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Butterfly Effect, the Chinese startup behind Manus AI, did move its global headquarters and key operations to Singapore in 2025. But the shift did not erase the company’s Chinese roots or shield it from scrutiny: on April 27, 2026, China’s National Development and Reform Commission (NDRC) prohibited foreign investment in the Manus project and ordered Meta’s proposed acquisition withdrawn.
The move was more than a planned overseas expansion. It was an effort to serve international customers, attract foreign capital and reduce the friction of operating a China-founded AI company amid U.S.–China tensions. The outcome shows the limits of an offshore address when a company’s people, technology and history remain tied to its country of origin.
What Butterfly Effect moved—and what remained connected to China
Manus is an AI agent: software designed to carry out sequences of computer-based tasks, such as researching a topic, browsing websites, preparing reports, writing code or creating presentations. It attracted international attention after its public debut in March 2025. “Agentic” does not mean fully autonomous or reliably correct; the results still depend on the underlying models, permissions, integrations and user oversight.
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The product was developed by Butterfly Effect, a company founded in China in 2022 and also associated with the Monica.im brand. Reports describe co-founders Red (Xiao Hong), Ji Yichao, also known as “Peak” Ji, and Tao Zhang moving to Singapore with other executives in 2025. The company was reported to have shifted its global headquarters there, opened offices in San Mateo, California, and Tokyo, and later shut down its China-based team. Some employees reportedly relocated; others left. These workforce details come from reporting based on people familiar with the decisions, rather than a public headcount or formal company announcement (The Information; The Information).
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| Changed or expanded abroad | Still relevant to the company’s China links |
|---|---|
| Global headquarters and key operations shifted to Singapore, according to reporting. | Butterfly Effect was founded in China, and the product’s early development and engineering history were rooted there. |
| Founders and some employees relocated; overseas offices and hiring included Singapore, the U.S. and Japan. | Chinese entities, personnel and technology connections continued to matter to regulators. |
| Manus was aimed primarily at customers outside China. | An overseas customer base and a Singapore office did not, by themselves, settle questions about ownership, technology or jurisdiction. |
“The company left China” is therefore too simple. Its operating footprint became more international and its China team was reportedly eliminated, but that does not establish that every legal entity, ownership interest, item of intellectual property, employee relationship or data connection moved with it. Public reporting does not provide a complete, independently verified map of those elements.
Why Singapore made strategic sense
Singapore offered Butterfly Effect a regional base from which to pursue overseas customers, hire internationally and engage with investors more familiar with cross-border corporate structures. It is a recognized technology and finance hub, with access to Asian markets. Companies from China and elsewhere in Asia have increasingly used it as a regional base for AI operations, as Fortune reported.
That makes Singapore a practical choice, not a guaranteed legal safe harbor. Three distinct changes are often conflated in discussions of a company “moving”:
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- Corporate restructuring: using a Singapore-based entity or changing where the global headquarters sits. This is not necessarily the same as transferring every parent-company or ownership interest.
- Regulatory disentanglement: separating the business’s ownership, technology, personnel and data from its country of origin. A new office or entity alone does not prove this has happened.
Butterfly Effect’s international operating shift was reported clearly; the extent of any complete legal and technological separation is not publicly established. Its later experience illustrates why incorporation, ownership, staff location, development history and data handling can all matter independently.
U.S. capital brought opportunity—and scrutiny
Manus’s overseas ambitions and reliance, at least in earlier reporting, on U.S.-developed AI models made international relationships important. At the same time, U.S. restrictions and notification requirements for some American investments in Chinese AI and other strategically sensitive sectors raised compliance and political risks for investors. The relevant question is not only where a startup is registered, but also who owns it and how closely its business remains connected to China.
In 2025, Benchmark reportedly led a $75 million funding round that valued Butterfly Effect at about $500 million. These are reported figures, not numbers independently confirmed here through company filings. The investment brought prominent U.S. venture capital into a Chinese-founded AI business at a time when such ties were attracting attention in Washington (The Information; The Straits Times).
Some commentators have called offshore restructuring by Chinese-founded companies “Singapore washing,” suggesting that a foreign corporate address can be used to soften the appearance of Chinese connections. That is a criticism, not proof of Butterfly Effect’s motive. Moving abroad can also be ordinary international expansion. In either case, regulators and investors may look beyond the label to beneficial ownership, people, technology and operations (Axios).
