.......

It's called Tuf-cloth. It's a rust inhibitor. I have them and I rub all my knives with it.
Reminds me of a machine shop.
 
I think it is the blade coating, my Izzy smells pretty bad and the coating is sticky after having it for a few months... I figure in time it will dry out...
 
tuf cloths are soaked in mineral spirits, no?

mineral spirits have a strong odor, but nothing like formaldehyde imo.
 
Wash it with dish soap a couple of times. The new resin smell will go mostly away.
I lube mine with mineral oil afterwards. No smell or rust issues.
 
Just got a Junglas and it stinks!...I mean it smells bad!...
It's obvious your Junglas has gone bad. You'll need to get a fresh one. Since this one is now spoiled, at least it'll serve for scrap metal. I'll give you a couple of bucks for it. What the heck. I'm into recycling. :D
 
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I think it is the blade coating, my Izzy smells pretty bad and the coating is sticky after having it for a few months... I figure in time it will dry out...

It's definitely the Micarta. My Izzy (along with my G10 equipped ESEEs) smells like crayons.
 
Micarta can be based on a number of resins. It's possible ESEE used a phenolic resin based Micarta. IIRC, one of the by-products of many phenolic cure reactions is formaldehyde. You might try washing the handle with rubbing alcohol (AKA isopropyl alcohol, isopropanol). That should help draw out any residuum.
 
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