The firms named were DeepSeek, Moonshot AI, and MiniMax. Anthropic said those accounts sent over 16 million prompts into Claude to gather responses and patterns that could be reused for training. Anthropic shared the details in a blog post on Monday. The company said the activity was a form of distillation. That process uses outputs from one model to train another model. Dario Amodei leads Anthropic.

Anthropic alleges that three Chinese firms pulled Claude data

Anthropic alleged that DeepSeek ran about 150,000 interactions with Claude. Moonshot AI logged more than 3.4 million prompts. MiniMax reached over 13 million prompts. Anthropic said the scale shows a clear intent to extract value at speed. This is not the first allegation against DeepSeek by a company based in the United States.

Earlier this month, OpenAI sent a memo to House lawmakers accusing DeepSeek of using the same distillation tactic to copy its systems. Sam Altman runs OpenAI. After first naming OpenAI, the company told lawmakers that DeepSeek tried to mimic its products through large prompt volumes. Anthropic said distillation itself has valid uses. Companies use it to build smaller versions of their own models.

Anthropic also said the same method can create rival systems in a fraction of the time and at a fraction of the cost. Synthetic data now plays a large role in training big foundation models. Developers use it because high-quality real data is limited. Many labs are also building agentic systems that can take action for users. In a July technical report, Moonshot said it used synthetic data to train its Kimi K2 model.

Market reacts to Anthropic’s new security tool

Anthropic said the activity raises national security concerns. The company stated that foreign labs that distill American models can feed those capabilities into military, intelligence, and surveillance systems. Anthropic also rolled out a new security tool for Claude on Friday in a limited research preview. The tool scans software code for weaknesses and suggests fixes. Anthropic plans to hold an enterprise briefing on Tuesday with more product announcements.

Markets reacted fast. Cybersecurity stocks fell for a second day on Monday as investors worried that new AI tools could replace older security services. CrowdStrike dropped about 9 percent. Zscaler also fell about 9 percent. Netskope slid nearly 10 percent. SailPoint declined 6 percent. Okta, SentinelOne, and Fortinet each lost more than 4 percent. Palo Alto Networks was down 2 percent.

Cloudflare fell 7 percent after recent gains tied to Moltbot interest. The iShares Cybersecurity and Tech ETF fell almost 4 percent. The Global X Cybersecurity ETF hit its lowest level since November 2023. The pressure extends beyond security stocks. AI tools that build apps and websites from simple prompts have shaken software companies this year. Salesforce has lost about one-third of its value. ServiceNow has fallen more than 34 percent. Microsoft has dropped roughly 20 percent.

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The State Administration for Market Regulation said Friday it punished several companies for unfair competition, falsely imitating and advertising AI services from other brands. One of the fined companies is Shanghai Shangyun Internet Technology, which was found running a sham ChatGPT service through Tencent’s WeChat platform. The regulator fined the company 62,692.70 yuan, equivalent to about $9,034.

China fines firms impersonating ChatGPT and DeepSeek

According to the agency, the service had been advertising itself as the “official Chinese version of OpenAI’s ChatGPT,” and charged users for AI conversations, a conduct that breached the country’s Anti-Unfair Competition Law. “The company was fully aware of the industry status and influence of OpenAI’s ChatGPT. They deliberately created a false impression that they are providing the official service to mislead users into making purchases,” it said during a press briefing on Friday.

According to the AI Market Regulation government arm, a wave of DeepSeek mini-programmes and websites imitating the original platform appeared in early 2025. The watchdog penalized the services for trademark violations and for trying to deceive the public through falsified promotional language. “This investigation served as a deterrent to illegal operators … and guided the AI market towards a standardised and orderly path of development,” the agency said.

Another firm, Hangzhou Boheng Culture Media, was fined 30,000 yuan for running an unauthorized website that allegedly offered “DeepSeek local deployment.” The regulator said the site copied fonts, icons, and layout from DeepSeek’s official platform and tricked users into paying for the service.

In the regulator’s campaign roundup, an engineer was slapped with a 360,000 yuan penalty for illegally accessing company servers that held confidential code and algorithm data. Furthermore, a Shanghai firm received a 200,000 yuan penalty for building AI phone-call software used by loan agencies to carry out scams.

A Beijing-based company was also fined 5,000 yuan for “freeriding” on DeepSeek’s name to promote its own local deployment software. China’s innovation regulators have been trying to balance out the growth of AI companies and fair competition in a market where developers are aggressively competing to topple American entities. Just over a year ago, DeepSeek became the talk of the globe after it launched a chatbot with lower user fees and development costs compared to OpenAI’s ChatGPT.

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Moonshot announced the launch of Kimi K2.5, its most advanced model yet, introducing a native multimodal architecture that processes text, images, and video in a single system. Meanwhile, it is worth noting that this update reflects a surging trend of omni models, led by key players in the tech industry, such as OpenAI and Google’s Alphabet Inc.

Moonshot launches AI as Chinese firms rally to upgrade models

The new version of Moonshot’s Kimi is one of the several upgrades launched over the last month. With this finding, sources noted that major AI firms in China are scrambling to get ahead of DeepSeek’s impending announcement. Regarding its upcoming announcement, sources acknowledged that DeepSeek has been hinting at a major launch lately.

