MiraclePlus, the Beijing incubator founded by former Microsoft AI executive Lu Qi, has responded publicly to the US State Department's October 19 sanctions, denying that it ever invested in Shanghai Zhisuan Technology and saying the measures were imposed without any prior communication.

In a company statement on October 20, reported by The Straits Times, the firm said it is in talks with relevant parties to have the sanctions lifted and expects the matter to be resolved through 'candid communication'.

The State Department designated Shanghai Zhisuan Technology, founded by former Google engineer Ding Linwei, along with MiraclePlus and three affiliated investment firms.

Multiple outlets report the affiliates were targeted for allegedly providing seed financing to Zhisuan, which was established in 2023 to build software infrastructure for training large AI models. The measures may include freezing US-based assets and restricting dealings with US persons.

Streamlinefeed reports the designations were made under a trade-secrets enforcement framework aimed at severing financial pipelines that facilitate transfer of sensitive know-how from US labs to Chinese competitors — a shift from the semiconductor export controls that have defined the US-China tech war.

The dispute lands squarely on the venture community's newest anxiety: liability by association. Lu Qi is a revered figure who led Microsoft's AI research, ran Baidu's AI efforts, and built YC China before rebranding the operation as MiraclePlus when Y Combinator withdrew in 2019.

Y Combinator has distanced itself from his subsequent ventures, saying it maintains no affiliation with MiraclePlus, according to Streamlinefeed.

Streamlinefeed notes the incubator's inclusion on the blacklist signals Washington is now pursuing institutional enablers rather than only direct perpetrators, and warns the move could accelerate a bifurcation of the global AI industry, with Chinese startups forced to prove the independent origins of their technology to attract international capital.

The criminal case beneath the sanctions is well documented.

According to the US Justice Department, Ding, who worked on Google's advanced AI chip architecture, transferred more than 2,000 pages of confidential documents — including material related to Tensor Processing Units — to a personal cloud account, and copied files to his computer less than two weeks before resigning in December 2023.

News18 reports he was convicted by a federal jury in January 2026 and sentenced in September to one year in prison along with two years of supervised release, restitution and a fine. Prosecutors said he touted his insider knowledge of Google's infrastructure when pitching investors for Zhisuan.

Beijing's foreign ministry condemned the measures as an abuse of state power and an attempt to suppress Chinese technology development, according to Streamlinefeed.

MiraclePlus, for its part, has said it expects the dispute to be resolved through dialogue rather than litigation, per The Straits Times.

The stakes extend well beyond one firm: Streamlinefeed reports investors must now conduct due diligence not just on commercial viability but on the provenance of a startup's foundational technology and the employment histories of founders.

Whether MiraclePlus's 'candid communication' strategy succeeds or the US holds firm will shape how venture firms price the national-security risk of backing AI startups with cross-border ties.