The US Justice Department U.S. Department of Justice announced the arrest of two Chinese businessmen accused of masterminding a sophisticated scheme to illegally smuggle high-performance Nvidia AI chips to China. The enforcement action comes just as President Donald Trump Donald Trump moves to reverse a Biden-era export restriction, allowing China to once again import the powerful Nvidia H200 processors.
Operation Gatekeeper Seizes $50M+ in GPUs
The takedown—part of Operation Gatekeeper—blocked more than $50 million in restricted GPUs headed to China and other banned destinations. Prosecutors say the suspects acquired Nvidia H100 and H200 chips through intermediaries and straw buyers before falsifying export documents.
Who Was Arrested?
Authorities arrested:
- Fanyue “Tom” Gong, 43, a Chinese citizen living in Brooklyn
- Benlin Yuan, 58, a Canadian national originally from China
Gong operated a New York tech firm, while Yuan led a Virginia-based IT company tied to a parent organization in the People’s Republic of China.
The pair allegedly conspired with another Chinese national, Alan Hao Hsu, and his Houston firm, Hao Global LLC. Hsu was previously arrested and has already pleaded guilty.
Fake Labels, Hidden Shipments, $160M in Chips
According to court filings, the smuggling network moved over $160 million in export-controlled GPUs between late 2024 and mid-2025. Workers reportedly removed legitimate Nvidia Nvidia labels and replaced them with counterfeit “SANDKYAN” branding to disguise the chips’ origin and bypass export controls.
More than $50 million in wire transfers from China allegedly funded the operation.
Trump’s New Policy May Reopen AI Chip Exports
The arrests coincide with Trump’s reversal of policies under President Joe Biden Joe Biden, allowing Nvidia to export H200 chips to approved Chinese customers. The Commerce Department is expected to expand the updated rules to other chipmakers such as AMD AMD and Intel Intel.
Trump says the shift is aimed at supporting American industry while maintaining national-security safeguards, though analysts warn that smuggling cases like this highlight ongoing risks.
Potential Prison Time
- Gong faces up to 10 years for conspiracy to smuggle goods
- Yuan faces up to 20 years under the ECRA
- Hsu, who pleaded guilty, also faces up to 10 years, with sentencing scheduled for February
The DOJ also revealed a separate $4 million GPU-smuggling bust last month involving both American and Chinese suspects—suggesting demand for restricted AI chips continues to fuel elaborate evasion schemes.