I don't know much about this case, but I do know about science and labs and unless they had a full home lab, this is absolutely for nefarious purposes or these people are the dumbest scientists ever. You absolutely do not carry out experiments on biological or environmental hazards without the proper precautions and if they were the only people aware of what they were bringing back and the whole lab was not in on it or at least informed, it wouldn't have mattered because it would have become an issue regardless.
Just a preemptive note that I'm not anti china and what the us is doing to all immigrants and foreign nationals is disgusting.
There may be intricacies regarding having to provide some funding, so it's easy to just cut it instead of jumping through hoops to remove it. It might be just for the optics of saying they didn't remove funding, they just reduced it to "prevent fraud" and then they never mention that they reduced by 90%. Maybe so that if it goes over well with their base they can cut it again for some extra bump in the news cycle. I do wish the article mentioned if there was a mandatory requirement for funding though.