China forces Meta to hand back $2 billion Manus acquisition and now the startup wants to buy itself back

Less than five months after closing, Meta's $2 billion bet on Chinese AI startup Manus is being forcibly unwound, and the founders are already in talks to raise $1 billion to reclaim what Beijing just took away.

On April 27, 2026, China's National Development and Reform Commission (NDRC) issued a formal order requiring Meta and Manus to reverse the transaction, the first time a completed deal has been ordered to unwind under China's Foreign Investment Security Review Measures. The acquisition had closed on December 29, 2025. In under 150 days, a landmark deal became a cautionary tale.

Meta has since moved fast to comply. According to a Bloomberg memo reviewed by TechCrunch, the company cut Manus staff off from internal data systems at the start of June, barred Meta employees from using Manus tools, and told teams to "sunset" active projects by shifting them to Meta's own infrastructure. The operational split is the most concrete step yet toward a full divestiture.

The probe had signaled its seriousness months earlier. In March 2026, Chinese authorities restricted co-founders Xiao Hong and Ji Yichao from leaving the country and summoned them to Beijing for questioning. The message to other AI founders who had relocated teams offshore was unmistakable: physical distance from China doesn't mean regulatory distance from Beijing.

Manus went from an invitation-only beta in March 2025 to a $2 billion exit in December 2025 to a forced unwind order in April 2026. The entire arc took under 14 months. The startup had tried to shed its Chinese origins by relocating its team to Singapore in mid-2025, but Manus's parent company Butterfly Effect remained China-registered, and that lineage never stopped mattering to Beijing. As Singapore-based AI advisor Matthias Hendrichs put it: "Once another company's engineers have been inside your stack, you can delete the repository, but you can't make them unsee what they've seen."

Western investors appear to have escaped cleanest. Benchmark, the California venture firm, reportedly received its acquisition proceeds before the deal unraveled. Asian backers, Tencent, HSG, and ZhenFund, have indicated they'll cooperate with the unwinding process, which in practice means accepting whatever terms Beijing and Meta negotiate.

What happens next is the stranger part. Manus's co-founders are reportedly in preliminary talks to raise approximately $1 billion from outside investors to repurchase the startup from Meta, potentially through a Chinese joint venture structure, with an eventual Hong Kong listing. Meanwhile, China is expanding travel restrictions to researchers at other top AI firms, and a new framework taking effect July 1 gives Beijing formal legal authority to block or reverse future cross-border deals involving sensitive technology.

For U.S. tech companies eyeing Chinese AI assets, the lesson is blunt: Chinese-origin AI now carries a reversibility risk that no deal structure can insure against.