DOJ Announces Shutdown of Major China-Linked AI Tech Smuggling Network Through Operation Gatekeeper

On December 8, 2025, the U.S. Department of Justice (DOJ) announced that it had dismantled a sophisticated, multi-jurisdictional AI smuggling network linked to China. DOJ’s recent actions mark an escalation of its enforcement of U.S. export controls on advanced AI hardware, underscoring the Trump administration’s growing focus on punishing illicit technology transfers to China. For companies, DOJ’s investigation and resulting charges illustrate how willful export controls violations continue to be framed not as technical compliance lapses, but as serious national security crimes carrying significant prison exposure.

According to DOJ, the China-linked network smuggled at least $160 million worth of restricted Nvidia AI chips (specifically Nvidia H100 and H200 Tensor Core graphics processing units (GPUs) and related items) out of the United States, using straw purchasers, domestic warehouses, and deliberate rebranding to evade detection. DOJ’s investigation, called “Operation Gatekeeper,” involved several individual defendants. Most recently, two businessmen, Benlin Yuan and Fanyue “Tom” Gong, were arrested in the United States. Yuan, a Canadian citizen and CEO of a Virginia-based IT services company, was charged with conspiracy to violate the Export Control Reform Act and the Export Administration Regulations. Gong, a Chinese national and owner of a New York-based technology company, was charged with conspiracy to smuggle goods. As part of the broader operation, American citizen Alan Hao Hsu and his Texas-based company, Hao Global LLC, pleaded guilty to smuggling export-controlled Nvidia H100 and H200 GPUs valued at least $160 million.

According to charging documents, Gong and Yuan also independently conspired with employees of a Hong Kong-based logistics company and a China-based AI technology company to evade U.S. export controls. The elaborate smuggling network misrepresented the content and destination of Nvidia GPUs on export paperwork, relabeled Nvidia chips with a nonexistent fake brand, and classified them as generic computer parts, removing any association with Nvidia. Yuan allegedly even helped organize sham inspections to mislead U.S. authorities about the destination of the Nvidia chips.

Interestingly, on the same day as DOJ’s announcement, President Trump signaled, as part of his recent meeting with President Xi Jinping of China, that the United States will loosen its export controls to allow Nvidia to ship one of the AI chips that the defendants allegedly exported in contravention of export controls — the H200 — to approved customers in China and other countries, subject to finalization of details by the U.S. Department of Commerce. President Trump also indicated that his administration would take the same approach with export of chips from other U.S companies.

In light of the heightened risk of export controls evasion associated with AI chips, companies should carefully assess and identify the end user of AI chips even when transacting with U.S.-based companies. Companies should consider requesting end-use/end-user certificates when selling or reselling export-controlled AI technology and should strengthen overall due diligence mechanisms, including to ensure that they are keeping abreast of the potentially changing export controls landscape.

For questions about this press release or other export controls or sanctions matters, contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations or Export Control & Sanctions practice groups.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.