Moreover, the Chinese artificial intelligence company’s research lab shared key publications from prominent team members, including its CEO, Liang Wenfeng, and code on GitHub, a premier cloud-based, Microsoft-owned platform. In the meantime, reports revealed that Moonshot secured around $500 million in December last year from its significant supporters.

It included Alibaba and IDG Capital, demonstrating renewed investor interest in high-growth, technology-driven ventures. Furthermore, the company reached a $4.3 billion valuation through this deal. On the other hand, sources with knowledge of the situation noted that Moonshot planned to release an enhanced version of its primary model at a time when demand for AI is surging.

Therefore, to cope with this escalating demand, the AI startup initiated new funding rounds targeting a $5 billion valuation. This was after key Chinese AI rivals Zhipu and MiniMax Group Inc. announced in early January 2026 the successful introduction of their initial public offerings (IPOs) on the Hong Kong Stock Exchange (HKEX). Collectively, they raised more than $1 billion in the Special Administrative Regions of China.

Following their strategic approach to operations, Moonshot, Zhipu, and MiniMax Group Inc. are ranked among the top Chinese large language model developers, a competition once called the “War of One Hundred Models.” Nonetheless, analysts alleged that many smaller firms have struggled to implement necessary technology enhancements and secure adequate funding after DeepSeek’s R1 model reached key milestones at the start of 2025.

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Software firm Palantir also dipped by 9.4%, with a growing chip designer ARM losing 5% in stock valuation. At the same time, the tech-focused Nasdaq Composite edged lower by 1.4%. At the same time, the S&P 500 slipped by 0.7%. Stock selling spilled into Asia on Wednesday. Nikkei 225 in Japan fell by 1.8% while Kospi in South Korea fell by 1.9%. The Hang Seng index in Hong Kong also suffered, as it shed 0.6%, mirroring weakness on Wall Street.

Traders pointed to a critical assessment published Monday by MIT’s affiliate as one reason for the pullback. The researchers mentioned “95 per cent of organizations are getting zero return” from their spending on gen AI, the tech that helped propel US stocks to record levels. The latest concerns arrive months after DeepSeek rattled markets, claiming AI advancement with significantly less computing power than rivals from the US. While shares later steadied, the episode highlighted how sensitive investors remain to negative headlines.

Top-performing United States tech companies led the declines

Advanced Micro Devices and Oracle, both among the five best large-cap gainers since May, shed 5.9% and 5.4%, respectively. AppLovin, on the other hand, which serves adverts in applications, lost 5.9%. In the crypto markets, Bitcoin reduced by 2.7%, weighing on stocks linked with the broader crypto market, including Metaplanet and Strategy. “The market has been on fire, and today you saw a rotation out of a lot of the very hot, high-momentum names,” said Jacob Sonnenberg, a portfolio manager at Irving Investors who focuses on tech.

According to an announcement made in January by DeepSeek in relation to a high-performing new model, it raised questions about whether American companies can maintain their lead in AI and about the level of demand for the chips that power the systems. Although shares later recovered, the episode showed how quickly sentiment can swing. As big tech fell, defensive groups such as utilities, real estate, and consumer staples rose.

Roughly 7 out of 10 S&P 500 stocks finished higher. Even with the setback, tech has been the engine of the market’s latest climb. The S&P 500 information technology sub-index has gained 14 per cent since mid-May, led by AI-linked names including Oracle and AMD.

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Minister for Investment, Trade, and Industry Zafrul Abdul Aziz mentioned that the United States has urged Malaysia to pay attention to the end-users of its Nvidia chips. “They want us to make sure that servers end up in the data centers that they’re supposed to and not suddenly move to another ship,” the Minister. He urged the Malaysian government to ensure that these servers containing Nvidia chips should be moved to the right data centers.

The probe in Singapore, which has led to authorities investigating several consignments tagged as Nvidia chips, is presently ongoing. The probe has seen three people charged for conspiracy to deceive companies like Dell and Super Micro Computers about the Dina users of the hardware.

The authorities mentioned that the servers that may contain prohibited Nvidia chips from being sold in China may have passed through Malaysia illegally. However, Malaysian authorities have mentioned that they have not found any wrongdoing, but they are coordinating efforts with US and Singaporean authorities to look into the issue.

Malaysia to cooperate with other countries as tensions grow over semiconductors

The probe into the chip shipments is also an extension of the previous conflict between the United States and Asia for more innovation in the semiconductor industry. The United States has been trying to limit China’s access to these technologies, with the country noting that it may give its military an edge.

As a result of this, the United States has decided to control the exports of these chips and equipment to make these countries impose strict regulations on them. To stop the leak in export control, the United States has also put pressure on other areas, including Southeast Asia and the Middle East, believing that they act as the middlemen moving these chips to China. The company has also faced criticism because its physical shipment to Singapore has been low, despite the area being responsible for most of its revenue.

The United States is also investigating if DeepSeek and other Chinese AI used intermediaries in Singapore to source the chips. Meanwhile, lawmakers have raised the issue, noting that the company makes a ridiculously high revenue in Singapore. This is because its shipment to the country is relatively low. However, Nvidia and Singapore have clarified that the area is a billing hub, noting that only a small amount of shipments are sent to the area. Meanwhile, Nvidia’s CEO, Jensen Huang, announced that the company is opening a quantum computing lab in Boston.

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