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Struggling Huawei Pleads Not Guilty To Trade Secret Theft, Wire Fraud In U.S.

Political tensions are mounting between the U.S. and China as Huawei appeared in a federal court in Seattle Thursday to plead not guilty to a 10-count indictment, including theft of trade secrets, wire fraud, conspiracy and obstruction of justice.

Chinese telecom company Huawei Technologies Co. on Thursday pleaded not guilty to U.S. charges of trade-secret theft related to T-Mobile, one day before Huawei could learn whether Canada will start extradition proceedings for its chief financial officer, who has been in custody since December.

The struggling smartphone maker has been hit with a 10-count indictment brought by the U.S. Department of Justice in the western district of Washington State. The Justice Department is charging Huawei Device Co. Ltd. and Huawei Device Co. USA with theft of trade secrets from Bellevue, Wash.-based T-Mobile, conspiracy to steal trade secrets, seven counts of wire fraud, and one count of obstruction of justice.

Huawei’s and its U.S. affiliate appeared in federal court in Seattle on Thursday and pleaded not guilty in front of U.S. District Judge Ricardo S. Martinez. A trial is now set for March 2, 2020.

[Related: Cisco Could Reap Benefits On Increased Huawei Security Fears, JP Morgan Says]  

If convicted, Huawei could face fines of more than $5 million, or three times the value of T-Mobile’s trade secrets. 

Huawei ran into legal trouble in December when CFO Meng Wanzhou was arrested in Vancouver by Canadian police on behalf of the U.S. because of alleged activities during her time as head of a Huawei-affiliated company that U.S. prosecutors believe sold equipment to Iran in violation of U.S. regulations. Meng is still wanted in the U.S. and the two countries could begin extradition, but as of now, Meng was granted bail in Vancouver and is currently under 24-hour surveillance via an electronic ankle tag. She is expected to appear in court again on March 6.

Earlier this month, Meng's father, founder and CEO of Huawei Ren Zhengfei, publicly said that the U.S. can't stand in the way of Huawei's growth.

"There's no way the U.S. can crush us," he said. "The world needs Huawei because we are more advanced. Even if they persuade more countries not to use us temporarily, we could just scale things down a bit. And because the U.S. keeps targeting us, and finding fault with us, it has forced us to improve our products and services."

The U.S. and several other countries, including Australia and New Zealand, have moved to keep Huawei out of their upcoming 5G infrastructure buildouts over concerns that Huawei has close ties to the Chinese government, which could lead to potential security risks. Huawei has consistently expressed that these concerns are unfounded.

Diplomatic tensions between China and the U.S. and Canada have been flaring up since Meng's December arrest. China has been demanding the release of its CFO, and in the meantime, the country has detained two Canadians on national security grounds and sentenced a third with a death sentence for drug trafficking in China.

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