Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick in the White House Situation Room over the Commerce Department’s failure to crack down on a company tied to Nvidia’s widening spy scandal, according to a new report.
Axios reported that Bessent asked Lutnick last week why Megaspeed, an Nvidia customer accused of illegally diverting U.S. chips to China, hadn’t been added to the Commerce Department’s entity list of companies that pose national security concerns.
“How come Megaspeed isn’t on the entities list?” Bessent asked, according to a source briefed on the meeting.
Lutnick initially stammered, sources said, before replying, “I don’t know. I’ll look into it.”
One source with extensive experience in the chip controversy called that answer “b—s—.” The source said Lutnick had resisted acting on Megaspeed ever since he was personally handed a memo outlining the problems with the company.
The memo was drafted by Secretary of State and National Security Adviser Marco Rubio, and Lutnick received it in May, before a trip to China.
The company has come under intense scrutiny since revelations that Nvidia CEO Jensen Huang had an affair with Alice Huang, a Megaspeed employee and suspected Chinese spy.
Sources told Axios that White House and intelligence officials have pressed Lutnick and his top advisers to act against Megaspeed since fall 2025. Instead, Lutnick spent the past year “undoing” other officials’ efforts to hold the company accountable because he was worried about escalating the trade war with China, according to the sources.
Commerce Undersecretary Jeff Kessler was also repeatedly warned about Megaspeed in deputy-level meetings.
On Tuesday, the New York Times reported that Kessler abruptly halted an investigation into Megaspeed after Nvidia intervened. The Financial Times reported that the department had delayed blacklisting the company even though several U.S. agencies urged it to do so.
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