Manus AI is one of the hottest AI agent startups around, recently raising $75 million at a half-billion-dollar valuation in a round led by Benchmark.

But two unnamed sources told Semafor that the investment is now under review by the U.S. Treasury Department over its compliance with 2023 restrictions on investing in Chinese companies.

Benchmark’s lawyers cleared the investment because Manus isn’t technically developing its own AI models, but is instead a “wrapper” around existing ones, Semafor reported. 

Those lawyers also concluded Manus is not China-based since it’s incorporated in the Cayman Islands. (That’s a common structure used by Chinese companies, like Alibaba, to access foreign capital.)

Benchmark has attracted criticism for its Manus investment from Founders Fund partner Delian Asparouhov, who posted on X “wow, actions have consequences?”.