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Chinese holo fans already had a pile of grievances, and Coco was just the trigger
The holomembers weren't streaming on Bilibili enough or giving the CN audience enough attention. They used the Coco Taiwan controversy to try to show that they're an audience with a voice that should be heard. Unfortunately for them, that was a very poor choice to use as the main object of protest because global sentiment towards Chinese super patriotism is very poor and nobody else in the world was sympathizing with them. The Chinese fans then escalated it further into harassment and threats (fire Coco or else etc.). At this point the behavior was viewed so negatively, that if Cover conceded, then all fans outside of China would be giving Cover shit.
So Cover can either concede to the CN demands which would draw the ire of their main Japanese audience and their up and coming EN audience, or deny the CN demands which would essentially result in cutting ties with the CN audience. Cover chose the latter and HoloCN inevitably had to be shut down as well.
