I doubt they did any distillation as Hinton defined it (requiring logit access). They most likely ran a bunch of prompts/conversations and captured the results. Those conversations already missed thinking tokens, replaced by some confusing quasi-summaries. Then they took those and ran basic SFT or maybe DPO if they had competing responses. As there is no copyright on the output of AI, I am not sure where is the "covert industrial distillation" part of the problem.