Law Enforcement Busts $160M AI Chip Smuggling Ring Sending Nvidia Tech to China
Federal law enforcement shut down a major smuggling network that was smuggling U.S. artificial intelligence (AI) technology into China, Hong Kong, and other restricted countries.
Prosecutors say at least $160 million worth of export-controlled Nvidia chips were either exported or awaiting exportation by the smuggling ring, which was centered out of a company in Houston.
“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.”
Prosecutors say the smuggling ring used falsified paperwork, shell companies, and fake labels to get the Nvidia H100 and H200 chips into China. They would obtain the chips by lying about their intended destination and then would label them with a fake company name, “SANDKYAN.”
The scheme originated with a businessman in Houston and operated between October 2024 and May 2025. According to recently unsealed court documents, Alan Hao Hsu and his company Hao Global LLC, both pleaded guilty to smuggling and unlawful export activities in October 2025.
Federal officials arrested two other individuals in late November and early December, Fanyue Gong, a tech-company owner in New York, and Benlin Yuan, a Canadian executive, for their roles in the smuggling network.
Investigators also traced more than $50 million in funds originating from China to help finance the scheme.
The Commerce Department’s Bureau of Industry and Security (BIS) Office of Export Enforcement Dallas Field Office, Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI) Dallas, and the FBI New York and Washington Field Offices are investigating the case.