Sure thing.
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So, get this — federal agents in LA stumbled onto this wild smuggling ring, you know, moving all these high-end graphics processors to China, like it’s no big deal. Strange place for it — from this nondescript office in a strip-mall in El Monte. Honestly, who would’ve thought?
Anyway, court documents – they’re all official and stuff – came out Tuesday spilling the beans on this company, ALX Solutions Inc. They popped up just after the U.S. clamped down on chip exports in late 2022. Over 20 months, they loaded out 21 shipments, supposedly just “video cards” going through spots like Singapore or Malaysia. But then some inspectors got nosy, and boom! The boxes were full of top-notch accelerators, just marked as “computer parts.” Really sneaky, right?
Money trail was kinda wild. There’s this one buyer in Hong Kong who just wired a cool million upfront. Then smaller bits came in from mainland groups tied to defense. And they even caught these Secret chats – ‘cause, let’s face it, who doesn’t use Signal? – with one of the founders, Chuan Geng, telling his buddy Shiwei Yang stuff like “split up orders, switch labels” if anyone pokes around.
These shenanigans bump up against a Bureau of Industry and Security rule from October 2022, which, in short, all but pulled the plug on China’s access unless there’s some special Commerce license. Why? Because these chips are gold for AI that takes on military tasks, basically.
The affidavit is like something out of a spy novel: mislabeled crates caught by Long Beach customs, serial numbers hitting Nvidia’s databases, and even a late-night tail on a delivery van. Agents searched ALX’s warehouse, finding empty trays that could’ve held something like 1,000 GPUs, worth around $25 million, with papers pointing to a new Shenzhen AI firm.
Geng turned himself in smoothly, cooperative-like, but Yang, whose student visa, by the way, expired ages ago in 2020, got nabbed at LAX with a one-way ticket to Taipei. Geng’s out on a $250,000 bond, but Yang’s still cooling his heels in custody, waiting for an August 12 hearing. They’re facing charges under this Export Control Reform Act – pretty serious, with penalties reaching up to 20 years in prison.
The big guns at the Justice Department are zeroing in on this. They’re calling it slick “21st-century transshipment.” BIS wants civil penalties too, maybe even a lifetime export ban.
Got some background: Geng was once the finance chief (fancy title, huh?) of some e-commerce thing that folded over unpaid taxes. Yang ran some LA parcel-forwarding outfit, helping overseas sneaker flippers. Neither’s got much in the way of tech cred, which just backs up the prosecutors’ idea that ALX was all about sneaky silicon shipments to fuel China’s chip cravings.
It’s still early, though. They need a grand jury to give an indictment, and the defense might kick things off by saying the chips didn’t quite hit the performance limits when they were bought. Expect lots of geeky debates about bandwidth and firmware in court. Could see a trial by spring 2026, by the way. That’ll dive into how Washington’s tackling silicon smuggling as AI keeps evolving.
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News Source: Justice Department
