This chapter examines the origins and consequences of Operation 1027 within Myanmar’s evolving conflict landscape, focusing on the Kokang region’s role in the rise and collapse of ceasefire governance. It argues that the former political-economic system, characterized by resource-sharing, provided temporary stability while embedding structural vulnerabilities. These vulnerabilities unraveled under the pressures of illicit digital economies, contested authority, and shifting alliances. The failed 2009 Border Guard Force initiative fractured relations between the Myanmar National Democratic Alliance Army (MNDAA) and the central military, laying the groundwork for renewed resistance. Over the subsequent decade, the proliferation of cyber scams and illicit economies undermined both state and militia authority, generating new grievances and opportunities for armed groups. Drawing on archival materials, interviews, and cross-verified sources, the chapter reconstructs the planning and execution of Operation 1027, demonstrating that it represented not only a military breakthrough but also a direct challenge to a deteriorating system of governance. More broadly, the chapter contributes to debates on rebel governance by showing how the erosion of ceasefire arrangements and the rise of digitalized conflict economies have reshaped patterns of war and authority in Myanmar’s borderlands.