The U.S. Department of Justice announced on Monday (December 8th) that two Chinese businessmen have been indicted for allegedly smuggling Nvidia’s H100 and H200 chips to China. The two individuals are currently in custody. On the same day, U.S. President Trump approved Nvidia to export a downgraded version of the H200 chip to Beijing.
Fanyue Gong, a 43-year-old Chinese citizen residing in Brooklyn, New York and the owner of a technology company, was arrested on December 3rd in New York on charges of conspiring to smuggle goods out of the country.
Benlin Yuan, a 58-year-old Chinese citizen with Canadian citizenship living in Mississauga, Ontario, and the CEO of a subsidiary of a Chinese IT company in Sterling, Virginia, was arrested on November 28th in Sterling on charges of conspiracy to violate the 2018 Export Control Reform Act (ECRA).
Prosecutors allege that Gong and Yuan conspired with employees of a Hong Kong logistics company and personnel from a Chinese AI technology company to circumvent U.S. export controls. The two have been detained on suspicion of violating export control and smuggling laws.
Prosecutors state that Gong and his associates acquired Nvidia chips and graphics processing units (GPUs) through purchasing agents and intermediaries, falsely claiming that the goods were intended for U.S. customers or customers in third countries such as Taiwan and Thailand.
According to court documents, the Nvidia chips were initially shipped to multiple warehouses in the U.S., where Gong’s employees removed the Nvidia labels and affixed false labels from a fictitious company called “SANDKYAN” before preparing them for export as per Gong’s instructions.
Prosecutors say that Yuan was responsible for recruiting and organizing personnel to inspect the tampered labels on the GPUs for the Hong Kong logistics company. Yuan allegedly instructed the inspectors not to disclose that the destination of the goods was China and directed workers on how to deceive so that they could retrieve the equipment after the U.S. seized the chips and devices.
If convicted, Yuan faces up to 20 years in prison and a maximum fine of $1 million for conspiracy to violate the Export Control Act, while Gong could face up to 10 years in prison for conspiring to smuggle goods out of the country.
Authorities estimate that the smuggling scheme began operation in November 2023. Over $50 million in assets and Nvidia chips and graphic processors have been seized in this case.
Several Chinese individuals involved in the case have already pleaded guilty. Alan Hao Hsu, a 43-year-old residing in Missouri City, Texas, and his company Hao Global LLC in Houston have admitted to being involved in smuggling. Hsu received over $50 million from China and exported or attempted to export over $160 million worth of Nvidia H100 and H200 Tensor Core GPUs from October 2024 to May 2025.
Prosecutors stated that Hsu and others also falsified transportation documents, altered the description of the goods (such as generic computer parts), and the recipient, concealing the true destination of the GPUs. These GPUs were ultimately shipped to China, Hong Kong, and other places, violating U.S. export regulations.
Hsu is scheduled to be sentenced on February 18, 2026, and could face up to 10 years in prison. His company may face a maximum fine equivalent to twice the illegal proceeds and could be subject to probation.
The H100 and H200 are high-speed GPUs used for artificial intelligence applications and high-performance computing, capable of processing large amounts of data for developing generative AI and large language models. These GPUs have both civilian and military applications.
Since 2022, the U.S. has implemented export controls on chips and semiconductors to China, expanding restrictions in September this year to include listed companies and their subsidiaries with over 50% ownership.
U.S. Assistant Attorney General John Eisenberg emphasized the importance of innovation and cutting-edge technology, especially the critical role of advanced chips in artificial intelligence. The Justice Department will rigorously enforce export controls to protect America’s technological edge.
The case was cracked by the U.S. Department of Justice’s Operation Gatekeeper.
A spokesperson for Nvidia stated, “We will collaborate with the government and customers to prevent the smuggling of second-hand chips.” Emphasizing that the resale of old products in the secondary market “must comply with strict security regulations and review procedures.”
Yuan’s lawyer did not respond to media requests for comments.