US Treasury Secretary Scott Bessent has blamed Howard Lutnick's Commerce Department for failing to properly oversee the export of high-specification AI chips, as the fallout from the Nvidia scandal widens into President Donald Trump's cabinet.
Pressure is building on Lutnick from across the political spectrum to explain his department's actions.
The specific accusation
Bessent told CNBC that several agencies "were in favour of putting Megaspeed on the entity list for months".
"But Commerce has the pen... and you will have to ask them about their internal process," he added.
That is a precise charge rather than a general complaint, and it is worth separating into its two parts. First, that other parts of the government wanted Megaspeed restricted and said so. Second, that only Commerce could act, and did not.
What the entity list is, and why it matters here
The entity list names companies that US firms are barred from supplying without a licence. Megaspeed is not on it.
That single fact carries the whole story. Megaspeed had been probed by US government agencies over suspicions it was smuggling Nvidia chips into China, according to reports — and it remained free to buy them throughout. Nothing Nvidia did in selling to Megaspeed was unlawful, because the restriction that would have made it unlawful was never imposed.
So the question moving through Washington is not whether a company broke an export rule. It is whether the rule was deliberately not written.
How this connects to Huang
Jensen Huang was ousted as Nvidia chief executive after revelations that he had an affair with a businesswoman who was also allegedly a Chinese spy. She worked for Megaspeed.
Bessent's comments come after Lutnick was called to testify before the Senate Banking Committee next month over the Commerce Department's role in allowing Nvidia to export its advanced chips.
Why a cabinet-on-cabinet accusation is the notable part
Administrations normally settle this kind of dispute privately, because public blame between departments invites exactly the scrutiny both would rather avoid. Going to CNBC with it signals that Treasury has decided the Commerce Department's exposure is worse than the cost of distancing itself.
For readers here the consequence is straightforward. December's hearings are now about export policy rather than one executive's private life, and the likely direction is tighter control of where advanced chips end up — including the intermediary and reseller routes through which most of Asia, Bangladesh included, actually buys AI hardware.
What the entity list cannot do
It is worth being clear about the limits of the remedy everyone is now arguing about. Adding a company to the entity list stops US firms selling to that company by name. It does not stop the chips moving, because a restricted buyer can be replaced by an unrestricted one in a week, and the list is updated in months.
That asymmetry is why export control of this kind is so hard to enforce, and why the argument in Washington keeps returning to who had the pen rather than what the pen should have written. Naming Megaspeed in 2025 would have been a real step; it would not have been a solution.
What to watch in December
The question to listen for in the hearings is not whether Commerce was slow. It is whether anyone proposes moving from naming companies to restricting volumes or destinations — because that is the change that would reach the resale routes, and the one that would be felt furthest from Washington.
