DeepSeek Reportedly Raises $15 Billion Days After US Orders Federal Agencies to Drop Its AI
Two developments involving the Chinese AI company DeepSeek unfolded within days of each other in late October 2026, drawing attention to the tension between geopolitical restrictions and continued investor interest in Chinese artificial intelligence firms.
US Orders Federal Agencies to Strip DeepSeek AI From Systems
On October 20, 2026, the U.S. Department of Homeland Security issued a directive ordering federal civilian executive branch agencies to stop purchasing and to remove DeepSeek AI products and services from their systems. The order cites national security and data privacy concerns, including the possibility that sensitive government data could become accessible to Chinese authorities under Chinese law.
The restrictions reportedly extend beyond DeepSeek's own offerings to third-party products built using its underlying technology, though exceptions may apply in some cases. This order builds on a law passed in December 2025 that already restricted DeepSeek's use within national security systems, suggesting a continued tightening of U.S. policy toward the company over the past year.
Allegations of Model Distillation Add to Tensions
The federal order arrives alongside separate allegations, reported in September, that U.S. officials accused DeepSeek and five other Chinese AI companies of large-scale "model distillation" — a practice in which one AI system's outputs are used to train or improve another. OpenAI and Anthropic reportedly flagged suspected unauthorized attempts to extract outputs from their own models, though these remain allegations rather than independently confirmed findings.
China's Foreign Ministry has pushed back against the U.S. actions, characterizing them as a politicization of trade and technology issues and emphasizing what it describes as the legitimate rights and interests of Chinese enterprises. Bloomberg has also reported that China may be considering export restrictions on 23 AI-related technologies, a move that would mark a retaliatory escalation in the broader U.S.-China tech dispute. These claims originate from a single Bloomberg report and have not been independently verified through primary government sources.
Days Later, DeepSeek Reportedly Closes a $15 Billion Round
Just two days after the federal order, Bloomberg reported on October 22 that DeepSeek had raised approximately $15 billion, or roughly 100 billion yuan, in a new funding round. Potential investors named in the reporting include battery manufacturer CATL and technology conglomerate Tencent.
It is worth noting that DeepSeek has not independently confirmed these figures, and the reporting traces back to a single Bloomberg source that other outlets have since referenced. This reported raise would follow a pattern of rapid fundraising for the company: more than $7 billion in June at a $50 billion valuation, and a sought $1.5 billion in July at an estimated $71 billion valuation. Founder Liang Wenfeng reportedly retains an approximately 81.6% stake in the company, according to data from WireScreen.
Reading the Timing: Defiance, Coincidence, or Confidence?
Some coverage has framed the near-simultaneous timing of the U.S. restriction and the reported funding round as notable, though no causal relationship between the two events has been established. A recurring consumer and industry concern is whether unverified financial figures of this scale are being treated with appropriate caution before being repeated as settled fact.
Many observers note that the juxtaposition raises broader questions about investor risk tolerance amid escalating U.S.-China friction over AI policy. Whether the timing reflects genuine investor confidence, coincidental scheduling, or a deliberate signal from DeepSeek and its backers remains a matter of speculation rather than confirmed fact.
DeepSeek in the Broader Chinese AI Funding Landscape
DeepSeek's reported raise sits within a wider pattern of substantial funding activity among Chinese AI firms in 2026. Moonshot AI reportedly raised $2 billion at a $20 billion valuation in May, while Manus AI raised more than $500 million within the same month as DeepSeek's reported round. Other firms, including Zhipu AI and MiniMax, carry reported market capitalizations of approximately $29 billion and $7.2 billion, respectively.
Taken together, these figures suggest that global investor appetite for Chinese AI companies has, at least for now, continued alongside — rather than in spite of — escalating geopolitical restrictions. Whether this pattern persists as U.S. policy toward Chinese AI firms continues to evolve remains an open question.