Chinese proxy services exploit crypto payments to access U.S. AI models, undermining export controls and fueling a shadow market for advanced AI capabilities.
A shadow market of proxy services is enabling Chinese users to bypass U.S. export controls on advanced AI models, according to research by Chainalysis. These services provide access to restricted frontier models, such as ChatGPT and Claude, allowing Chinese companies to distill advanced capabilities into their own systems at a fraction of the training cost. The report highlights the role of cryptocurrency in facilitating this market, with 40% of surveyed proxy services accepting crypto payments, predominantly stablecoins.
Proxy services act as intermediaries, routing user queries into restricted AI models while concealing the origin of the requests. Payments for these services are made through fiat currency, including platforms like WeChat and AliPay, as well as cryptocurrencies. By using crypto, these services can bypass state capital controls and maintain off-grid access for sensitive users. Chainalysis found that many proxy services rely on custodial cryptocurrency payment processors, adding a layer of separation between users and providers.
The ecosystem has evolved into a structured economy with a segmented supply chain. Vendors acquire access to AI models through methods such as account farming and model swapping, while proxy services handle downstream operations like pooling access and selling subscriptions. This layered structure makes enforcement and disruption of the market particularly challenging.
S. national security-focused restrictions. Chinese AI companies use these services to distill outputs from advanced models, improving their own systems without incurring the high costs of training from scratch.
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