When questioning the motives of certain public leaders, the Roman orator Cicero was said to have used as a shorthand, “cui bono?” meaning, whose interests come first? That line rings true as Secretary of Commerce Howard Lutnick falls under rapidly escalating bipartisan scrutiny over his role in the flow of Nvidia chips into China.
Nvidia founder and CEO Jensen Huang resigned Thursday after reports of affairs with a direct report and with Alice Huang, a suspected Chinese spy, yet the national security questions he leaves behind keep growing amidst escalating congressional investigations. Megaspeed, the Nvidia customer where Alice Huang was an executive, was suspected of funneling advanced chips to China for years, yet the U.S. government took little action. Many are now asking: Who knew what, and when? And why is this surfacing only now?
We have already described Nvidia directors’ exposure to shareholder lawsuits over their own failures of oversight. Now the scrutiny is shifting to Washington. How did the U.S. government look past so grave a threat to national security for so long, and let these sales go on? As the reporting accumulates, all roads lead to one person, who by multiple accounts blocked action over the objections of fellow cabinet members and leading voices in both parties in Congress: Commerce Secretary Howard Lutnick. He is now squarely on the hot seat, and it grows hotter by the day as more information comes to light.
Untangling the Truth of a Muddled Timeline
Megaspeed has long been a major target of U.S. government focus amidst pervasive allegations that the Singapore-based data center company helped Chinese firms evade U.S. export controls on sensitive Nvidia chips.
The Department of Commerce’s own agents began investigating Megaspeed, the Singapore firm that bought billions of dollars of Nvidia chips and is suspected of diverting them to China, in 2024, under the Biden Administration. After the change of administration but amidst the ongoing probe, The New York Times reported that in 2025, Nvidia’s general counsel emailed those agents directly, citing permission from Lutnick’s export-control chief, Jeffrey Kessler, with Commerce soon pausing its work on the investigation.
That sparked many concerns even within the GOP, with respected Senate Intelligence Committee Chair Tom Cotton writing to Lutnick directly, urging Commerce to investigate Megaspeed more carefully. Still, Megaspeed never landed on the entity list, the blacklist kept by the Department of Commerce that cuts suspect firms off from American technology; even though other agencies repeatedly agreed on proposing to add Megaspeed to the list, with the Financial Times reporting that the State Department, Treasury Department, Energy Department and the Pentagon were pushing particularly aggressively to add Megaspeed to the entity list. Despite these entreaties, Lutnick’s Commerce Department was unmoved, steadfastly refusing to add a single company to the entity list for more than a year.
Then came the memo. This spring, the New York Times reports, Secretary of State Marco Rubio oversaw the drafting of a highly classified assessment built on electronic surveillance of Alice Huang. Its conclusion was as stark as can be: China’s Ministry of State Security had recruited her to gather intelligence on Jensen Huang and on America’s AI chips, and she had grown close to the Nvidia CEO. U.S. officials assessed that Beijing’s aims may have gone further, to steering Nvidia into pressing Washington for greater Chinese access to its most advanced chips.
The memo went to a handful of senior officials before President Trump’s May trip to China, with Axios reporting that Lutnick was among those who received the memo directly. Perhaps not coincidentally, Jensen Huang was originally left off the delegation of business leaders traveling to China with Trump, before being added at the very last possible minute during an Alaska refueling stop.
That same month, Reuters reported that Commerce had cleared about 10 Chinese companies to buy H200s.
Perhaps even more alarmingly, but less widely known than the existence of the memo; Axios also reports that President Trump approved a crackdown on chip diversion to China no less than three times, in May, in August, and on Nov. 5, with even Elon Musk supportive, and that Lutnick and his deputies had resisted carrying out each order. As Maria Curi and Marc Caputo of Axios reported pithily, “One administration official has repeatedly stood in the way: Commerce Secretary Howard Lutnick,” noting that virtually every other Administration official was supportive of these crackdowns.
Just last week, after news of the Jensen Huang spy scandal broke, Axios reported that Bessent confronted Lutnick about why his department has resisted implementing the export controls, particularly on Megaspeed, the company at the center of the spy scandal, with virtually all other Admin officials siding with Bessent; yet Lutnick apparently continued to stall. Already, there has been speculation that the leaks over the last week that felled Huang came from sources within the Trump Administration, perhaps from within the National Security Council, who were frustrated at Lutnick pushing what they perceived to be pro-China policies, with many remarking about the suspicious timing of these leaks right after midterm elections, even though the original memo was circulated in May this year, six months ago.
