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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 · 7d agoAdvisory in the wild1

Label-Guided Knowledge Distillation for 3D-CNNs in Action Recognition

LGKD uses ground-truth labels to guide feature distillation for 3D-CNNs, combining sample-wise and class-wise distillation for action recognition.

The paper proposes Label-Guided Knowledge Distillation (LGKD) for 3D-CNNs, noting that most video feature distillation methods are simple adaptations of image techniques that neglect temporal-dimension differences. LGKD combines sample-wise distillation, which uses label information and the teacher's probability distribution to guide features impacting temporal accuracy, with class-wise distillation employing a prototype network to capture relational knowledge among same-category samples. Experiments on the UCF101 and HMDB51 action recognition benchmarks achieve competitive results.

arXiv cs.AI / cs.LG / cs.CL · 4d agoAI research

Making Knowledge Distillation Cheap Enough to Run at Scale

Hugging Face blog by Multiverse Computing describes techniques making knowledge distillation cheap enough for large-scale training.

A Hugging Face blog post from Multiverse Computing (CAI) presents methods for reducing the cost of knowledge distillation so it can be run at scale. The post is aimed at practitioners compressing large models into smaller, cheaper ones for production use.

Hugging Face Blog · Aug 10, 2026AI research

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.

SecurityWeekupdated · 6d agofirst · 6d agoAI safety & security in the wild 5 sources1

Chinese AI firms are siphoning capabilities from American models, CISA warns

CISA, NSA and FBI warn Chinese AI firms including DeepSeek and Moonshot AI extracted billions of tokens from US frontier models via distillation campaigns.

A joint CISA, NSA and FBI advisory says China-based firms including DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun and Z.AI have run industrial-scale knowledge distillation campaigns against US frontier models such as Claude, GPT, Gemini and Grok since at least late 2024, likely with Chinese government knowledge. The campaigns used gray-market API proxies called transfer stations, premium account pools and traffic routing to bypass restrictions, evade safeguards and exfiltrate billions of tokens used to train models like DeepSeek R1/V3 and Kimi. The agencies challenge DeepSeek's reported $5.6 million training cost and recommend identity verification, usage monitoring, response variation, differential privacy and indicator sharing as defenses.

Help Net Security · 7d agoAdvisory in the wild1

Lightweight Vision Transformer Compression for On-Device Plant Disease Detection in Resource-Constrained Agricultural Field Conditions

A unified ViT compression pipeline (H-BAC pruning, quantization, distillation) cuts plant-disease models 54.5x to 6.01 MB while keeping 95.13% accuracy.

Researchers combined Hessian-Balanced Adaptive Block Pruning (H-BAC), guided by second-order sensitivity estimation, with quantization and attention-based knowledge distillation to compress Vision Transformers for on-device chilli plant disease detection in India. On a 3-class cross-village, cross-device out-of-distribution dataset, the integrated pipeline reduced model size from 327.42 MB to 6.01 MB (54.5x) at 95.13 +/- 2.32% accuracy, matching the 95.13% FP32 baseline. Ablations also show a directly trained 6.01 MB INT8 student reaches 94.87% accuracy, indicating where pruning and distillation add limited value.

arXiv cs.AI / cs.LG / cs.CL · 11d agoAI research

DeepSeek, Alibaba and Chinese AI Firms Extract Billions of Tokens From U.S. AI Models

NSA, CISA and FBI advisory AA26-251A accuses DeepSeek, Alibaba and four other Chinese AI firms of industrial-scale distillation of US frontier models.

Joint advisory AA26-251A from NSA, CISA and FBI accuses DeepSeek, Alibaba, Moonshot AI, MiniMax, StepFun and Z.AI of extracting billions of tokens from Claude, GPT, Gemini and Grok variants since at least late 2024, likely with Chinese government awareness. Campaigns allegedly used API proxy 'transfer stations', account pools, metadata sanitization and prompt injection to harvest reasoning, coding, agentic and reinforcement-learning capabilities, with techniques mapped to MITRE ATLAS. DeepSeek's R1 and V3 and Alibaba's Qwen families reportedly trained on harvested outputs, and DeepSeek's $5.6 million training-cost claim is disputed as excluding distilled data value. Agencies urge anomaly monitoring, output alteration for suspected extractors, and intelligence sharing across vendors, clouds and aggregators.

