As with many others among these threads I don't see how the timing works out for K3 to have trained on distilled Fable usage. There should be at least a tacit academic acknowledgment of Kimi's own design efforts.

Distillation itself, however, is still clearly valuable - else competitors wouldn't pay so much to their rival on distillation campaigns or try to circumvent anti-distillation defenses.

As for the morality of it, if you paid for the tokens they're yours. It is already understood that you own the output. Seems to me like a variation of ordinary business arbitrage. Providers might object to certain use-cases or intention and try to craft terms around that, but that's hard to enforce at scale.