In April 2023, FTX's estate sold a 5% stake in AI coding startup Cursor for $200,000, a valuation that would now be approximately $3 billion following SpaceX's recent agreement to acquire the company at $60 billion. This significant disparity has brought attention to the estate's handling of assets during the bankruptcy process. SpaceX's decision to acquire Cursor is part of Elon Musk's strategy to enhance his company's AI coding capabilities, an area where he acknowledges xAI, the AI company merged with SpaceX, lags behind competitors like OpenAI and Anthropic.

The deal allows SpaceX to either purchase Cursor later this year for $60 billion or pay $10 billion if the full acquisition does not proceed, with the latter serving as a breakup fee as SpaceX prepares for an initial public offering targeting a $2 trillion valuation. The investment in Cursor originated from Alameda Research, founded by Sam Bankman-Fried, which 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, following FTX's collapse and subsequent bankruptcy, the court-appointed estate sold the Cursor stake for the same $200,000, realizing a significantly lower value than its current worth. The gap between the sale price and the current valuation represents a 15,000x return, a sum that could have been recovered by the estate for the benefit of creditors but was instead realized by the buyer in the bankruptcy sale. This oversight has been cited by Bankman-Fried, currently serving a 25-year federal sentence, as an example of how the estate's rapid liquidation of assets destroyed billions in potential value for customers.

He has argued that had the estate held onto these assets, their value could have increased substantially, potentially making customers more than whole. The trajectory of Cursor from its launch in early 2023 to its current valuation is one of the most rapid in software startup history, further emphasizing the potential value that could have been realized. While FTX customers have been repaid in full plus interest under the bankruptcy distribution plan, they did not benefit from the upside of the assets sold during the bankruptcy process, including the significant increase in value of the Cursor stake.

This example is likely to feature prominently in discussions about the handling of FTX's assets during its bankruptcy.