GBHackers · 7d agoAI safety & security in the wild1· 1 read

CISA Warns Chinese AI Firms Extract Billions of Tokens From Claude, GPT, Gemini and Grok

CISA, NSA and FBI advisory says six Chinese AI firms extracted billions of tokens from Claude, GPT, Gemini and Grok via API proxies since late 2024.

A joint advisory from CISA, NSA and FBI alleges China-based AI companies including DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun and Z.AI harvested billions of tokens across millions of exchanges from Claude, GPT, Gemini and Grok variants since late 2024. Operators allegedly used API proxy 'transfer stations', account pools, bulk premium subscriptions and prompt injection or jailbreak-style requests to force models to reveal chain-of-thought reasoning. DeepSeek's R1 and V3 and Moonshot's Kimi-K2 and Kimi-K3 models reportedly benefited from the extracted data. CISA urged providers to add identity checks, monitor subscription-to-usage ratios, rate limit, and share infrastructure signals with cloud platforms.

Cyber Security News · 7d agoAI safety & security in the wild

Open-Source AI & Open Models Reading List

Interconnects publishes a curated open-model reading list covering release strategy, US-China competition, adoption data, and a narrowed 4-6 month open-closed frontier gap.

The list, updated September 11, 2026, compiles essays on open-model strategy, licensing gradients, safety of open weights, adoption data, and Chinese open-source history. It notes leading open models have come from Chinese labs since roughly 2024, citing Kimi K3 and GLM-5.2/5.3, and that the open-closed gap has narrowed to roughly 4-6 months. It also documents Western adoption of Chinese models, including Perplexity's use of DeepSeek R1 and Thomson Reuters moving to Qwen, which has drawn lawmaker probes at DoorDash, Airbnb, Anysphere/Cursor, and Apple.

Interconnects · 4d agoAI industry1

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 · 4d agoAI safety & security 10 sources

5 useful things you'll learn in my new post-training textbook (shipping now!)

Nathan Lambert's new RLHF and post-training LLM textbook covers PPO, GRPO, GSPO, CISPO and related techniques, freely available online.

Nathan Lambert's book 'Reinforcement Learning from Human Feedback: Aligning and Post-training LLMs' is now shipping from Manning. It covers policy-gradient algorithms including PPO, GRPO, GSPO, CISPO, and RLOO, plus loss aggregation, truncated importance sampling, asynchronous RL systems, and post-training topics like rejection sampling, outcome reward models, and on-policy distillation. The book is freely available online with a 12-hour course, codebase, and exercises.

Interconnects · Aug 10, 2026AI research

Feds accuse China of ‘systematic’ distillation of U.S. AI models

NSA, CISA, and FBI jointly accuse Chinese AI firms including DeepSeek and Moonshot AI of industrial-scale distillation of US frontier models.

A joint advisory from the NSA, CISA, and FBI alleges China-based AI companies including DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI have systematically extracted capabilities from US frontier models since at least late 2024. The companies allegedly spent billions of tokens across millions of requests against Claude, ChatGPT, Gemini, and Grok, routing traffic through multiple accounts, platforms, proxies, and third-party aggregators to evade detection. Moonshot AI allegedly distilled 18 US models, including Anthropic's most advanced model, to train its Kimi-K2 and Kimi K3 models.

CyberScoop · 7d agoAI policy

Week in review: Linux rootkit deployed on F5 BIG-IP APM devices, Cisco FMC bugs exploited

Weekly roundup: Cisco FMC and N-able N-central zero-days exploited in the wild, MikroTik RouterOS hijacks, Microsoft Patch Tuesday ships two exploited zero-days.

