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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

US Agencies Warn China Is Systematically Extracting Frontier AI Capabilities

NSA, CISA and FBI warn Chinese AI firms including DeepSeek and Moonshot systematically extracted billions of tokens from US frontier models since late 2024.

The NSA, CISA, and FBI report that China-based AI companies including DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI extracted billions of tokens from US frontier models such as Claude, GPT-4/GPT-5, Gemini, and Grok 4 since late 2024. The distillation trained DeepSeek's R1 and V3 and Moonshot's Kimi-K2/K3 models, and the agencies mapped the tactics to MITRE ATLAS while noting additional novel techniques like subscription exploitation and request metadata sanitization. They describe the activity as a strategic economic threat to US technological leadership and recommend behavioral detection, differential privacy, and targeted cost-imposing responses.

SecurityWeek · 7d agoAI safety & security in the wild1

Scam Attacks Taking Advantage of the Popularity of the Generative AI Wave

Unit 42 finds about 225 generative AI-themed domains registered daily since ChatGPT's launch, with nearly 29 percent suspicious, fueling scams and PUP delivery.

Palo Alto Networks analyzed new domain registrations containing generative AI keywords such as chatgpt, prompt, and sora since ChatGPT's November 2022 launch, observing around 225 GenAI-related registrations per day. About 28.75 percent of these domains are suspicious, a rate 22 times higher than for general new domains, with registration spikes aligning with milestones like Bing ChatGPT integration, the GPT-4 release, new GPTs, and OpenAI's Sora announcement. Over 72 percent of the domains use gpt or chatgpt keywords, and gpt domains show a 76 percent suspicious rate. Case studies cover PUP delivery, spam distribution, and monetized domain parking, with 35 percent of traffic to these domains directed at suspicious ones.

Palo Alto Unit 42 · Aug 17, 2026Phishing & fraud in the wild1