The United States is currently reviewing Benchmark's investment in the Chinese AI startup Manus. Manus AI has been making waves as one of the leading AI agent companies, having recently secured $75 million in funding at a valuation of $500 million. The financing round was led by Benchmark, a prominent venture capital firm. However, according to two sources familiar with the matter, the U.S. Treasury Department is scrutinizing the investment to ensure it complies with new restrictions introduced in 2023 that limit American investments in Chinese companies. These regulations aim to address national security concerns and protect sensitive technologies. Benchmark's legal team initially approved the investment, reasoning that Manus does not technically develop its own AI models. Instead, Manus acts as a "wrapper" around existing AI technologies, integrating them into user-friendly applications. Additionally, the company is registered in the Cayman Islands, which the lawyers argued disqualifies it from being considered a Chinese entity. This corporate structure is commonly used by Chinese companies to attract foreign capital, as seen with giants like Alibaba. Despite these legal justifications, Benchmark's decision has faced criticism. Founders Fund partner Delian Asparouhov expressed his skepticism on the social media platform X, posting, "Wow, actions have consequences? I’m hearing about this for the first time." At the time of reporting, neither Benchmark, Manus, nor the U.S. Treasury Department had responded to requests for comment. The outcome of the review will likely have significant implications for both the company and the broader landscape of U.S.-China tech investments. The case highlights the complex and evolving nature of international tech regulations, particularly those involving AI. It underscores the challenges faced by venture capitalists and startups as they navigate a rapidly changing legal environment, where even seemingly minor details can trigger major reviews. The scrutiny of Manus AI by the U.S. Treasury serves as a cautionary tale for investors looking to capitalize on emerging markets while adhering to stringent regulatory standards.