Uncovered 3-person smuggling ring charged with moving AI chip stock worth millions to China risks receiving a 20-year prison term
In a significant development, two Chinese nationals, Chuan Geng and Shiwei Yang, are currently facing federal charges for allegedly exporting AI chips to China without the required licenses, violating the Export Control Reform Act.
The case involves the California-based company ALX Solutions, where Geng handled finances, Yang was secretary, and the CEO remains unnamed. According to the allegations, from October 2022 to July 2025, they shipped sensitive AI GPUs, specifically Nvidia H100 chips, using mislabeled shipments and false representations to conceal exports to China. The scheme allegedly included routing shipments via Singapore and Malaysia to evade U.S. export controls.
Evidence presented includes seized communications and business records suggesting an intentional scheme to bypass export licensing requirements. Both defendants face up to 20 years in prison under the Export Control Reform Act, and the Department of Justice’s National Security Division is actively prosecuting the case.
Geng was released on a $250,000 bond, while Yang remains in custody pending a detention hearing scheduled for August 12, 2025. Both defendants' arraignment is set for September 11, 2025, in the U.S. District Court in Los Angeles.
It is important to note that no pleas have been entered by the defendants. The FBI and Department of Commerce’s Bureau of Industry and Security continue investigating the matter.
The exports occurred after the Commerce Department began requiring licenses for advanced microchips, and after the rollout and rescission of the AI Diffusion Rule by the Biden and Trump administrations, respectively. Chip smuggling operations have become more sophisticated over the years, with instances of smugglers hiding chips in prosthetic body parts and using live lobsters as a cover.
[1] Federal Bureau of Investigation - Press Release [2] Department of Justice - Press Release [3] Department of Commerce - Press Release [4] U.S. District Court, Central District of California - Court Filing [5] White House - Fact Sheet on AI Chips Export Controls
- The race for technological advancement in the data-and-cloud-computing industry has led to an alleged violation of the Export Control Reform Act by Chuan Geng and Shiwei Yang, who operate in the finance and business sectors.
- The duo, employed at California-based ALX Solutions, are accused of shipping sensitive AI GPUs, including Nvidia H100 chips, to China without the required licenses, a scheme that involves mislabeled shipments and false representations.
- In the game of business and finance, these actions could lead to a potential 20-year prison sentence under the Export Control Reform Act, with the Department of Justice’s National Security Division aggressively prosecuting the case.
- As part of the technology and artificial-intelligence industry, the case highlights the growing sophistication of chip smuggling operations, with methods such as hiding chips in prosthetic body parts and using live lobsters as a cover.
- The losers in this race, Geng and Yang, are currently facing federal charges, with Geng released on a $250,000 bond and Yang in custody, awaiting a detention hearing on August 12, 2025.
- The season for legal proceedings begins for both defendants on September 11, 2025, in the U.S. District Court in Los Angeles, where no pleas have been entered by the parties involved. The FBI, Department of Commerce, and other relevant authorities continue their investigation into the matter.
