In April 2023, FTX's bankruptcy estate sold a 5% stake in AI coding startup Cursor for $200,000, a valuation that has skyrocketed to approximately $3 billion following SpaceX's decision to acquire the company at a $60 billion valuation. This deal, announced by SpaceX, marks a significant turning point in the company's efforts to bridge the gap with competitors in the AI coding tools sector.
The acquisition is part of Elon Musk's strategy to enhance xAI, the AI company merged with SpaceX, which he recently acknowledged was lagging behind its competitors. SpaceX has chosen to delay the acquisition due to its planned initial public offering, which aims to achieve a $2 trillion valuation, with a $10 billion breakup fee serving as a safeguard. The connection to the crypto world lies in Alameda Research's $200,000 investment in Anysphere, the company behind Cursor, in April 2022.
This investment, which represented roughly 5% of the company at a $4 million valuation, was sold by the FTX estate for the same amount after the company's collapse. The stark contrast between the sale price and the current valuation of $3 billion underscores a missed opportunity of enormous proportions, with the return on investment potentially reaching 15,000 times the original amount.
This development comes at an awkward time for FTX's bankruptcy administration, as Sam Bankman-Fried, currently serving a 25-year federal sentence, has been arguing that the estate's rapid liquidation of assets destroyed billions of dollars in value. He has suggested that had the estate held onto these assets, customers could have received more than full compensation. The Cursor stake's trajectory, from its launch in early 2023 to its current valuation, is one of the most remarkable in software startup history.
While FTX customers have been repaid in full, they have not benefited from the significant upside of the assets sold during the bankruptcy process, including the $3 billion potential value of the Cursor stake. This example is likely to feature prominently in ongoing discussions about the case against Bankman-Fried and the campaign for his pardon.