The black list is a newline delimited file of wallet addresses. It can also support comments with the # character.
By default, the harmony binary looks for the file ./.hmy/blaklist.txt.
one1spshr72utf6rwxseaz339j09ed8p6f8ke370zj
one1uyshu2jgv8w465yc8kkny36thlt2wvel89tcmg # This is a comment
one1r4zyyjqrulf935a479sgqlpa78kz7zlcg2jfen
Each transaction added to the tx-pool has its to and from address checked against this blacklist.
If there is a hit, the transaction is considered invalid and is dropped from the tx-pool.