Woofun AI reports that White House Chief Technology Officer Michael Kratsios stated on X that Moonshot AI utilized distillation techniques on Anthropic's Fable model to develop its K3 model. Kratsios alleged that the company established an internal platform for large-scale distillation of American models and employed multiple access methods to evade detection. While acknowledging legitimate distillation for efficiency, he condemned covert industrial efforts to steal proprietary US technology as unacceptable. This follows US Treasury Secretary Scott Bessent's warning that sanctions may be imposed on Chinese firms proven to use improper distillation. Anthropic previously accused Moonshot AI and two others in February of violating terms of service through distillation attacks.