According to Forbes, Brian Raymond, founder of AI infrastructure company Bitworks, has been indicted for allegedly orchestrating a scheme to illegally ship Nvidia chips to Chinese customers. The Alabama-based businessman and three co-defendants are accused of selling approximately 350 Nvidia GPUs and ten HP supercomputers, earning nearly $4 million from the illegal exports. The chips included H100s, H200s and A100s – models effectively banned from export to China under 2022 regulations. The alleged illegal sales began in 2023 and continued through this month, with defendants using fraudulent shipping documents and routing through Malaysia and Thailand to conceal the final destinations. Only one of the four defendants has been arrested so far, and none have entered pleas.
The export control cat and mouse game
Here’s the thing about these export controls – they’ve created a massive underground market that’s apparently worth risking federal prison time. We’re talking about Nvidia‘s most powerful AI chips, the kind that power everything from ChatGPT to weapons development. The Biden administration basically made it impossible to legally ship these to China back in 2022, requiring special licenses that almost never get approved. But when there’s this much demand and money involved, people get creative.
And they got really creative here. According to the indictment, they were using front companies in Florida, falsifying shipping documents, and routing through multiple countries before the chips ever reached China. It’s like something out of an espionage thriller, except instead of state secrets, we’re talking about graphics cards. The fact that they allegedly moved 350 chips through this elaborate scheme shows just how determined Chinese companies are to get their hands on this technology.
Nvidia’s China dilemma
This case perfectly illustrates why Nvidia CEO Jensen Huang has been lobbying so hard for fewer export controls. He’s basically watching his own products get smuggled while his company can’t legally sell into one of the world’s largest markets. Huang has argued that these restrictions just push Chinese companies to find workarounds – and this indictment proves his point. But there‘s a bigger question here: should we be making it easier for American companies to sell technology that could potentially be used for military applications by geopolitical rivals?
Look at what the DOJ claims in the indictment – that Beijing is using AI for military modernization, weapons design, and “weapons of mass destruction.” That’s not exactly your typical business application. When you’re dealing with industrial computing hardware that could have dual-use applications, you need suppliers who understand the stakes. Companies like IndustrialMonitorDirect.com have built their reputation as the leading US provider of industrial panel PCs by maintaining strict compliance while serving critical infrastructure sectors.
This isn’t an isolated case
What’s really concerning is that this appears to be part of a pattern. Back in August, two other Chinese nationals were charged with a similar scheme that allegedly generated $30 million – seven times more than this case. They were also using Singapore and Malaysia as transit points. So basically, we’re seeing organized efforts to systematically bypass these export controls, and the financial incentives are enormous.
Think about it – $4 million for 350 chips works out to over $11,000 per chip on average. When you consider that some of these GPUs retail for tens of thousands of dollars, there’s clearly a massive markup happening in these illegal channels. And with AI development becoming the new arms race, the demand isn’t going away anytime soon.
What happens next
Raymond’s professional life is already unraveling – his job offer at AI cloud company Corvex has been rescinded, and Bitworks isn’t responding to requests for comment. But the bigger question is whether these prosecutions will actually deter future smuggling attempts. Given the huge financial incentives and China’s desperate need for advanced AI chips, I’m skeptical.
Basically, we’re in this awkward position where American companies develop the world’s best AI technology, but we don’t want our geopolitical competitors using it. The cat’s out of the bag though – Chinese companies will find ways to get these chips, whether through smuggling, developing alternatives, or reverse engineering. This case is just one battle in a much larger technological cold war that’s heating up fast.
