Following SpaceX's agreement to acquire Cursor at a $60 billion valuation, it has been revealed that a 5% stake in the AI coding startup, sold by FTX's bankruptcy estate for $200,000 in April 2023, would now be worth approximately $3 billion. This substantial increase in value has brought attention to the estate's decision to liquidate assets during the bankruptcy process.
The investment in Cursor was initially made by Alameda Research, a trading firm founded by Sam Bankman-Fried, in April 2022, with a $200,000 investment buying roughly 5% of the company at a $4 million valuation. After FTX's collapse, the court-appointed estate sold the stake for the same $200,000, resulting in a significant loss of potential recovery for creditors.
The timing of this sale has been criticized, particularly by Bankman-Fried, who argues that the estate's decision to liquidate assets too quickly destroyed billions in value. The Cursor stake's valuation increase represents a 15,000x return, highlighting the potential upside that could have been realized if the estate had held onto the assets. This example is likely to feature prominently in ongoing discussions about the handling of FTX's bankruptcy and the potential for a pardon for Bankman-Fried.