The United States Department of State designated five China-based entities under the Protecting American Intellectual Property Act on October 19, 2026, targeting firms linked to former Google engineer Linwei Ding and his conviction for stealing artificial intelligence trade secrets.
Washington has taken the unusual step of deploying economic sanctions legislation against private businesses rather than state-owned enterprises to curb the theft of artificial intelligence technology. The Department of State announced designations on October 19, 2026, targeting five China-based entities connected to Linwei Ding, a former Google software engineer convicted earlier this year of stealing confidential system architecture and supercomputing documents.
The targeted network includes Shanghai Zhisuan Technology Co Ltd, a startup founded by Ding in 2023, alongside Beijing-based investment firm MiraclePlus and three associated venture capital partnerships. According to federal authorities, the sanctioned businesses played a pivotal role in helping market and finance infrastructure modeled directly on proprietary Silicon Valley technology.
Linwei Ding Stole Confidential Google Chip Specifications
The foundation for the economic penalties stretches back to Ding’s tenure at Google, where he worked as a software engineer starting in 2019 and gained access to infrastructure supporting advanced machine learning systems. Between May 2022 and April 2023, he uploaded more than 2,000 pages of confidential material from company networks to his personal cloud account, according to evidence presented during his trial.
The compromised data included detailed specifications for Google’s specialized Tensor Processing Unit chips and the underlying hardware and software designs required to operate large-scale AI supercomputers. Before resigning from Google, Ding downloaded additional documents in December 2023. He established Zhisuan that same year, marketing the startup as capable of accelerating machine learning workloads and training large superintelligence models.
In promotional materials, Ding outlined his operational blueprint for the new venture. He highlighted his ties to Google’s innovations and his capacity to adapt that technology to match China’s unique domestic environment.
US Government Penalizes MiraclePlus for Funding Zhisuan
The U.S. government widened its administrative response beyond Ding himself by penalizing the financial backers who helped launch his commercial enterprise. MiraclePlus, a venture capital firm, provided seed funding to Zhisuan.
According to prosecutors and the indictment details, Ding secured a $700,000 investment from MiraclePlus in exchange for a 7 percent ownership stake in Zhisuan. The State Department determined that MiraclePlus provided significant financial, material, and technological support that enabled the exploitation of stolen intellectual property.
In tandem with MiraclePlus, the Office of Foreign Assets Control within the Treasury Department sanctioned Qiji Chuangtan Beijing Investment Management Co Ltd (MiraclePlus), Beijing Qiji Chuangtan Phase I Venture Capital Center Limited Partnership (Phase I), Beijing Qiji Chuangtan Phase II Venture Capital Center Limited Partnership (Phase II), and Beijing Qiji Chuangtan Zhiyuan Enterprise Management Center Limited Partnership (Zhiyuan Enterprise).
The list of five targeted entities comprises Beijing Qiji Chuangtan Phase II Venture Capital Center Limited Partnership, Beijing Qiji Chuangtan Zhiyuan Enterprise Management Center Limited Partnership, Qiji Chuangtan Beijing Investment Management Co Ltd, Shanghai Zhisuan Technology Co Ltd, and Beijing Qiji Chuangtan Phase I Venture Capital Center Limited Partnership. Phase I is a venture capital fund managed by MiraclePlus established in 2020, while Phase II is a venture capital fund managed by MiraclePlus.
The designations were issued under the Protecting American Intellectual Property Act, a statutory authority that mandates economic penalties against foreign parties involved in significant trade secret theft. The administrative action freezes U.S.-based property held by the five entities, restricts access to American capital markets, and bars U.S. persons from purchasing significant debt or equity instruments.
Criminal Sentencing and Beijing Rejection of U.S. Penalties
The sanctions arrive on the heels of parallel criminal proceedings in federal court. A federal jury convicted Ding on January 29, 2026, on seven counts of theft of trade secrets. A judge later acquitted Ding on the espionage counts while the theft convictions remained.
Judge Chhabria sentenced Ding on September 1 to just under a year in prison, two years of supervised release, a $2,500 fine, and more than $198,000 in restitution to Google. The separate PAIPA designations target the corporate entities independently of the criminal verdicts.
Theft of trade secrets is a serious threat to US economic, foreign policy, and national security interests.
Tommy Pigott, State Department spokesperson, via Social News XYZ
In Beijing, officials sharply rejected the unilateral penalties and threatened to take retaliatory steps. Chinese authorities insisted that national advances in artificial intelligence stem from sustained domestic research, long-term capital investment, and independent innovation rather than the misappropriation of foreign technology.
While the sanctions immediately restrict financial transactions, federal regulators authorized limited operational wind-down licenses. OFAC General License No. 2 permits necessary transactions to unwind existing arrangements involving MiraclePlus and its designated funds through January 2027.