Treasury Secretary Scott Bessent appeared to blame the Commerce Department for failing to act on the Nvidia espionage scandal sooner.
Former Nvidia CEO Jensen Huang was ousted this week following two (now reportedly three) affair scandals, one with an Nvidia executive and another with an alleged Chinese spy and executive at Singapore-based Megaspeed International.
Speaking on CNBC Friday morning, Bessent said that the Treasury, Defense, and State departments, as well as the Office of the United States Trade Representative, had been “in favor of putting Megaspeed on the entity list for months,” but the Commerce Department “has the pen.” He added, “You would have to ask them about their internal processes.”
The affair allegedly facilitates the shipment of at least $7 billion worth of Nvidia chips to Chinese companies, The Information reported on Tuesday, evading export control restrictions imposed by Washington. Alice Huang, who is accused of helping Chinese companies obtain restricted Nvidia chips, also reportedly had business interests connected to Huawei, Nvidia’s biggest Chinese competitor, according to a CNBC investigation.
“President Trump made it very clear that China should not receive any Nvidia chips above H100s, and so any leakage is very frustrating, because it hurts our great companies in the AI race and gives the Chinese an advantage,” Bessent told CNBC.
That would seem to contradict Trump’s own policy. His administration explicitly authorized sales of Nvidia’s more powerful H200 chips to approved Chinese customers earlier this year, subject to licensing requirements.
Bessent’s comments come after reports suggested that the Trump administration had known about the concerns regarding Megaspeed and the Nvidia chief’s affair for months prior to the bombshell New York Times report that brought the allegations under public scrutiny.
Another New York Times report has claimed that President Trump himself was informed about Huang’s relationship with the woman believed to be a Chinese spy, including right before Huang boarded Air Force One to accompany Trump on his trip to China back in May.
A Bloomberg report, also from this week, says Nvidia’s general counsel intervened in a Commerce Department probe into Megaspeed in late summer 2025. Afterward, investigators at Commerce’s Bureau of Industry and Security faced restrictions on their work and were instructed to route requests to Nvidia through Commerce Undersecretary Jeffrey Kessler. The report also says the Justice Department subsequently requested that BIS pause its investigation.
The reports have already sparked concerns about the influence Nvidia and other tech giants might have over the Trump administration. Democratic lawmakers, who will take control of Congress in January following their sweeping midterm victories, have vowed to hold Trump administration officials accountable.
The responsibility is reportedly being put on Commerce Secretary Howard Lutnick. On Thursday, Reuters reported that senior White House officials were debating ousting Lutnick due to the Department’s failure to handle the situation and address the concerns. This wouldn’t be the first report to suggest that Lutnick has found himself at odds with other Trump admin officials. Back in September, Axios claimed that the Commerce Department under Lutnick and the White House Office of Science and Technology Policy led by director Michael Kratsios were in disagreement on AI regulation.
Bessent allegedly confronted Lutnick directly in a meeting last week, according to an Axios report citing anonymous officials who said Lutnick appeared to be “stalling” the implementation of export controls on Megaspeed. One of the officials reportedly told Axios that this constant delaying was “an ongoing concern with Howard and this issue.”
When asked by CNBC about the alleged confrontation, Bessent said that he would not “repeat conversations in the Situation Room.” The Commerce Department previously denied Axios’s account of the confrontation.
