US banks and investors dealing with MiraclePlus, which says it has accelerated 612 startups, must wind down covered transactions with it by January 19, 2027 under an OFAC license.
The US State Department has sanctioned five Chinese entities over the theft of Google’s AI trade secrets by former engineer Linwei Ding, including MiraclePlus, the Beijing startup accelerator that Lu Qi set up after Y Combinator left China. Announced on October 19 under the Protecting American Intellectual Property Act, the designations also cover Shanghai Zhisuan Technology, the company Ding founded, two MiraclePlus-managed venture funds and a holding partnership owned by one of them, according to the department’s fact sheet.
The State Department says MiraclePlus gave Zhisuan seed capital in exchange for an ownership stake, and that Ding used the accelerator’s startup program to promote technology he claimed could replicate Google’s infrastructure. MiraclePlus denies the investment. In a statement reported by Jiemian, the company said it did not invest in Shanghai Zhisuan Technology, and that it was in contact with the relevant parties and hoped the sanctions would be lifted soon.
China’s Ministry of Commerce (MOFCOM) called the US move egregious in nature and said Beijing firmly opposes it. A spokesperson urged Washington to correct its approach, warning that China would otherwise take necessary measures in response, Beijing News reported.
The sanctions restrict banking, lending and investment
The five entities were placed on the US Treasury’s Non-SDN Menu-Based Sanctions List, Export Compliance Daily reported. The measures block property and transactions under US jurisdiction, restrict foreign exchange and banking dealings, and prohibit US persons from investing in or buying significant amounts of the entities’ equity or debt. The sanctions bar US financial institutions from lending the five entities more than US$10 million in any 12-month period.
A general license from the Treasury’s Office of Foreign Assets Control (OFAC) allows transactions with MiraclePlus, its three partnerships and companies they own 50% or more of to be wound down until January 19, 2027. Lu Qi, a former Baidu president and Microsoft executive who is listed on MiraclePlus’s website as a partner, was not named.
MiraclePlus runs a three-month accelerator in Beijing that recruits twice a year. Its website says it has accelerated 612 startups over 10 batches, with a combined portfolio valuation of 90 billion yuan. In its statement, the firm said some of its affiliated entities were added to the OFAC list on the evening of October 19 Beijing time without prior communication.
The case rests on a conviction that was later narrowed
A federal jury in San Francisco convicted Ding in January on seven counts of trade-secret theft and seven counts of economic espionage, after he took more than 2,000 pages of confidential information on Google’s AI supercomputing hardware and software. In August, Judge Vince Chhabria acquitted him of the espionage counts, finding insufficient evidence that he intended to benefit the Chinese government, Courthouse News Service reported. The trade-secret convictions stand.
On September 1, Ding was sentenced to 12 months less a day and ordered to pay more than US$198,000 in restitution to Google; prosecutors had sought 70 months. The Justice Department is appealing the dismissal of the espionage counts, according to AP, as carried by ClickOrlando.
The Wire China reported earlier this year that Ding joined MiraclePlus’s fall 2023 batch, signed an agreement on November 20, 2023 giving the accelerator a 7% stake in Zhisuan, and pitched the company at a Beijing demo day as having built Google’s computing platform for tens of thousands of chips. The publication said MiraclePlus’s standard deal is US$300,000 for 7%. Whether that agreement was ever funded is the point MiraclePlus now disputes.
Portfolio companies and Beijing’s response are the next tests
In a press statement, the State Department said the theft endangered US economic, foreign policy and national security interests. MOFCOM argued that China’s AI achievements stem from long-term basic research and have nothing to do with stealing trade secrets, AP reported.
The South China Morning Post, which Alibaba owns, noted that the designations target entities suspected of benefiting from the theft of US companies’ trade secrets. The listing extends US scrutiny of China AI investment that EastFrontier tracked when Treasury turned a small Noematrix deal into a compliance signal.
Three developments will show how far the sanctions reach: whether US-linked banks and co-investors pull back from MiraclePlus-backed startups before the January 19 wind-down deadline, whether MOFCOM follows its warning with countermeasures, and how the appeals in Ding’s case are decided.