U.S. Treasury secretary Scott Bessent doubled down on his warnings to Chinese AI companies on Wednesday, saying that sanctions remain on the table after a White House official accused Moonshot of improperly distilling Anthropic’s Fable model. “Open source is not open season on American IP,” Bessent posted on X, adding that when Chinese firms conduct “covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table.” Bessent’s remarks came hours after White House science and technology policy chief Michael Kratsios accused Moonshot of conducting large-scale distillation against U.S. models, alleging that Moonshot had acquired Nvidia’s “GB300-equipped servers and has accessed GB300s in Thailand, likely to train its AI models.” The GB300 servers are part of Nvidia’s Blackwell generation, which are banned from being sold to Chinese companies. Some experts dispute the idea that Kimi K3 could have been developed primarily through distillation from Fable, which has only been publicly available since July 1. Moonshot released K3 last week as an open-weight model.