Summary
On October 19, 2026, the State Department designated five China-based entities under the Protecting American Intellectual Property Act (PAIPA) in connection with former Google engineer Linwei Ding's theft of Google AI trade secrets. The targets are Shanghai Zhisuan Technology, the startup Ding founded in 2023, and the Beijing startup incubator and venture firm MiraclePlus, which gave Zhisuan seed capital, together with two MiraclePlus venture funds and a partnership owned by one of them. The Treasury Department's Office of Foreign Assets Control (OFAC) added all five to its Non-SDN Menu-Based Sanctions List with blocking of their property, limits on US bank lending, and bans on US foreign-exchange and banking transactions involving them and on US investment in their equity or debt.
What Happened
A press statement from department spokesman Thomas "Tommy" Pigott said the department was "sanctioning five entities connected to People's Republic of China national Linwei Ding" and that the designations followed an investigation of Ding by the Justice Department and the FBI. It said a federal jury convicted Ding on January 29, 2026, of seven counts of theft of trade secrets, for "stealing thousands of pages of confidential information containing Google's trade secrets related to super intelligence (SI) technology to benefit himself and China-based tech companies." The action was taken under PAIPA, codified at 50 U.S.C. 1709, which was signed into law in January 2023 and, in the fact sheet's words, "mandates sanctions against certain foreign persons who have engaged in, or benefited from, significant theft of trade secrets of U.S. persons, as well as associated persons." Ding himself was not designated.
The accompanying fact sheet describes Zhisuan as a company "marketed as capable of developing a software platform that could accelerate machine learning workloads, including training large super intelligence (SI) models powered by supercomputing chips." It says Ding applied on Zhisuan's behalf to MiraclePlus's incubation program, "touting his experience with and knowledge of Google's technology and internal systems and claiming that Zhisuan could replicate Google's SI infrastructure technology," and that MiraclePlus, legally Qiji Chuangtan Beijing Investment Management Co Ltd, "gave seed capital in exchange for an ownership stake in Zhisuan." The other three designated entities are the Beijing Qiji Chuangtan Phase I fund (established 2020), the Phase II fund (established 2022) and Beijing Qiji Chuangtan Zhiyuan Enterprise Management Center, which is wholly owned by Phase I. The department found that Zhisuan "has knowingly engaged in, or benefitted from, significant theft of trade secrets of United States persons, which occurred on or after January 5, 2023," and that MiraclePlus "has provided significant financial, material, or technological support for" the theft.
OFAC's notice the same day lists the five entities with five PAIPA sanctions each: all property and interests in property are blocked; US financial institutions may not lend to or extend credit to them beyond $10 million in any 12-month period; and foreign-exchange transactions, transfers through US financial institutions and significant purchases of their equity or debt by US persons are prohibited. OFAC also issued General License 2, signed by OFAC Director Bradley T. Smith, which authorizes the wind-down of transactions with the four MiraclePlus entities, and any entity 50 percent or more owned by them, until 12:01 a.m. Eastern time on January 19, 2027, with payments to go into blocked US accounts. The license does not cover Zhisuan.
Bloomberg reported that MiraclePlus was established by Lu Qi, a former Microsoft executive and Baidu AI chief who joined Y Combinator in 2018, recruited by then-president Sam Altman, to build YC China, and whose team continued the program under the MiraclePlus name after Y Combinator dropped the expansion a year later. Bloomberg said MiraclePlus has since backed companies including the AI inference platform SiliconFlow and the robotics maker AgiBot, and that MiraclePlus did not immediately respond to requests for comment. According to Bloomberg, the Justice Department said after the January verdict that Ding had secretly affiliated himself with two China-based AI companies while employed at Google and moved more than 2,000 pages of trade secrets to his personal cloud account before resigning in December 2023; he was sentenced in September to a year in prison. The Associated Press reported that the jury had also convicted Ding of economic espionage counts, that the judge later dismissed those counts and sentenced him to 12 months, and that the Justice Department is appealing the dismissal.
On October 20, China's Ministry of Commerce said the move "severely harms the legitimate rights and interests" of Chinese businesses and that "The nature of this act is egregious." It urged the United States to "correct its erroneous practice," and said Beijing would take "necessary measures" without specifying them, according to the AP. The ministry said China's AI achievements have "nothing to do with the so-called 'stealing of trade secrets.'"
Why It Matters
OFAC's notice of February 24, 2026 records earlier PAIPA designations, of the Russia-based exploit broker Operation Zero and its owner, over the theft and sale of US government cyber tools. The October action applies the statute to an AI startup and to the investor that funded it, while the person convicted of the theft is not designated. The finding against MiraclePlus rests on its financial support for Zhisuan; unlike the finding against Zhisuan, it does not say that MiraclePlus acted knowingly. MiraclePlus runs two startup camps a year, according to the fact sheet, and has backed companies such as SiliconFlow and AgiBot, so the designation reaches an investor whose portfolio extends well beyond the startup at the center of the criminal case.
The designations were announced on the same day that the Department of Homeland Security's order excluding DeepSeek products from federal civilian systems went on public inspection, and six weeks after the NSA, CISA and FBI advisory naming six Chinese companies over distillation of US models. The three actions rest on different statutes and different conduct: insider theft of trade secrets here, supply-chain risk for DeepSeek, and model distillation in the advisory.
Several facts are not public. The State Department has not said which Google technology Zhisuan is alleged to have used, whether any of it appears in Zhisuan's product, or how large MiraclePlus's stake in Zhisuan is. The notices do not name any company 50 percent or more owned by the MiraclePlus entities, and they do not say whether US investors hold interests in the MiraclePlus funds. The Justice Department's appeal of the dismissed economic espionage counts is pending, and the fact sheet notes that designated persons can seek removal through the department's delisting process.
§ How to read the metadata
- Landmark
- Fundamentally alters the trajectory; 2–5 per year.
- Major
- Meaningfully shifts the landscape; 2–4 per month.
- Notable
- Worth documenting; significance can be upgraded later.
- Confidence
- High = primary sources corroborate. Medium = credible secondary only. Low = provisional. Disputed = credible sources disagree.
- Contestation
- Uncontested = no formal challenge. Contested = at least one challenge open. Superseded = replaced by a later entry. Unresolved = dispute still open.