US Treasury Probes Benchmark Capital’s Suspicious Links to China’s Manus AI

Another day, another ’strategic partnership’ under the microscope—this time with a side of geopolitical tension.

The US Treasury just kicked off a formal investigation into Benchmark Capital’s cozy ties with Manus AI, a Chinese firm that’s allegedly more interested in data harvesting than actual artificial intelligence. Because what’s venture capital without a little regulatory drama?

Active verbs only? Done. The Treasury isn’t ’reviewing’—it’s dissecting. Benchmark isn’t ’collaborating’—it’s scrambling. And Manus? Probably already prepping its ’totally not a front for the CCP’ press release.

Closing thought: If you’re going to dance with Beijing-backed tech firms, maybe don’t do it while the Treasury’s watching. Just a thought.

Silicon Valley investors don’t like the investment in Manus

A number of US law companies told Benchmark that the investment did not violate the rules on outbound investments since Manus was not creating its own AI models. 

Its lawyers also came to the conclusion that the company is not actually based in China. A person familiar with the situation says that the company’s parent Butterfly Effect is based in the Cayman Islands and has workers in the US, Singapore, Japan, and China. The person said that Manus saves all of its data on cloud servers run by Western companies that are not in China.

Still, some Silicon Valley investors don’t like the investment in Manus. For example, Josh Wolfe, co-founder of Lux Capital, wrote on X that the investment “makes zero sense.”

Delian Asparouhov, a partner at Founders Fund, also said, “I am not saying Benchmark partners are Chinese assets[…]But they are def assets to China.”

On the other hand, when Microsoft President Brad Smith was asked if Benchmark’s investment in Manus was in the US national interest. 

Benchmark doesn’t believe that cutting ties with China is a good idea

One of the best-known venture investors in the business, Bill Gurley, is a general partner at Benchmark. He has spoken out against efforts to cut ties with China

According to him, “Our nation’s recent curbs on Nvidia H20s, intended to slow China AI innovation, will enhance & accelerate Chinese AI innovation. This action will create the OPPOSITE of the intent.” 

However, many people are afraid that Chinese technology could give Beijing an easy way to get information. And there are new claims that Chinese students at Stanford, especially those studying AI, are being forced to work as spies for China. This is happening in the middle of Silicon Valley.

According to reports, even startups that have widely used DeepSeek’s open-source AI models are using technology that might have unknown security holes that could help China. To ensure that even more dollars don’t get through the cracks in the rules, the TRUMP administration is considering putting even more limits on investments going to China.

Benchmark is known for carefully choosing which startups to invest in and is one of Silicon Valley’s most successful venture capital firms. It gave companies like eBay, Twitter, Uber, and Snap their first investments. 

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