From relocation to a blocked acquisition
The sequence shows why the relocation cannot be treated as a clean reset:
- 2022: Butterfly Effect was founded in China.
- March 2025: Manus made its public debut and gained international attention.
- 2025: Benchmark reportedly led a $75 million round at an approximately $500 million valuation. The founders and other executives moved to Singapore, and the company shifted its global base and some operations overseas.
- December 2025: Meta announced an acquisition of Manus worth about $2 billion, according to coverage. The deal was announced; that does not mean its legal and regulatory path was complete.
- January 2026: China began reviewing or investigating the acquisition, according to reports. The exact procedural description varies by outlet.
- April 27, 2026: China’s NDRC prohibited foreign investment in the Manus project and required the parties to withdraw the acquisition. This was the decisive public regulatory intervention (TechCrunch; Channel News Asia).
- June 2026: Reports said Meta was separating Manus from its internal systems and moving to unwind the deal. Those reports do not establish that every legal, financial, staffing and technical element of the unwind was finally resolved (TechCrunch).
Reports in March 2026 said Manus employees had begun integrating into Meta and that Chinese authorities had restricted the movement of some executives. Those are reported developments, not evidence of a general published rule applying to every company. The subsequent NDRC order made the acquisition’s status different from an ordinary completed purchase: Meta had announced the deal and integration had reportedly begun, but China ordered the transaction withdrawn and later reporting described an unwind.
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A Singapore headquarters does not automatically remove a project from another country’s review. China’s action was framed through foreign-investment security review, not merely as a question of where the company had registered its headquarters. Reporting and analysis pointed to the project’s Chinese origins, technology, talent and continuing links as relevant to Beijing’s concern. That is the apparent regulatory rationale described in coverage, not an independently adjudicated finding about the legal status of every asset or entity.
The episode also involved distinct risks that are sometimes bundled together as “U.S.–China tensions”:
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minute- U.S. investment scrutiny: American funds face additional restrictions or notification obligations for some investments in Chinese AI and related strategic sectors.
- Chinese review of foreign investment: Beijing can scrutinize an overseas transaction involving a project it considers tied to sensitive domestic technology.
- Technology and data questions: The location where code was developed, who can access it and how customer data is handled may matter independently of headquarters.
- Talent mobility: Relocating founders and engineers can create practical and regulatory complications.
- Acquisition risk: A foreign buyer may announce a transaction and begin integration, yet still face regulatory intervention before the outcome is settled.
The Manus case therefore does not establish that Singapore incorporation is ineffective in general, nor that all overseas Chinese-founded companies are subject to the same outcome. It does show that a corporate address alone was not enough to remove scrutiny in this particular transaction.
How to assess whether an AI startup has genuinely internationalized
For investors, customers and founders, five questions provide a more useful test than asking only where a company’s headquarters sits:
- Where is the parent incorporated? Identify the operating company, holding company and any intermediate entities rather than relying on a brand name.
- Who owns and controls it? A Singapore entity is not necessarily Singapore-owned or independent of shareholders elsewhere.
- Where are founders and key engineers based? Staff location can affect hiring, operations and the reach of regulators.
- Where was the core technology developed? Moving future work abroad does not by itself change the origin of code or systems already built.
- Where is customer data processed and stored, and who can access it? A new headquarters does not answer data-governance questions.
These tests also explain the trade-offs. A move can improve access to global capital, customers and talent, while making employment, tax, data and corporate structures more complicated. It can reduce a company’s visible mainland footprint but increase scrutiny from more than one government. Relocation may also require employees to move or leave, and it can be difficult to demonstrate that the technology itself has genuinely shifted with the organization.
What remains unsettled
As of the latest developments covered here, the relocation to Singapore is reported as completed, and China’s order to withdraw the Meta acquisition is clear. But the final ownership and financial status after the reported unwind, the disposition of staff who had reportedly integrated into Meta, and the precise location and control of Manus code, data and intellectual property are not established by the cited reporting. Nor does the available information settle whether Butterfly Effect continues as an independent business in its prior form.
For other Chinese AI startups, the practical lesson is narrower than “move to Singapore” or “a move never works.” Internationalizing early may help a business serve global markets and raise capital, but it is not a substitute for a transparent ownership chain, clear technology provenance, well-documented data practices and a realistic assessment of regulatory reach in every country connected to the company.
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