Treasury Secretary Scott Bessent questioned whether Nvidia's management knew it was selling restricted AI GPUs to shell companies, while saying the company itself is responsible and not directly blaming Jensen Huang.

Scott Bessent, U.S. Treasury Secretary, acknowledged that U.S. export controls cannot prevent all restricted hardware from reaching China or other adversaries, which is why the country allegedly obtained millions of restricted AI GPUs from Nvidia. He also questioned the effectiveness of Nvidia's internal controls and called for accountability at the company. He criticized Nvidia's general counsel but stressed that it remains unclear whether Nvidia chief executive Jensen Huang knew about the potentially illicit practices.

In an interview with CNBC, Bessent said: "I think that there is a lot of leakage in the system, and we are constantly working to close that down. One thing here is that the story has been thus far on Jensen Huang's personal foibles. The real story here should be, did Nvidia know their client? And was there a robust effort at Nvidia to make sure that there was no leakage and that they were selling to what were obviously pass-through shell companies? And I think it is important that anyone at the company there be held accountable for that."

Bessent acknowledged that, despite strict U.S. export controls that prohibit sales of advanced AI GPUs to China, considerable quantities of restricted hardware may still reach the country. However, he does not believe the U.S. needs stricter export restrictions or additional powers for government agencies to prevent GPU smuggling. Instead, he said, authorities should properly enforce existing regulations.

Bessent also criticized Nvidia's general counsel, Timothy Teter, who reportedly contacted the U.S. Department of Commerce to ask whether U.S. authorities were behind the detention of Megaspeed's Alice Wong in Singapore. The Treasury Secretary declined to speculate on possible consequences for Nvidia if it turned out that some of its executives knew their customers were acting as intermediaries for Chinese entities. He did, however, express confidence that Nvidia's board of directors would conduct a thorough investigation.

"But let us just say, if this was happening, then there were not robust controls at the company," Bessent said. "We do not know for a fact that Jensen Huang knew this. The [general counsel] seems to have been very involved here, probably should have done more oversight rather than the haranguing [government officials at the U.S. DoC]."

Bessent further revealed that the Departments of the Treasury, War, and State, as well as the Office of the U.S. Trade Representative (USTR), had supported adding Megaspeed to the Entity List for months. The authority to impose such export restrictions, however, rests with the Department of Commerce's Bureau of Industry and Security (BIS), which reportedly stalled efforts to blacklist Megaspeed for months, as Commerce Secretary Howard Lutnick feared the move could worsen trade tensions with China.