US blacklists Chinese firm tied to engineer who stole Google secrets

The US has blacklisted a prominent Chinese venture capital firm founded by former Microsoft AI scientist Lu Qi, penalising the fund for financing a startup tied to the theft of proprietary artificial intelligence (AI) secrets from Google, Bloomberg has reported.

The US Department of State announced sweeping enforcement measures against Shanghai Zhisuan Technology Company, an AI venture created by Ding Linwei, an ex-Google software engineer who was convicted earlier this year for exfiltrating confidential AI trade secrets.Bloomberg reported that alongside the startup, Washington placed sanctions on Lu’s incubator fund, MiraclePlus – the successor to Silicon Valley accelerator Y Combinator’s former China division – as well as three of its corporate affiliates for supplying seed capital to Zhisuan.

The actions could trigger the freezing of any US-based assets held by the entities alongside severe international banking restrictions.

Zhisuan ‘connection’ and seed funding

Founded in 2023, Shanghai Zhisuan Technology focused on developing specialised software infrastructure engineered to accelerate and train large-scale AI models. Citing the State Department, Bloomberg reports that Ding applied on behalf of Zhisuan to enter MiraclePlus’s startup incubation pipeline, actively promoting and leveraging his inside knowledge of Google’s proprietary technology to secure backing.

Meanwhile, Lu Qi has long been recognised as one of the most visible technology executives operating between the US and China. After serving as a high-ranking corporate executive at Microsoft, Lu was hired in 2017 by Chinese search giant Baidu to direct its enterprise AI initiatives, stepping down a year later for personal reasons.In 2018, Sam Altman, who was then serving as president of Y Combinator, recruited Lu to establish and lead YC China.

When Y Combinator decided to pull back and cancel its direct China expansion a year later, Lu and his founding group reorganised the venture under the independent MiraclePlus banner.Since launching, MiraclePlus has emerged as a high-profile backer of prominent Chinese startups, investing in ventures such as AI inference developer SiliconFlow and humanoid robotics company AgiBot, both of which have been exploring public listings in Hong Kong.

What is the Google IP theft case

The blacklisting stems directly from one of the highest-profile intellectual property cases involving AI between the US and China. According to the US Department of Justice, Ding covertly partnered with two China-based tech startups while continuing to work as a full-time software engineer inside Google.Federal investigators revealed that Ding exfiltrated more than 2,000 pages of confidential technical trade secrets to a personal cloud storage account. He continued transferring internal files directly onto his personal computer less than two weeks before tendering his formal resignation from Google in December 2023. Following his conviction in January, Ding was sentenced in September to serve one year in prison.