# US sanctions Chinese Y Combinator successor MiraclePlus over Google trade secrets > Source: > Published: 2026-10-20 08:10:25+00:00 *MiraclePlus took an ownership stake in a startup built on stolen Google chip secrets. Now Washington has put the venture firm on its sanctions list too.* The State Department announced sanctions on October 19 against five China-based entities tied to Linwei Ding, the former Google engineer convicted of stealing the company's AI infrastructure secrets. The list includes Shanghai Zhisuan Technology, the AI startup Ding founded in 2023, and MiraclePlus, the Beijing venture firm that gave Zhisuan its seed money in exchange for an ownership stake. Two MiraclePlus-managed funds, Beijing Qiji Chuangtan Phase I and Phase II, and a Phase I subsidiary round out the list. Here's the detail that gives this story its edge: MiraclePlus is what's left of Y Combinator China. Y Combinator opened a China unit in 2018 under Qi Lu, a former Microsoft and Baidu executive. It shut the operation down in November 2019 as the US-China trade war made the arrangement untenable. Lu spun the team out into an independent firm he named MiraclePlus. The firm never stopped doing what YC China was built to do: fund and mentor Chinese startups, many of them modelled closely on the Silicon Valley playbook it inherited. The sanctions order, issued under the Protecting American Intellectual Property Act, accuses MiraclePlus of doing more than writing a cheque. According to the State Department's announcement, the firm's backing helped Zhisuan market itself on the strength of Ding's Google pedigree and his claimed ability to replicate Google's AI infrastructure for Chinese customers. In other words, the US government says a Silicon Valley-descended accelerator helped turn stolen trade secrets into a funded company. The underlying case has been public since Ding's arrest in March 2024. Google hired him in 2019. Prosecutors say he uploaded more than 1,000 files containing confidential material to his personal Google Cloud account between May 2022 and 2023, while still employed there. That haul included code tied to Google's AI supercomputing stack: tensor processing unit designs, GPU system architecture, and the networking components that tie it all together to train and run large AI models. He founded Zhisuan in 2023, while the alleged theft was reportedly still unfolding. [How One Judge's Split Ruling on Anthropic Became AI's Copyright Rulebook](https://startupfortune.com/how-one-judges-split-ruling-on-anthropic-became-ais-copyright-rulebook/) Judge Alsup ruled that training AI on books is fair use, but that Anthropic's piracy of those books from shadow libraries was not, a split that cost the company $1.5 billion. Publishers are now using the same legal seam to sue Google over how Gemini was trained. - [how judges ruled on AI training copyrighted books](https://startupfortune.com/how-one-judges-split-ruling-on-anthropic-became-ais-copyright-rulebook/) - [why anthropic paid 1.5 billion for copyright infringement](https://startupfortune.com/how-one-judges-split-ruling-on-anthropic-became-ais-copyright-rulebook/) A jury convicted Ding on economic espionage charges in January. That verdict didn't survive, though. On August 20, a federal judge granted Ding a post-trial acquittal on the espionage counts. Prosecutors hadn't proven beyond reasonable doubt, the judge ruled, that he knew his theft would benefit the Chinese government specifically. He was sentenced on September 1 over the surviving trade secret theft counts: 12 months minus a day, two years of supervised release, more than $198,000 in restitution to Google, and a $2,500 fine. It's a lighter outcome than the espionage case once promised. And it's worth sitting with: the criminal case against the man narrowed considerably even as the economic case against the companies around him just widened. The sanctions themselves bite in fairly standard ways. Asset freezes. A ban on US financial institutions extending credit to the named entities. Restrictions on foreign exchange and banking transactions, and limits on US investment into any of the five. For MiraclePlus, a firm that invests across the Chinese startup ecosystem, that's a real constraint on how it can move money through dollar-denominated channels, even if its core business runs in yuan. ## Why this case, why now This is only the second time Washington has used PAIPA since the law took effect in January 2023. The first case, announced in February, targeted Sergey Zelenyuk and his firm Operation Zero, Russian brokers accused of reselling stolen US cyber tools. That one was about hacking exploits. This one is about AI chip architecture, and it's the first PAIPA action aimed at China specifically. The law exists precisely for cases like this: trade secret theft that doesn't fit neatly into export-control or sanctions frameworks built for weapons and dual-use tech. Treasury and State now treat it as a national security matter anyway. The timing lands inside a broader pattern Washington has been building all year. Multiple federal agencies, from the Pentagon to NASA, have separately restricted the Chinese AI model DeepSeek on government devices this year over national security concerns. Treasury Secretary Scott Bessent has separately warned that sanctions are on the table if Chinese firms are found running industrial-scale model distillation off American AI labs' outputs. The Ding case gives regulators something a distillation allegation doesn't: a completed criminal conviction, a named founder, and now a named investor, all tied together in one file. What makes this sanctions action different from a standard espionage prosecution is the decision to go after the funding layer, not just the thief. Zhisuan could have been quietly shut out of the US market through existing export controls on AI hardware. Instead, the government chose to sanction the venture firm that bankrolled it, and that firm happens to carry Y Combinator's name recognition, however many years removed from the original. For any US accelerator, fund, or scout programme that still keeps informal ties to Chinese counterparts built in the years before 2019, that's the part of this story worth paying attention to. **Also read:** [Elice shares plunge 32% on Korea debut despite 400-fold retail demand](https://startupfortune.com/elice-shares-plunge-32-on-korea-debut-despite-400-fold-retail-demand/) • [Z.AI founders built models on research tied to an alleged Chinese spy front](https://startupfortune.com/zai-founders-built-models-on-research-tied-to-an-alleged-chinese-spy-front/) • [Stripe will pay 7.5 billion dollars for the AI router OpenRouter](https://startupfortune.com/stripe-will-pay-75-billion-dollars-for-the-ai-router-openrouter/) *This article is posted in [AI News](https://startupfortune.com/category/ai/), check it out for more related stories.* ## Join the discussion [Open in the community →](https://startupfortune.com/community/) Almost there. Sign in and your reply posts straight away.