are heating up. [image]
@tekbog @tekbog on x
soon the great firewalls will be put up and a shadow token economy will be born welcome to cyber warfare
@taylorlorenz Taylor Lorenz on x
Suddenly we have to protect the AI companies— who commit 24/7 IP theft and have built their businesses on IP theft— from IP theft? Lmao
@micsolana Mike Solana on x
what's wrong, you don't like the free market?* *american startups competing against the second wealthiest nation state in human history, which is presently committed, from the top down, to destabilizing our industry and cornering the global intelligence market
@stevesi Steven Sinofsky on x
This makes me sad. It always makes me sad to see tech companies in litigation in general and in IP litigation specifically. This compounds when any company seeks to do so under the cover of using the whole of government, trade law, and claims of spying. Treating/calling model …
@matthewberman Matthew Berman on x
1. Didn't we know this? 2. The data distilled from Ant was not enough to make the model as good as it is. 3. Why can't Fable detect and prevent distillation attacks? 4. This seems like a losing battle, let's just go all-in on building our own (US) AI.
@hamandcheese Samuel Hammond on x
We urgently need to pass the Chip Security Act to enforce location verification of our advanced chip exports. By all means sanction adversarial distillation, but allowing China to illicitly or surreptitiously access racks of Hoppers and Blackwells is the far bigger own-goal.
@ryangreenblatt Ryan Greenblatt on x
Many people seem to be arguing this is implausible because Fable hasn't been out for long. But Moonshot could have obtained unauthorized access before Fable was released via actors with prerelease access (Glasswing) or possibly by hacking Anthropic directly.
@arielkwiat Ariel on x
US cope is starting to exceed even the European cope-producing facilities. Truly outstanding.
@peterwildeford Peter Wildeford on x
The US government accuses Kimi K3 of being developed with... - sophisticated large-scale distillation of Anthropic's Fable model - use of Nvidia compute procured in violation of US export controls - legal use of remote compute in Thailand 👀
@yacinemtb Kache on x
@mkratsios47 I don't remember letting anthropic scrape my GitHub profile as well as all of my online writing!
@kchoudhu @kchoudhu on x
“They paid for Anthropic for API access and used it”
@matthew_sigel @matthew_sigel on x
Frontier labs entire business model is built on “distilling” the entire history of human creativity and intelligence, no?
@cmuratori Casey Muratori on x
When AI companies pirate something*, it's “fair use”. When someone pirates their model data, it's “stealing” and “undermining American research”. * - Literally pirate. Multiple court admissions have made clear that AI companies download millions of works from pirate sites.
@chrisrmcguire Chris McGuire on x
Incredibly strong statement by @mkratsios47 showing how China is continuing to illicitly distill its AI models from US models and illegally access U.S. chips. Excellent the administration is so focused on this. The question again is: when is this going to translate into action?
@aphysicist Aaron Slodov on x
maybe one day china will actually make a better model from the ground up, prob not, but maybe!
@dkaushik96 Divyansh Kaushik on x
Important to note that BIS could address the remote access issue today if it wanted to.
@dougcalidas Doug Calidas on x
Hard to see how anyone can look at this and reach the conclusion that the US needs to double-down on accelerating release of frontier models to “beat China.” Absent the release of US frontier models, Chinese developers like Moonshot have nothing to distill. This seems so
@hunterwalk.com @hunterwalk.com on bluesky
even if true, doesn't matter. — Anything that can be distilled will be distilled. [embedded post]
@fry69.dev @fry69.dev on bluesky
That is simply impossible! — It takes months to train a model! — Fable was not available during that time where the main training run for K3 must have happened! — Also it takes ENORMOUS amount of data to train a model! — Way more that it is possible to siphon from an API …
@daniloc.xyz @daniloc.xyz on bluesky
I saw Goody Proctor distilling with Fable [embedded post]
r/politics r on reddit
The White House Is Trying to Figure Out What to Do About Chinese AI
r/mlscaling r on reddit
USG states that Moonshot used large-scale rapid Fable distillation for Kimi K3, and has both acquired & accessed export-controlled GB300 Nvidia GPUs
r/MU_Stock r on reddit
White House accuses China's Moonshot AI of distilling Anthropic's Fable to develop Kimi K3.
@andrewcurran_ Andrew Curran on x
A new trade group, known as the Little Tech Association, which includes Proton, Replit and Y-Combinator, are urging the Trump admin to not ban Chinese open-source models, they argue that doing so would be catastrophic for US start-ups, while doing nothing to stop proliferation. […
@shwetarkohli Shweta Rajpal Kohli on x
🧐
@anthonyronning Anthony Ronning on x
Yes, our US startup protecting user privacy with TEE hosted open models would be destroyed. Which is why I pledge to ignore any unlawful orders on any open model bans.
@lutherlowe Luther Lowe on x
NEW: 🚨 in a letter that just dropped, nearly 200 companies (members of @LittleTechOrg) call upon the White House to not ban open weight models. [image]
@quxiaoyin Xiaoyin Qu on x
If U.S bans Kimi, it will actually benefit Kimi: 1. They aren't making much money in the U.S …
r/LocalLLaMA r on reddit
Startup founders urge Trump not to shut off Chinese open weight AI

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