On December 3, federal agents arrested a man in New York. On November 28, they arrested another in Virginia. And back in Missouri City, Texas, a third man already pleaded guilty to one of the largest technology smuggling schemes in American history.
Together, they tried to smuggle $160 million worth of cutting-edge AI computer chips out of the United States and send them straight to China. They almost succeeded.
But here’s why this matters: these aren’t just computer parts. These are the building blocks of artificial intelligence. Whoever controls these chips controls the future.
What Actually Got Smuggled
The chips are called Nvidia H100 and H200 GPUs. Think of them as the superbrains that power AI. They process massive amounts of data in seconds. They’re what makes ChatGPT work. They’re what makes modern AI breakthroughs possible.
The U.S. is the only country making them at scale. China wants them desperately. And Alan Hao Hsu, a Texas businessman, found a way to get them there.
Between October 2024 and May 2025, Hsu and his company, Hao Global LLC, exported and attempted to export at least $160 million worth of these chips. They falsified shipping paperwork. They misclassified what was actually being shipped. They lied about where the chips were going.
They received over $50 million in wire transfers from China to fund the operation.
How the Smuggling Ring Worked
This wasn’t some guy shipping a few chips in a box. This was organized. Sophisticated. Criminal.
Tom Gong, a Brooklyn-based technology company owner, worked with Benlin Yuan, a Virginia IT services executive. Together they recruited straw purchasers to buy the chips. Then Gong’s workers removed the Nvidia labels and replaced them with a fake company name: “SANDKYAN.” The real identity disappeared. Then they shipped the relabeled chips to warehouses.
From there, the chips went to Hong Kong. Then to China. All while falsified shipping documents claimed the boxes contained generic computer parts.
Yuan’s job was different. He recruited inspectors, organized storage, and crafted cover stories if federal agents caught the shipments. When authorities detained some chips, Yuan allegedly coached people on how to lie to American officials about where the goods were actually going.
Every detail was calculated to deceive.
Why America Cares (And You Should Too)
This isn’t about one company or one shipment. This is about national security.
“The country that controls these chips will control AI technology; the country that controls AI technology will control the future,” said U.S. Attorney Nicholas Ganjei for the Southern District of Texas.
He’s not exaggerating. These chips power military applications. They power intelligence work. They power the technology that will dominate the next 20 years. When China gets advanced AI chips, they don’t use them for commercial purposes. They use them to advance their military, their surveillance, their strategic advantage over the U.S.
Every chip that Hsu smuggled out was a chip China could use to close the technological gap. Every successful shipment weakened America’s edge.
And Hsu almost got away with it.
The Investigation: Operation Gatekeeper
Federal agents from the FBI, Homeland Security Investigations, and the Commerce Department’s Export Enforcement office launched what they called “Operation Gatekeeper.” They tracked the money. They followed the shipments. They connected the dots between Texas, New York, Virginia, and China.
What they found was a sophisticated network operating in plain sight. The conspiracy wasn’t hidden in dark corners. It was running out of legitimate-looking companies with real addresses and real employees.
It took federal coordination across multiple agencies to expose it. And even then, they don’t know how many successful shipments made it through before the operation was shut down.
What Happens Now
Alan Hao Hsu faces sentencing on February 18. He could get up to 10 years in prison. His company faces maximum penalties of twice the profit from the scheme.
Tom Gong and Benlin Yuan are in federal custody. Gong faces up to 10 years. Yuan faces up to 20 years. Both are awaiting trial.
The U.S. government seized over $50 million in Nvidia chips and cash as proceeds of the crime.
But here’s the real question: how many other operations like this are running right now? How many chips are still being smuggled? How many American technological advantages are being compromised by smuggling networks we haven’t caught yet?
The Larger War for Tech Supremacy
China wants advanced AI chips. America makes them. China can’t easily buy them because of export controls. So they resort to smuggling networks like this one.
The U.S. government is fighting back. But it’s a numbers game. Stop one network, and others emerge. Every smuggling ring that operates successfully teaches China they can get the technology they need without waiting for the future to arrive on its own terms.
This case proves the threat is real. It proves the networks exist. And it proves America is willing to prosecute to protect its technological edge.
The question is whether that’s enough.
Key Players Arrested:
- Alan Hao Hsu (Missouri City, Texas) – Pleaded guilty, sentencing Feb. 18
- Tom Gong (Brooklyn, New York) – Arrested Dec. 3, in custody
- Benlin Yuan (Sterling, Virginia) – Arrested Nov. 28, in custody
Report It: If you suspect illegal export of technology or national security violations, contact the FBI or Homeland Security Investigations immediately.
