Treasury Secretary Scott Bessent has escalated the political fight over the Nvidia scandal, publicly blaming the Commerce Department for failing to blacklist the Singapore-based cloud company at the center of the affair — and suggesting the real question is not Jensen Huang's personal conduct, but whether Nvidia knowingly sold advanced chips to pass-through shell companies.
Bessent made the remarks in a CNBC interview on Friday morning, as first detailed by Business Insider. "Commerce has the pen," Bessent said, referring to his rival department's control over the trade restriction process. "You all will have to ask them about their internal processes."
The comments mark a striking turn in a scandal that has already cost Nvidia its founder-CEO. They also open a new front in an intragovernmental dispute over why Megaspeed, an Nvidia partner now facing scrutiny for allegedly helping Chinese customers access restricted chips, was never added to the Commerce Department's entity list.
A Cabinet-Level Clash in the Situation Room
According to an Axios report cited by Business Insider, Bessent confronted Commerce Secretary Howard Lutnick during a meeting in the Situation Room, pressing him on why the department had not placed Megaspeed on the entity list — the trade blacklist that Commerce itself controls. Asked about the report, Bessent declined to discuss what happens in the Situation Room but notably did not deny it.
Bessent told CNBC that his department and his deputy had been "pushing for months" for action against Megaspeed. A spokesperson for the Commerce Department did not immediately respond to a request for comment from Business Insider.
The dispute exposes an awkward fault line in the administration's own enforcement posture. Reuters reported this week that Bessent blamed the Commerce Department over the lack of export controls applied to Megaspeed, while Politico reported that Bessent faulted Lutnick for not cracking down on the firm at the center of the scandal.
From Personal Scandal to Corporate Accountability
The Megaspeed row is inseparable from the broader Nvidia crisis. Alice Huang was a top executive at Megaspeed, and The New York Times has reported that US officials suspected she was a Chinese intelligence asset. The Times also reported that she had an affair with then-Nvidia CEO Jensen Huang. China has repeatedly denied that Huang was a spy.
Jensen Huang apologized to employees in a note on Sunday for having the affair, but did not mention Alice Huang or the espionage allegations. On Thursday, Nvidia's board announced that he had resigned as chief executive, with CFO Colette Kress stepping in as interim CEO.
Bessent argued on Friday that the focus on Huang's conduct has obscured the more consequential question for the company. "The story has been thus far on Jensen Huang's personal foibles," Bessent said. "The real story here should be, did Nvidia know their client?"
He pressed the point further: "Was there a robust effort at Nvidia to make sure there was no leakage, and they were selling to what were obviously pass-through shell companies? And I think it's important that anyone at the company there be held accountable for that."
Why Megaspeed Matters to the AI Chip Race
Megaspeed, an Nvidia partner, is facing scrutiny over whether its data centers helped Chinese customers access advanced Nvidia chips despite US export restrictions. Reuters has reported that the company built a network across Singapore and Malaysia to move roughly $7.5 billion worth of Nvidia chips to Chinese companies.
The company's trajectory illustrates how the region's cloud infrastructure became a pipeline for restricted compute. Singapore authorities have already charged an executive in a separate case involving 917 Nvidia servers, and a contractor tied to a $2.5 billion AI server smuggling scheme pleaded guilty in the United States in October. For readers tracking how enforcement is tightening across the region, our latest AI news coverage follows every development.
Bessent said the system is still leaking at scale. "There is a lot of leakage in the system," he told CNBC, adding that Chinese companies are getting access to chips superior to Nvidia's H100. "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."
What Comes Next for Nvidia and the Administration
Bessent's comments underscore that Huang's ouster is far from the end of the controversy for Nvidia. The Treasury Secretary has effectively reframed the scandal as a corporate governance and sanctions-compliance question: what due diligence did the world's most valuable chipmaker perform on the intermediaries buying its most advanced GPUs, and who inside the company is accountable for the answer?
Several threads will shape the coming weeks. Congressional committees have already summoned Jensen Huang for briefings on China-related matters, and lawmakers are likely to press the company on its screening of buyers such as Megaspeed. The Commerce Department, now publicly on the defensive, faces questions about why months of internal pressure from Treasury did not result in an entity-list designation. And with Kress running Nvidia on an interim basis, the board must decide how to answer regulators and investors who will demand to know what the company knew about its own customers.
For the AI industry, the episode is a warning that export controls are shifting from a policy debate to a corporate liability issue. If Treasury's framing takes hold, due diligence on chip buyers will become a board-level concern for every US semiconductor company selling into Southeast Asia's fast-growing data center market. Investors will be watching whether Nvidia discloses what it knew, whether Commerce finally designates Megaspeed, and whether the intra-administration feud over "who has the pen" ends in a policy change or a purge.
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