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Goldman Sachs reviews its role in Megvii’s IPO after Chinese AI firm is blacklisted

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Goldman Sachs is reviewing its role in the Megvii IPO after the AI company was added to a US blacklist of Chinese entities.

Megvii, which has already filed its prospectus for a public listing in Hong Kong, was effectively barred from importing American technology this week. The US Department of Commerce cited the company’s alleged role in facilitating human rights abuses in China’s Xinjiang region.

“We are evaluating in light of the recent developments,” Goldman Sachs said in a statement. JPMorgan and Citi are joint sponsors of the IPO with Goldman. Both JPMorgan and Citi declined comment.

Megvii, which is worth an estimated $4 billion, was part of a sweeping action that targeted 28 Chinese entities, raising the stakes ahead of crucial trade talks in Washington.

In a statement, Megvii said “there are no grounds” for the company being added to Washington’s export blacklist.

“We are … in compliance with all laws and regulations in jurisdictions where we operate. We require our clients not to weaponize our technology or solutions or use them for illegal purposes,” the company said.

The company also tried to downplay its dependence on American suppliers, noting that its supply chain is global and “the US is just one part of it.” In its prospectus, the company said its top five suppliers are based in China.

The expansion of the blacklist is a blow to some of China’s hottest tech startups, especially in artificial intelligence. Facial recognition startups SenseTime and Yitu were also included, as were AI-driven surveillance camera maker Hikvision and voice recognition firm iFlyTek.

Chinese authorities have dismissed the human rights allegations, and threatened retaliation against US companies.

“The US accusations against China are groundless and senseless. They only expose the evil motives of the United States to interfere with counterterrorism efforts in Xinjiang and thwart China’s development,” China’s Foreign Ministry spokesman Geng Shuang said on Tuesday.

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