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US Treasury Chief Bessent Signals Sanctions Threat Over Foreign Open-Source AI Models and Alleged IP Theft

July 21, 2026 at 12:23 EDT

Policy & Regulation
Open Source
Foundation Models

US Treasury Secretary Scott Bessent said Washington will closely scrutinize open-source artificial intelligence models built overseas, including those from China, and is prepared to impose sanctions if it finds evidence of intellectual property theft from American companies. Speaking in a Fox Business interview on July 21, 2026, Bessent framed the position as support for open-source development coupled with a hard line on IP violations.

July 21, 2026 · US Treasury

Washington Threatens Sanctions Over AI Model IP Theft

Treasury Secretary Scott Bessent says the US backs open-source AI but will scrutinize overseas models — and is prepared to sanction them if it finds evidence of stolen intellectual property from American companies.

2.8T

Parameters in Kimi K3 — among the largest openly available models to date

Sept

Bessent expected to lead US delegation at US-China AI talks

Apr '26

White House first alleged "industrial-scale distillation" of US frontier models

Model Scale — Kimi K3 vs. Prior Chinese Frontier Model

2.8T

Kimi K3

smaller

DeepSeek V4

Kimi K3's parameter count exceeds earlier models — with claimed benchmarks "neck-and-neck" with top US systems.

Two Positions, One Policy

"This administration supports open source models, but what we do not support is IP theft."

✓ Supports

Open-source AI development and open ecosystems that let developers worldwide customize models.

⚠ Will penalize

IP theft — US watermarks turning up in Chinese models is "unacceptable," with sanctions on the table.

How "Distillation" IP Theft Is Alleged to Work

Query US frontier model

→

Copy behavior via jailbreaks / proxy accounts

→

Replicate in a lower-cost rival model

Still open: Detailed benchmarks, pricing and distribution terms for Kimi K3 remain thin. What form any US action might take — and what evidence would trigger it — awaits the review Bessent described.

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