Lutnick Loses Cabinet Confidence and GOP Trust
What makes this scrutiny so hot is who is turning up the temperature. Lutnick’s chief antagonists on the issue of China chip controls are almost entirely his own colleagues within the administration, ranging from Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, U.S. Trade Representative Jamieson Greer and National Security Adviser and Secretary of State Marco Rubio, to U.S. Director of National Intelligence Jay Clayton, all of whom reportedly favor a far tougher approach than Lutnick has been willing to impose.
Lutnick’s Republican detractors are plenty outside the administration as well, particularly within the GOP congressional ranks. Republican Sen. John Kennedy says Lutnick must explain himself “in front of God and country.” Rep. Bill Huizenga has attacked Lutnick’s lack of responsiveness to Congress as “frustrating,” and the Republican chairs of the House China and Foreign Affairs committees, Rep. John Moolenaar and Rep. Brian Mast, have made their unhappiness with Lutnick just as vivid.
All these intraparty critics join legions of Democratic senators who are demanding records from Lutnick, and after last week’s midterms, their party takes the committee gavels in January with detractors making clear that Lutnick is one of their top targets – for reasons extending far beyond merely his role in sensitive U.S. technology making their way to China.
The Conflicts that Continue in Commerce under Lutnick
Many congressional Democrats are practically salivating at the prospect of being able to issue subpoenas to examine Lutnick’s perceived business conflicts of interests, and their files are already thick with hard questions Lutnick will have to answer.
Start with rare earths as one prominent example. In January, Commerce announced a tentative $1.6 billion deal that gives the government a roughly 10% stake in USA Rare Earth. To close it, the company raised $1.5 billion in a private stock offering and chose as its lead placement agent Cantor Fitzgerald, the firm Lutnick led for decades and which his son Brandon Lutnick, 27 when he took over, now oversees as chairman. By the lawmakers’ account, the company’s CEO credited Lutnick’s personal involvement for the deal. Sens. Elizabeth Warren, Ron Wyden and Chris Van Hollen have pressed for documents since February.
Crypto brings another witches’ brew of problems for Lutnick. Cantor has been custodian of the reserves of Tether, the largest stablecoin issuer, since 2021, and holds a stake that Sen. Richard Blumenthal says has swelled from about $600 million to an estimated $10 billion since Trump returned to office. A trust for Lutnick’s children reportedly borrowed from Tether around the time he transferred his Cantor stake to them. Cantor also launched Twenty One Capital, the bitcoin treasury company known by its ticker, XXI, with Tether, with Blumenthal already raising questions about the arrangement.
That doesn’t even factor in any potential lingering issues related to Lutnick’s longtime ties to Jeffrey Epstein, his onetime next-door Manhattan neighbor. Lutnick long maintained that he cut ties with Epstein in 2005, but Justice Department files showed a 2012 family visit to Epstein’s island, a shared investment and emails as late as 2018, which many called “grossly deceptive.” Republican Rep. Thomas Massie called on him to resign in February, and his closed-door testimony to House Oversight in May left Democrats on the panel calling him evasive.
For Lutnick, each of these issues raises the exact question Megaspeed poses: Whose interests came first, and whose side was he really on?
Bluster is Not an Escape Strategy
Defenders of Lutnick point out that he is merely carrying out Trump’s wishes as part of a broader implicit trade deal with China where the U.S. continues to provide cutting-edge chips and in exchange, the Chinese continue to provide the U.S. with rare earth minerals. But this is a misleading and misguided argument on several counts.
First, the U.S. is not nearly as dependent on China for rare earth minerals as many imagine, with the U.S. possessing tremendous reserves of rare earth minerals but merely needing some sustained investment to extract and process them. Second, this implicit deal did not apparently restrain other cabinet members, such as Secretary of State Rubio and Treasury Secretary Bessent, from registering their concerns with Lutnick’s stances. Third, Trump himself has endorsed the widely admired former CEO of Apple, Tim Cook, as the next CEO of Nvidia, echoing our own earlier endorsement of Cook. Cook has scrupulously abided by national security policies while capably and successfully balancing commerce in China with protection of US national security, and there is nothing to suggest that Cook would knowingly undermine US national security by continuing the illicit flow of chips into China.
As the questions pile up, there is no easy way out for Lutnick. As Thomas More is said to have warned King Henry VIII, “Trust is as fragile as liquid in your hands, once you separate your fingers, its forever gone.”
Where have Lutnick’s fingers gone?
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
This story was originally featured on Fortune.com
