Federal investigators say a sprawling smuggling network quietly moved thousands of Nvidia’s most advanced chips toward China by relying on a fake brand, falsified paperwork, and exploited gaps in export enforcement. At the center was a made‑up company name, “SANDKYAN,” used to conceal the origin and identity of high-end H100 and H200 graphics processing units that are restricted under U.S. export controls.
Inside the Operation: A Three‑Layer Deception
According to prosecutors, the scheme, dubbed Operation Gatekeeper, combined three layers of deception that worked together across borders.
First, straw buyers and shell companies placed orders with authorized Nvidia resellers, claiming the GPUs were destined for U.S. customers or for jurisdictions such as Taiwan and Malaysia that do not require American export licenses for these chips. Once Nvidia produced the hardware or distributors released it from inventory, a second group of conspirators took possession inside the United States.
At U.S. warehouses, workers directed by Brooklyn-based tech entrepreneur Fanyue “Tom” Gong allegedly removed the genuine Nvidia labels from each GPU and applied SANDKYAN branding instead. The hardware was then described in paperwork as generic “computer parts” or “electronic components,” masking the presence of controlled, high-performance AI chips.
Finally, conspirators altered shipping documents, including bills of lading, to reclassify the contents. Instead of identifying “H100 Tensor Core Graphics Processing Units” or “H200 Tensor Core GPUs,” the paperwork listed broad categories that would be less likely to trigger automated red flags in customs systems or attract the attention of inspectors.
Straw Buyers, Inspectors, and a Hong Kong Hub
Charging documents describe how straw purchasers—often with little or no background in the semiconductor trade—approached authorized Nvidia resellers on behalf of fictitious or superficially legitimate entities. Once sales were approved, the GPUs moved into a shadow logistics network.
Investigators say the SANDKYAN label worked precisely because it was bland, unfamiliar, and absent from regulatory databases. Export inspectors commonly rely on manufacturer labels and known brand names as shorthand for identifying controlled technology. A label that did not match any recognized manufacturer, paired with neutral product descriptions, helped shipments pass through routine checks without prompting deeper scrutiny.
The network’s reach extended to the inspection process itself. Prosecutors allege that 58‑year‑old Canadian executive Benlin Yuan, head of a U.S. subsidiary of a major Beijing IT firm, recruited federal contract inspectors on behalf of a Hong Kong logistics company tied to the scheme. Yuan allegedly instructed them not to reveal that the true end destination of the hardware was mainland China and helped craft misleading explanations when U.S. authorities detained suspect shipments.
Hong Kong served as the central transit point. Investigators identified a freight forwarding firm there as the operational hub where rebranded SANDKYAN GPUs were consolidated, repackaged, and routed onward to Chinese recipients. The city’s separate customs framework and its role as a global trading center created room for ambiguity over which country’s export rules applied and who bore responsibility for interception.
Money, Timeline, and Scale
Financial records uncovered by prosecutors show that Hao Global LLC and its principal, Alan Hao Hsu, received more than $50 million in wire transfers from accounts in the People’s Republic of China between October 2024 and May 2025. The funds flowed through intermediary banks in Southeast Asia, including institutions in Thailand, Malaysia, and Singapore, before being used to acquire Nvidia hardware from legitimate distributors.
Unsealed court documents place the core smuggling window between October 2024 and May 2025, a seven‑month period that predates the U.S. policy shift in December 2025 allowing certain H200 sales to China. During that time, exports of these GPUs to China were broadly restricted, suggesting the conspirators were operating with the expectation that direct sales would remain prohibited.
Court filings and outside investigative reviews cite “at least $160 million” in exported or attempted Nvidia GPUs linked to the conspiracy. One examination of the case materials found references to more than 7,000 H100 and H200 units shipped through Hsu’s operation alone in that period, implying an average value of roughly $23,000 per chip—consistent with market prices at the time.
Prosecutors have provided few details on the warehouse workers who physically removed labels and applied the SANDKYAN branding. Records describe them only as individuals who “worked for” or “under the direction of” Gong, possibly as employees of his New York technology venture. Their absence from the list of defendants suggests they may have had limited insight into the broader scheme, cooperated with investigators, or fell below prosecutorial priorities focused on organizers and financiers.
Legal Exposure and Unanswered Questions
The criminal cases emerging from Operation Gatekeeper illustrate differing levels of legal risk for key players. Hsu pleaded guilty in October 2025 and faces a maximum of 10 years in prison at his scheduled sentencing on February 18, 2026, along with possible fines and forfeiture. Similar export-control conspiracies can carry up to 20 years, indicating his plea agreement may include reduced charges or reflect sentencing guidelines for a first-time offender.
Hsu’s plea paperwork also notes that his conviction could have consequences for his immigration status, including potential denaturalization and deportation. That language implies he is a naturalized U.S. citizen whose citizenship could be challenged if the offense is deemed to involve fraud or moral turpitude under federal law.
Gong and Yuan face higher potential penalties. Yuan is charged under the Export Control Reform Act, which allows for prison terms of up to 20 years, signaling prosecutors see his alleged efforts to manipulate inspectors and mislead federal officials as central to the conspiracy. Gong faces a maximum 10‑year sentence on conspiracy to smuggle goods from the United States. Both remain in federal custody as their cases proceed.
Court documents repeatedly reference an unnamed “China-based AI technology company” that allegedly coordinated closely with Gong and Yuan on hardware demand, shipment planning, and final delivery in China. Its involvement indicates that the smuggling was not a one‑off effort but a structured acquisition campaign dedicated to securing Nvidia chips for a specific commercial or research operation.
U.S. officials say Operation Gatekeeper remains active, with multiple agencies—among them the FBI, the Commerce Department’s Bureau of Industry and Security, and Immigration and Customs Enforcement—continuing to trace financial flows, communications, and logistics tied to the scheme. The breadth of the case, the use of a Hong Kong hub, and the role of an organized Chinese AI buyer point to a sophisticated effort to obtain advanced computing power despite U.S. export restrictions. As prosecutions move forward, the outcome is likely to influence how Washington enforces controls on strategic technologies and how future smugglers attempt to adapt.
Sources:
U.S. Department of Justice, Southern District of Texas; U.S. Attorney’s Office press release (December 9, 2025)
Federal Bureau of Investigation, Counterintelligence Division; Operation Gatekeeper case filing
U.S. Department of Commerce, Bureau of Industry and Security (BIS) enforcement action
Reuters investigation on Chinese entities acquiring Nvidia chips (December 2025)
Financial Times black market GPU smuggling report (July 2025)