State-sponsored and financially-motivated attackers are actively exploiting CVE-2026-20079, a critical authentication bypass in Cisco Secure Firewall Management Center (FMC), alongside CVE-2026-20316. N-able issued an emergency hotfix for CVE-2026-86218, a critical pre-auth RCE in the N-central RMM platform exploited in the wild. CERT Polska disclosed six RouterOS vulnerabilities being chained to hijack internet-exposed MikroTik devices. Microsoft's September 2026 Patch Tuesday shipped a record patch count including two zero-days, while roughly 67,000 Trezor customers faced phishing after a shipping-partner breach and researchers privately disclosed a zero-click WeChat worm to Tencent.

Help Net Security · 3d agoExploit / PoC in the wildCVE-2026-20079CVE-2026-20316CVE-2026-862182· 1 read

[AINews] 10% worse, 100x cheaper, 10000x faster: Why Simulation is taking over

Latent Space argues AI training pipeline stages—rewards, data, teachers, curricula, environments—are flipping from human-made to model-made simulation.

Latent Space's AINews essay traces how each component of AI training has turned synthetic since 2022: reward models (InstructGPT, RLAIF), synthetic pretraining data (Microsoft Phi, NVIDIA Nemotron-4 340B), model teachers (Alpaca, DeepSeek-R1 distillation), and self-generated curricula (Self-Rewarding Language Models, SPIN). In 2026 it highlights Karpathy's autoresearch loop—700 experiments yielding 20 kept improvements, cutting GPT-2 training time from 2.02 to 1.80 hours—and Z.ai's GLM-5.3 fully synthetic RL environment, judging, and verification stack. It frames these shifts as 'simulation': 10% worse but 100x cheaper and 10,000x faster than human equivalents.

Latent Space · 25d agoAI industry

Y Combinator’s Garry Tan wants U.S. open-weight AI labs to ‘distill’ frontier models, too

Y Combinator CEO Garry Tan urges US open-weight labs to distill frontier models and regulators to stay out, countering Anthropic's crackdown calls.

Y Combinator CEO Garry Tan told CNBC he would "do nothing" about Chinese labs distilling frontier models and floated an "American distillation regime" letting US open-weight labs do the same to American frontier labs. Anthropic this week released its second report alleging Chinese labs conduct "illicit distillation attacks" using hidden identities, fraud, and stolen credentials, and CEO Dario Amodei has called for US regulators to crack down. Tan argued closed labs cannot dictate what customers do with API outputs, noting frontier labs trained on copyrighted material without permission, and called a single monolithic proprietary provider the true AI doomer scenario.

TechCrunch · AI · 4d agoAI industry

OpenWAM: An Open, Modular Exploration Towards Systematic World-Action Model Pretraining

OpenWAM releases an open modular stack for world-action model pretraining, plus OpenWAM-alpha trained on about 6,400 hours of egocentric and robot data.

OpenWAM is an open research stack that factorizes World-Action Model pretraining into composable infrastructure, study, and model components with unified training, inference, and evaluation. Controlled experiments distill three principles on knowledge inheritance, world-action synergy, and out-of-domain generalization gains from embodied co-training. The resulting OpenWAM-alpha, pretrained on roughly 6,400 hours of egocentric human and robot data, achieves top-tier results across eight simulation benchmarks and real-robot tests spanning single-arm, bimanual, and dexterous embodiments. The full stack, including infrastructure, evaluation protocols, pretrained models, and data recipes, is released openly.

Hugging Face daily papers · 9d agoAI research

Threat actors are coming for your AI assets to operationalize their use of AI

Google GTIG reports espionage and crime groups stealing AI models, prompts, and API credentials, plus distillation campaigns and agentic AI attack automation.

