Neither. Commerce didn't drop it, it got taken away and given to DoJ, but not because Commerce couldn't handle the invetigation of where the chips were going. The case goes to DoJ because we're talking about criminal charges of smuggling, corporate fraud, violation of national security statutes. Also because the Commerce investigation was tained by potential political interference. And possibly because it ran afoul of a counterintelligence operations siloed in the DoJ -- although by this point the cat is so out of the bag everyone must assume they've got a FISA wiretap warrant on them.
However, the *effect* may be to slow the progress of the investigation and delay any actions being taken.
The first reason for this is that criminal investigations are slower, the standards of proof higher, and potentially involve a criminal trial. Commerce could simply make an administrative law determination that put Megaspeed on some shit list and come to some kind of agreement with NVIDIA.
The second reason is that putting this into DoJ's hands is putting it into a department that has had staff turnover and loss of institutional knowledge, strife between career personnel and political appointees, and difficulty replacing lost employees. It's also led by lame-duck appointees, facing turnover in the next administration. So if they don't make progress in the next two years, allowing for transition delays, it could be years before anything gets accomplished. By then a lot of people will have left their jobs, memories will get hazy, evidence will go missing, and defensive positions constructed.
So while the investigation hasn't been *killed*; it has been delayed so long that it's effectively in suspended animation. It's not possible for Commerce to sanction anyone because the investigation is out of their hands.