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China-Based Artificial Intelligence Companies Conducting Industrial-Scale Distillation Campaigns Against U.S. AI Companies

NSA, CISA, and FBI warn DeepSeek, Alibaba, and other Chinese AI firms ran industrial-scale distillation of U.S. frontier models, threatening U.S. AI leadership.

A joint NSA, CISA, and FBI Cybersecurity Advisory (AA26-251A) says China-based firms DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI extracted billions of tokens from U.S. frontier models including Claude, GPT, Gemini, and Grok, likely with Chinese government knowledge. Campaigns running since at least late 2024 used native APIs, cloud providers, third-party aggregators, gray-market proxy "transfer stations", and shared premium subscriptions to bypass geographic restrictions, evade safeguards, and violate providers' terms of use. The agencies recommend detecting anomalous prompts, accounts, and usage patterns; subtly altering responses to suspected distillers; and cross-organization intelligence sharing. They also call DeepSeek's publicly cited $5.6M training cost misleading because it excludes data acquired through distillation.

CISA Advisories · 8d agoAdvisory in the wild1

Six Chinese AI firms accused of aggressively copying US frontier models

NSA, CISA, and FBI accuse DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI of industrial-scale distillation of US frontier models via API abuse.

A joint NSA, CISA, and FBI release alleges six Chinese AI firms have extracted capabilities from US frontier models, including Claude, GPT, Gemini, and Grok, since at least late 2024, likely with Chinese government awareness. Tactics include bulk procurement of premium subscriptions with fraudulent accounts, proxy routing to evade geo-restrictions, and prompt injection to force models to reveal hidden chain-of-thought reasoning. Agencies recommend stronger identity verification, monitoring of anomalous usage, and quietly downgrading or adding noise to responses for suspected distillers, while warning these mitigations could frustrate legitimate users.

Ars Technica · AI · 6d agoAI safety & security in the wild 2 sources

Anthropic Says Seven China-Based AI Labs Ran Industrial-Scale Claude Distillation Attacks

Anthropic disrupted industrial-scale unauthorized Claude distillation by seven China-based AI labs, including Alibaba, DeepSeek, Moonshot, and Z.ai.

Anthropic identified and disrupted six illicit distillation campaigns since February 2026 run by seven China-based labs: Alibaba, Moonshot, DeepSeek, Z.ai (Zhipu), MiniMax, Xiaomi, and SenseTime. The largest, GTG-16005, involved 151 million exchanges targeting Claude Opus 4.6/4.7 chain-of-thought transcripts, peaking at roughly 3 million exchanges per day from more than 3,500 fraudulent accounts. Labs used proxy/relay services with fictitious identities, fake or stolen credit cards, harvested API keys, and purchased conversation transcripts from third-party resellers. Anthropic is countering by banning reseller accounts, summarizing internal reasoning before responding, and introducing preserved thinking in Fable 5.1, which encrypts reasoning and prevents context edits before it.

The Hacker News · 5d agoAI safety & security 10 sources

The sexy AI-powered dating app scams are here

Anthropic exposed a network of roughly 28 AI-driven dating apps using autonomous personas and gig workers to defraud paying users.

Anthropic threat intelligence uncovered a fraud network of around 28 dating apps after a prepaid account sent over 100,000 Claude API requests daily, with most chats run by autonomous AI personas and no human agent. Researchers Matthew Gore-Kormanik and Anthropic's Chris Cronbaugh documented apps including Dora, Romi, and Doni, which monetize conversations via coins; gig workers were hired only to pass liveness checks and select pregenerated replies. An operations manual written in Chinese was found inside the Doni app, and Anthropic published findings in its September 2026 AI misuse report.

The Verge · AI · 4h agoPhishing & fraud in the wild

China-Aligned Hackers Hide PeckBirdy Malware C2 Inside Casino and Adult Websites

Infoblox found China-aligned actors hiding PeckBirdy malware C2 inside fake Chinese-language casino and adult websites, evading security scans via service workers and WebSockets.

Infoblox reported that China-aligned actors behind the PeckBirdy JScript C2 framework conceal command-and-control inside low-quality Chinese-language casino and adult websites, extending Trend Micro's earlier findings that tied the framework to backdoors including MKDOOR and HOLODONUT. One decoy, vip311[.]cc, embedded JavaScript linked to cache-mcp[.]com and registered a service worker connecting to mcp-source[.]online over WebSocket; at publication mcp-source[.]online had zero VirusTotal detections, showing how the layered design evades conventional scanning. The campaign has been active since at least 2023, and just over 3% of Infoblox enterprise customers resolved at least one PeckBirdy C2 domain, with education, IT, banking and government among observed sectors.

GBHackersupdated · 7h agofirst · 10h agoThreat actor in the wild 2 sources