Bessent blames Lutnick's Commerce Department for not blacklisting Nvidia customer Megaspeed

Treasury Secretary Scott Bessent has put the blame for Megaspeed on the Commerce Department, not the Treasury. Speaking on CNBC's Squawk Box, he said several government 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," the BBC reported. Bloomberg and the Financial Times ran the same story. It adds a new front to the Nvidia saga we have followed since Jensen Huang's exit: a public dispute inside the administration over who failed to act.

What Bessent said

• He said he was "frustrated" by the delay in listing the company and by reports of AI chips leaking into China, according to the BBC.
• He pointed to President Trump's position that China should not receive Nvidia chips above the H100, calling any leakage "very frustrating" because it gives Chinese firms an advantage.
• He also turned the question on Nvidia: "Did Nvidia know their client, and was there a robust effort at Nvidia to make sure that there was no leakage and that they were selling to what were obviously pass-through shell companies?" He said anyone at the company should "be held accountable."

Megaspeed, a cloud computing firm that bought advanced chips from Nvidia, is not on the list of firms US companies are barred from dealing with, the BBC noted. The New York Times has reported that Commerce investigated it last year over suspicions of chip smuggling. Megaspeed had not responded to the BBC's request for comment. The smuggling suspicion remains a reported allegation; no charge has been made public in the sources we read.

The Commerce side

The New York Post reported on Nov. 12 that Republican lawmakers have criticised Lutnick and Jeffrey Kessler, who runs the Bureau of Industry and Security (BIS). A former Commerce official quoted anonymously said the blame lies "squarely on Kessler and ultimately Lutnick." The same report says The Information found Commerce is finalising a rule to extend export controls to seven Southeast Asian countries, including Malaysia, Singapore and Thailand, to close a loophole that let Chinese entities reach Nvidia chips remotely in data centers there. A BIS spokesperson confirmed the agency is "actively considering new rules to address remote access with interagency partners" and said claims that Kessler's dealings with Nvidia were improper are "entirely unfounded."

The Post, citing Bloomberg, reported that Nvidia's general counsel called Kessler to ask about the Megaspeed probe. The BIS spokesperson said Kessler's response was "absolutely correct," and Nvidia said it regularly consults export officials. These are accounts from the parties and anonymous sources, and we have not confirmed them independently. For the Senate side of the story, see our report on Lutnick's agreement to testify, and for the records demand, the Warren and Coons letter.

Why this matters beyond Washington

The thing to watch is the rule, not the blame. Two outcomes are on the table: Megaspeed is added to the entity list, and the reported remote-access rule covers cloud operators in Southeast Asia. Either would raise the compliance burden on the neocloud and reseller customers who buy Nvidia systems outside the US, which is where the Megaspeed purchases sit. Bessent's "know your client" framing also moves the question from Commerce's paperwork to Nvidia's own sales checks, which analysts are likely to raise on the Nov. 17 earnings call.

Our chart data put Nvidia's last price at $159.90 on Nov. 13, 33.2% below its Oct. 6 peak. Prices can change quickly while the hearings and the earnings report are pending.

Sources: BBC News, New York Post, Bloomberg and Financial Times (headlines), Yahoo Finance price history. This is market information, not investment advice.