Google Threat Intelligence Group's quarterly AI Threat Tracker reports adversaries stealing proprietary models, source code, prompts, and API credentials from government, healthcare, and media targets, including China-based UNC6508 compromising clouds to run unauthorized LLM workloads. Distillation campaigns against Google's models exceeded 100 million prompts launched via thousands of stolen account credentials through proxy networks. Mandiant also observed a financially motivated actor deploy an autonomous multi-agent framework that harvested thousands of third-party credentials in under 6 hours, and a 'Recon' framework on a live C2 server managing over 23,000 stolen credentials including cloud and AI API keys.

CSO Online · 1d agoThreat actor in the wild

Learning 3D Editing without Paired Supervision via Generative Prior Distillation

New framework distills 2D editing and VLM priors into a feed-forward 3D editing model without paired 3D training data.

The method, PriorEdit3D, learns feed-forward instruction-guided 3D editing by distilling knowledge from foundation models instead of using ground-truth 3D pairs. Through a differentiable rendering pipeline it supervises a 2D visual prior from an image editing model at the main view and a Vision-Language Model semantic prior at novel views for instruction fidelity and identity preservation. A 3D-aware Distribution Matching regularization constrains outputs to the manifold of realistic 3D assets defined by a pretrained image-to-3D teacher. Experiments report superior instruction fidelity and cross-view consistency over state-of-the-art baselines, with code released on GitHub.

Hugging Face daily papers · 12d agoAI research

Opaque recurrence, and other AI terms that you should probably know

TechCrunch updates its plain-English glossary defining common AI terms from AGI and agents to chain-of-thought reasoning.

TechCrunch maintains a regularly updated glossary of AI terminology, defining terms such as AGI, AI agents, API endpoints, chain of thought, coding agents, compute, deep learning, and diffusion. It highlights 'opaque recurrence', the reasoning technique in OpenAI's new Astra model that has drawn attention from AI safety researchers. The piece is an educational living document rather than new research or a product announcement.

TechCrunch · AI · 8d agoAI industry

OpenBMB Releases MiniCPM5-2B: A 2.52B Dense Model Averaging 53.9 Across 34 Benchmarks and Built to Run On Device

OpenBMB released MiniCPM5-2B, a 2.52B-parameter Apache 2.0 on-device model averaging 53.9 across 34 benchmarks, ahead of Qwen3.5-4B.

OpenBMB released MiniCPM5-2B, a 2,516,756,480-parameter dense LlamaForCausalLM model with grouped-query attention and a 131,072-token context, under Apache 2.0, runnable via vLLM, SGLang, llama.cpp, and Ollama. It averages 53.9 across 34 benchmarks versus 51.1 for Qwen3.5-4B, with strong tool-use (97.1 on tau2-Bench Telecom) and code results (69.1 LiveCodeBench v6, 46.4 SWE-bench Verified). Training combined 400B tokens of deep-thinking SFT, critic-based JustRL II RL teachers, and on-policy distillation merging 16 RL experts; datasets and intermediate checkpoints were published alongside the weights.

MarkTechPost · 8d agoModel release

ZK-Trace: Certified Collusion Tracing with Zero-Knowledge Credentials for Federated GNSS Interference Monitoring

ZK-Trace combines Tardos fingerprints and zero-knowledge credentials to trace leaked classifier copies in federated GNSS monitoring without leaker cooperation.

ZK-Trace addresses leakage of a proprietary classifier distributed to partly trusted stations in federated GNSS interference monitoring, combining public identity marks, recipient-specific Tardos fingerprints, and zero-knowledge credential verification to support offline tracing. The paper provides false-accusation and tracing-score bounds with an interval-arithmetic checker allocating a common budget across accusation and tamper decisions. In a simulated GNSS federation it isolates all 160 single-owner copies and traces 712 of 720 two-owner mixtures with a 0.001 false-naming budget, while feature marks survive feature matching in 20/20 runs at 4.8 percentage-point accuracy cost but are erased by function-only distillation.

arXiv cs.CR · 7d agoResearch