Operating AI proxy sites to resell foreign large model APIs at low prices is illegal: a Shanghai operator was criminally detained

Cost: There is no direct monetary cost, but you give up a seemingly easy side business with decent revenue potential. If you truly want to aggregate models, you must follow legal channels — obtaining operating permits and authorized model access will require both time and money.

In plain terms: AI proxy sites are platforms that resell foreign large model APIs at low prices. In Shanghai, one site operator was criminally detained for 37 days; after being released on bail, he stated he would definitely be sentenced and has already returned illicit profits. The Ministry of State Security also warned that many such sites lack proper operating licenses and illegally transmit user data overseas.

Benefit: The Ministry of State Security issued a risk warning in June 2026 stating that AI proxy sites act as intermediaries between users and official model providers. Numerous sites operate without proper licensing; some transmit user data abroad without obtaining required data-export clearance or undergoing mandatory security assessments, and they even help users bypass domestic network restrictions, official authorization rules, and cross-border transmission limits. A June 2026 article in China Newsweek described a specific case: in May 2026, a Shanghai proxy site operator posted a shutdown notice on a tech forum, explaining he had been detained for 37 days by police for illegally obtaining large model APIs, and is now on bail. He confirmed he would be convicted, has returned all illicit gains, and will pay fines. These sites typically register or purchase foreign model subscriptions in bulk, set up overseas servers as relays, and then resell access to domestic users at low prices.

Evidence grade: C

Sources:国家安全部 (2026). 「AI中转站」，风险要防范. https://www.szzg.gov.cn/2026/xwzx/szkx/202606/t20260608_5331487.htm（数字中国建设峰会官网转载国家安全部微信公众号）；中国新闻周刊 (2026-06-22). AI中转站，面临整治「风暴」（记者孟倩）. https://www.chinanews.com/cj/2026/06-22/10644787.shtml（网页存档 https://web.archive.org/web/20261005042903/https://www.chinanews.com/cj/2026/06-22/10644787.shtml）

Notes: This case is documented only through media reports and the operator’s own statements; there is no court verdict or official police announcement, so the exact criminal charge remains unconfirmed. Reported charges and sentences circulating online originate from legal analyses and are not cited in this book. Therefore, while operating such proxy sites is illegal, we cannot claim it is a guaranteed crime. Legitimate model aggregation requires a business license, as explained in Section 26, Item 2; offering generative AI services to the public demands registration, as noted in Section 17. Data export abroad must comply with strict legal criteria outlined in Section 26, Item 10. Users of these proxy sites also face additional risks, detailed in Section 14, Item 10. Ultimately, any potential gains from such activities are outweighed by legal and security consequences.