US Espionage Investigation Targets Self-Driving Truck Start-Up Connected To China

In order to keep up with the changing times, TuSimple is developing self-driving software for trucking companies, but those big-brained developments might not be being kept here in the United States of America. It is being urged members of a U.S. national-security panel that the Justice Department should bring criminal charges against two of TuSimple's founders and the company's current CFO for improperly transferring patents to the Chinese startup Hydron.

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In 2021, TuSimple is known for taking a load of melons across four states in the American southwest for a journey of 1,931 km - of which 950 km were driven autonomously - that traveled across four states. Several federal organizations started paying close attention to the company and, in particular, TuSimple's founders Xiaodi Hou and Mo Chen as well as the current Chief Executive Cheng Lu during the last year as the company seemed to be holding a lot of promise in the self-driving tech space.

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After a Chinese national and shareholder bought a huge stake in TuSimple and controlled two board seats in the company's board, the federal government became concerned about TuSimple's business practices. After looking at Chen's other companies, centered in China, they took a closer look at Hydron, which is one of Chen's other companies.

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In a letter to the Justice Department, members of the Committee on Foreign Investment in the United States, commonly referred to as Cfius, made a recommendation that the company is charged with a crime. There are representatives from multiple federal agencies, including the Departments of Defence and Justice, who sit on Cfius, which is led by the Treasury Department. TuSimple was under investigation by Cfius in 2021 for possible charges of economic espionage, according to a report by TradeAlgol. It was discovered during the investigation that a startup in China had different stated goals than TuSimple, but that many of its officers and employees were the same:

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According to people familiar with the matter, after reviewing the Hydron review, the Cfius representatives concluded that TuSimple's leaders' dealings with Hydron may have constituted economic espionage and trade secret theft in violation of U.S. law, among other possible offenses.

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According to a filing, TuSimple filed with the Securities and Exchange Commission, the board of directors of TuSimple took action to fire the company's then-Chief Executive, Mr. Hou, after the board discovered that TuSimple had transferred confidential company information to Hydron and its partners.

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In accordance with those familiar with the matter, people familiar with the board's investigation discovered that there was significant evidence that Hydron had improperly transferred technology. One of the people involved in the transfer said that it included technical data, blueprints, and schematics that Hydron intends to use in order to replicate TuSimple's technology as well as information about specific TuSimple employees who are valuable to Hydron, according to one of the people involved.

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Some of the TuSimple employees who also worked for Hydron included top marketing, product development, business development, and government relations staff, according to people familiar with the matter.

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It is hard to doubt that TuSimple is going to have a rough start to 2023, even without the economic espionage investigation and recommendations. The Federal Motor Carrier Safety Administration (FMCSA) and the National Highway Traffic Administration (NHTSA) have also opened an investigation into the company following a wreck in which a truck drove straight into a cement barrier after jumping over I-80.

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As part of the investigation, there is a lot of corporate drama, with fights, power grabs, investigations by the federal government, and possibly even some spycraft involved.