OpenAI Says People Linked to China's Moonshot Tried to Copy Its AI's Hidden Reasoning

OpenAI says it disrupted a campaign involving 15,000+ users and ties a core cluster to people associated with Moonshot, the startup behind Kimi.

Why would anyone want it? Because distillation—training a new AI on the outputs of a stronger one—leads to better results from smaller models without heavy training.

Done without authorization, OpenAI calls it adversarial distillation: "the systematic and unauthorized use of one model's outputs or reasoning to help train, reproduce, or improve another model."

This is just one of the many scandals involving AI companies. The most obvious and popular one is the illegal or unauthorized use of copyrighted data to train models. Distillation doesn’t go this far. AI outputs are not copyrightable so companies include prohibitions and safeguards in their terms of service to prevent competitors from using those outputs.

OpenAI has been here before. In January 2025, it said it was reviewing signs that DeepSeek may have distilled its models, as Washington weighed national security risks.

Anthropic followed in February, accusing Chinese labs of using about 24,000 fraudulent accounts to generate more than 16 million exchanges with Claude. Online critics shot back that Claude itself was trained on the open internet.

By April, the White House was saying foreign entities, primarily in China , were running industrial-scale distillation campaigns. A week later, Elon Musk acknowledged in court that xAI used distillation on OpenAI models to train Grok.

In June, Anthropic took the fight to Congress , asking for penalties for large-scale model extraction.

In August, researchers showed that OpenAI, Anthropic and Google each protected reasoning with a single provider-wide encryption key, and that attackers could coax models into spitting out the hidden thoughts in plain text. All three companies deployed server-side patches after disclosure, though session logs shared earlier remain decodable.

Moonshot hasn't responded to OpenAI's post. It’s targeting a $3 billion IPO in Hong Kong at a $50 billion valuation.