The value of a 5% stake in AI coding startup Cursor, sold by FTX's bankruptcy estate for $200,000 in April 2023, would now be approximately $3 billion following SpaceX's agreement to acquire the company at a $60 billion valuation. This development comes as SpaceX, led by Elon Musk, aims to close the gap with competitors in AI coding tools through this strategic acquisition.
The deal allows SpaceX to either purchase Cursor for $60 billion later this year or pay $10 billion if the acquisition does not proceed, with the latter serving as a breakup fee as SpaceX prepares for its initial public offering targeting a $2 trillion valuation. The cryptocurrency aspect of this transaction involves Alameda Research, founded by Sam Bankman-Fried, which initially invested $200,000 in Anysphere, the company behind Cursor, in April 2022. This investment secured about 5% of the company at a $4 million valuation. However, after FTX collapsed and Alameda and FTX entered bankruptcy, the court-appointed estate sold the Cursor stake for the same $200,000, missing out on a potential 15,000x return.
The timing of this sale is particularly noteworthy given Bankman-Fried's arguments that the FTX estate prematurely liquidated assets, potentially destroying billions in value, and that customers could have been fully compensated if the process had retained positions instead of selling them at the bottom of crypto prices. The trajectory of Cursor, which launched its AI coding product in early 2023, represents one of the steepest valuations in software startup history, rising from a $4 million valuation to a $60 billion valuation in just three years.
While FTX customers have been reimbursed in full plus interest under the bankruptcy distribution plan, they did not benefit from the upside of the assets sold, including the significant increase in value of the Cursor stake. This example is likely to be central to Bankman-Fried's claims and his family's advocacy for a pardon, highlighting the potential value destroyed by the forced selling of assets during the bankruptcy process.