Moonshot AI's alleged covert distillation of Anthropic's Fable sparks U.S.-China AI tensions, posing risks and opportunities for investors.

Kimi K3 beats most AI models, except OpenAI's GPT-5.6 and Anthropic's Claude Fable 5. Moonshot is now seeking a valuation of over $30 billion ahead of an IPO.

"We have information that Moonshot AI distilled Anthropic's Fable for the development of its K3 model," a top White House official wrote on X.