Treasury Secretary Scott Bessent appeared to blame the Commerce Department for failing to act sooner on the growing Nvidia espionage scandal. Former Nvidia CEO Jensen Huang was ousted this week following multiple affair scandals, including one with an alleged Chinese spy and executive at Singapore-based Megaspeed International. Speaking on CNBC, Bessent stated that the Treasury, Defense, and State departments, along with the Office of the United States Trade Representative, had supported placing Megaspeed on the entity list for months, but noted that the Commerce Department holds sole authority over export enforcement. Bessent remarked that observers would need to ask Commerce officials about their internal processes regarding the delay.
Key takeaways
- Treasury Secretary Scott Bessent pointed to the Commerce Department for delaying action on Megaspeed.
- The affair allegedly facilitated the shipment of $7 billion worth of restricted Nvidia chips to Chinese entities.
- Commerce Secretary Howard Lutnick faces mounting pressure and potential ouster over the department's handling of export controls.
- Democratic lawmakers plan to investigate the Trump administration's handling of the matter when they take control of Congress in January.
The scope of the alleged export violations
The controversy stems from reports that an affair between the former Nvidia chief and an executive at Singapore-based Megaspeed International facilitated the shipment of at least $7 billion worth of Nvidia chips to Chinese companies, thereby evading export control restrictions imposed by Washington. Investigations also revealed that Alice Huang, who is accused of helping Chinese firms obtain restricted Nvidia chips, maintained business interests connected to Huawei, which serves as Nvidia's biggest Chinese competitor.
Bessent emphasized the strategic implications of the leak during his interview, stating that President Trump made it clear China should not receive Nvidia chips above H100 models, and that any leakage gives the Chinese an advantage in the artificial intelligence race. However, this stance appeared to contrast with official administration policy earlier in the year, which had explicitly authorized sales of more powerful H200 chips to approved Chinese customers under specific licensing requirements.
Internal administration friction and political fallout
Reports indicate that the Trump administration had known about concerns regarding Megaspeed and the Nvidia executive for months before public scrutiny intensified. Additional reporting revealed that Nvidia's general counsel intervened in a Commerce Department probe into Megaspeed during the late summer of 2025. Following that intervention, investigators at Commerce's Bureau of Industry and Security reportedly faced restrictions and were instructed to route inquiries through Commerce Undersecretary Jeffrey Kessler, while the Justice Department subsequently requested a pause in the investigation.
The situation has generated intense scrutiny regarding the influence tech giants hold over government officials. Reports from Axios highlighted prior disagreements between the Commerce Department under Howard Lutnick and the White House Office of Science and Technology Policy regarding AI regulation. Bessent reportedly confronted Lutnick directly in a meeting to address alleged delays in implementing export controls, though the Commerce Department has previously denied accounts of that confrontation. As senior White House officials reportedly debate Lutnick's future, incoming Democratic lawmakers have vowed to hold administration officials accountable when they take control of Congress.
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