Yeah, so, imagine this: federal agents in LA thinking they’ve just unraveled this whole secret operation—or whatever—like right out of a spy movie. We’re talking millions in super-fancy graphics processors smuggled to China, all run by these two young guys from this really unassuming strip-mall office. Who knew, right?
Anyway, this company, ALX Solutions Inc.—which kinda popped up almost immediately after the U.S. decided to lay down the law on chip exports back in late 2022, by the way—was caught sneaking out 21 shipments. Yeah, that’s right, 21. They tried to play it cool, calling them “commodity video cards” that weren’t supposed to need export licenses. But nope, they got busted. Customs folks found not-so-basic video cards priced like gold, labeled like they were just your everyday computer parts. Can you believe that?
Turns out some major player in Hong Kong wired them a cool million bucks, just right off the bat. And smaller chunks of cash came from companies linked to defense stuff—yikes. Oh, and those Signal chats? Total plot-twist vibes, with one dude, Chuan Geng, giving tips like he’s in some espionage thriller to his partner, Shiwei Yang, telling him to like, spread orders out and switch stuff up if anyone got too curious.
The rules they’re up against come from a 2022 BIS reg—sort of boring but important, I guess. It makes it hard for China to get chips that supercharge AI without U.S. thumbs up first. There’s this line in the sand at 600 gigabytes per second. Apparently, hardware that can speed up military AI needs watching. Who would’ve thought?
The drama reads like a bizarre crime series. Like, a mislabeled pallet caught by customs and then a trail leading back to Nvidia’s records—pretty intense. Plus, a night-time van pursuit from port to warehouse sounds kinda like something out of a Netflix show. When the feds finally raided the place, they found these empty trays meant for some crazy valuable GPUs.
Geng gave himself up quietly. Yang, though, almost made a classic movie escape out of LAX but got nabbed. Now Geng’s out on bond, but Yang? He’s waiting things out behind bars until his court date. Both could face up to 20 years because of the Export Control Reform Act. That doesn’t sound fun, does it?
The Justice Department’s all over this, calling it “classic transshipment with a modern twist.” And BIS is probably gonna hit them hard with civil penalties or a forever export ban. Like, maybe not forever-ever… but close enough.
Oh, and before all this? Geng was in finance for some e-commerce biz that crumbled thanks to unpaid taxes. Yang used to co-own a parcel-forwarding venture for sneakerheads. They’re definitely not tech pros, which strengthens the claim that ALX was just a smuggling front.
Everyone’s waiting on a grand jury indictment. And defense? They’re gearing up with stories about how maybe, just maybe, the chips were okay when bought. Sounds like a courtroom showdown’s on the horizon, maybe in 2026. So buckle up, it’ll be interesting to see how this all unfolds.
Source: Yep, thanks to the Justice Department.
