ChainCatcher report: On Monday, the U.S. Department of Homeland Security (DHS) directed federal civilian agencies to remove products from the Chinese AI company DeepSeek, as well as any third-party services built on its models, from government IT systems, and prohibited new purchases. The notice stated that using DeepSeek could lead to the transfer of sensitive data to China and potentially generate intelligence targeting U.S. individuals and institutions. DHS described these models as “multiple threat vectors.” The ban applies not only to DeepSeek’s own applications but also to third-party services developed using its technology. A DHS memorandum from July, made public on Monday, had previously required agencies to monitor government websites for risks associated with DeepSeek traffic. The U.S. Department of Commerce, the Navy, and the states of New York, Tennessee, and Virginia have previously restricted DeepSeek. The U.S. Federal Communications Commission (FCC) will vote on October 29 on whether to ban all Chinese laboratories from testing electronic products intended for use in the United States. DeepSeek is a startup headquartered in Hangzhou whose open-source model gained widespread attention on January 27, 2025; the model was developed for less than $5 million and caused NVIDIA’s stock to drop 16% that day, erasing approximately $600 billion in market value. In April 2025, the U.S. House of Representatives’ Special Committee on the Chinese Communist Party claimed that DeepSeek may be secretly transmitting U.S. user data to the Chinese government and may have used approximately 60,000 NVIDIA chips, 20,000 of which were subject to U.S. export controls. DeepSeek’s V4-Pro preview model, released in April this year, was priced approximately 98% lower than OpenAI’s GPT-5.5 Pro and is available for free download and modification under the MIT license; this week it released an updated version optimized for efficiency: the V4.1-Flash model.
U.S. DHS Orders Civil Agencies to Remove DeepSeek AI Products
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Summary
The U.S. Department of Homeland Security (DHS) has directed civil agencies to remove DeepSeek AI products from government IT systems, citing risks of sensitive data being transferred to China. The directive also prohibits new purchases and extends to third-party services utilizing DeepSeek models. A July memo had already highlighted risks related to website traffic. The Department of Commerce, the Navy, and states such as New York and Virginia have already implemented similar restrictions against DeepSeek. Amid tightening controls, liquidity and crypto markets remain under close scrutiny for regulatory impacts. CFT measures continue to shape global digital asset policies.
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