Treasury threatens sanctions after White House claims Moonshot distilled Anthropic’s Fable

U.S. Treasury Secretary Scott Bessent doubled down on his warnings to Chinese AI companies on Wednesday, saying that sanctions remain on the table after a White House official accused Moonshot of improperly distilling Anthropic’s Fable model. 

Model distillation is a common AI training technique in which a smaller model learns from the outputs of a larger one. While this process can infringe on intellectual property rights, it’s also widely used as a legitimate optimization method.