Its a Widgetworks vinyl drag knife replacement.
The photo on Amazon is blurry, but I recognized it immediately.
https://www.amazon.com/Degree-Replacement-Blade-WidgetWorks-Unlimited/dp/B007OWELKC
I use the tool on my CNC to cut vinyl. With the spindle turned off, the blade rotates based on the direction its going using small bearings inside the holder.
This is the actual tool the bit fits into:
https://www.widgetworksunlimited.com/CNC\_Sign\_Vinyl\_Drag\_Knife\_Bit\_p/cnc-vinyl\_knife.htm