Commerce Dept Halted Nvidia Chip-Smuggling Probe After Nvidia Reached Out

A monthslong Commerce Department investigation into suspected smuggling of Nvidia AI chips into China was halted late last year — right after Nvidia got in touch with the department. The case was then handed to the Justice Department, which handles criminal prosecutions, rather than staying with Commerce, the agency that oversees export licensing and enforcement. The transfer is now the flashpoint of the story, according to Crypto Briefing.

The target of the inquiry was Megaspeed International, a Singapore-based firm suspected of moving Nvidia AI chips to China in violation of US export rules. Investigators opened the case in late 2024 after Nvidia equipment turned up unpacked at a data center in Malaysia. US intelligence agencies also consider Alice Huang, a former Megaspeed executive who kept a close relationship with Nvidia CEO Jensen Huang, to be a Chinese intelligence asset.

Nvidia insists nothing improper happened. The company says earlier investigations found no evidence of chip diversion, that it has accounted for every deployed GPU, and that Megaspeed has no Chinese shareholders. It describes its dealings with Megaspeed as ordinary business. Singapore authorities are running their own investigations into the firm, and no illegal diversion of US-origin chips has been publicly established.

On November 8, 2026, Nvidia's board announced an independent investigation into claims that Jensen Huang may have been targeted by foreign intelligence. Shares fell in after-hours trading once the announcement landed. The case sits against Washington's push to keep advanced AI chips out of China, a restriction that creates obvious incentives for transshipment through third countries, with Southeast Asian hubs like Singapore and Malaysia under the spotlight.

The pivotal question is why the Commerce work stopped when it did. Whether Nvidia's contact swayed the decision — or just lined up with a handoff already in motion — is the thread critics are likely to pull hardest. The Justice Department now holds the case, and a move to the criminal side can mean either a sharper inquiry or a slower, quieter one. No charges have been announced.