Why is Meta's acquisition of Manus under scrutiny? A $2 billion deal may trigger China's technology red line

Meta acquires AI startup Manus for $2 billion, with the Chinese Ministry of Commerce evaluating whether this violates technology export controls. Manus was founded by a Chinese team and was sold to Meta after relocating to Singapore. Although not core technology, this case could trigger a “Singapore washing” demonstration effect, serving as a warning for Web3 and crypto projects.

From Silicon Valley deals to geopolitical storms

Meta’s acquisition of Manus should have been a typical Silicon Valley AI M&A deal, but according to the Financial Times, it has already attracted high-level attention from Chinese authorities. Multiple insiders reveal that the Ministry of Commerce in China has begun assessing whether the process of Manus relocating its team and technology to Singapore and ultimately selling to Meta constitutes a violation of Chinese technology export regulations. This means the transaction is no longer just a business deal but has been formally incorporated into the national-level discussion on technology and regulation.

Manus was founded by a team with Chinese roots, and early core R&D personnel had close ties to China. According to sources, the key concern of the Ministry of Commerce is whether the transfer of personnel and technology, followed by the sale to Meta, requires Chinese technology export licenses according to law. The answer to this question will determine the legality of the transaction.

If the relevant technology is deemed subject to export controls, and the company failed to follow the necessary approval procedures during migration and sale, not only could the deal face compliance risks, but responsible parties might also face legal consequences, including criminal liability. Legal experts point out: “As long as you change your registration location or headquarters, you can bypass the US-China regulatory system. That kind of thinking is overly simplistic.”

The gray area of Singapore washing

A somewhat ironic term repeatedly mentioned in reports is “Singapore washing.” It refers to: many Chinese tech companies, aiming at global markets and reducing geopolitical sensitivity, choose to establish a second headquarters or relocate core teams to Singapore, thereby legally and narratively “diluting” their Chinese background.

This practice has become very common in AI, crypto, Web3, and related fields. Manus’s case happens to straddle the gray area between regulatory ambiguity and practical operation. Notably, multiple insiders emphasize that Manus’s product—a AI assistant—is not considered a core technology critical to China. This suggests that, from a “technological importance” perspective, there is no urgent need for immediate intervention.

However, the deal still draws Beijing’s attention because of the potential demonstration effect it could produce. One insider bluntly states that this acquisition might: encourage more Chinese AI startups to “relocate overseas as a whole” to evade domestic regulation and scrutiny. If such pathways become widespread, regulators cannot simply turn a blind eye. The Chinese government worries not just about a single transaction but about possible chain reactions.

Three operational models of Singapore washing

Legal framework transfer: Register a new company in Singapore, transfer intellectual property and core assets to the new entity, formally severing ties with China.

Team relocation: Core technical personnel obtain Singapore work visas or permanent residency, achieving physical migration of talent.

Funding and exit arrangements: Conduct international financing and M&A transactions through the Singapore entity, circumventing China’s foreign exchange controls and approval processes.

This model may exist in legal gray areas. Companies can argue that the Singapore entity is an independent, newly operated company, but if the core technology, code, and intellectual property actually originate from Chinese R&D, regulators might see this as an evasion tactic.

Far-reaching impacts on Web3 and crypto projects

If Chinese regulators ultimately take action against Manus, the same regulatory logic applies to Web3 and crypto projects. In recent years, many projects have registered overseas or issued tokens abroad, but their underlying technology, code, operations, and decision-making are still essentially Chinese. These projects could face similar regulatory scrutiny as Manus.

The phenomenon of “Singapore washing” in crypto and Web3 is even more widespread. Many Chinese teams establish foundations in Singapore, issuing tokens and operating projects through these entities, while core development and decision-making remain in China. This approach has been widely adopted over the past few years because Singapore’s crypto regulation is relatively friendly, and it also offers the advantages of an international financial hub.

The Manus case could become a turning point. If Chinese authorities determine that such migration and sale constitute violations of technology export controls, it could set a precedent. In the future, Web3 projects with Chinese backgrounds seeking overseas funding or acquisitions may need to obtain Chinese technology export licenses beforehand. This would significantly increase compliance costs and delays, and some deals might fall through due to lack of approval.

More broadly, this could alter global talent flow in AI and Web3. If talent migration is viewed as a form of technology transfer, Chinese AI experts and blockchain developers accepting overseas offers or founding overseas companies might also need to consider compliance issues. This uncertainty could suppress free talent movement and impact the overall efficiency of global technological innovation.