In April 2023, FTX's bankruptcy estate sold a 5% stake in AI coding startup Cursor for $200,000, a valuation that would now be worth approximately $3 billion following SpaceX's agreement to acquire the company at a $60 billion valuation. The deal, announced this week, marks a strategic move by Elon Musk to bridge the gap with competitors in the AI coding tools sector. SpaceX has opted to delay the acquisition due to its planned initial public offering, which targets a $2 trillion valuation, with a $10 billion breakup fee serving as a contingency plan.
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 for a 5% stake in the company. However, after FTX's collapse, the court-appointed estate sold the stake for the same amount, resulting in a significant loss of potential recovery for creditors. This missed opportunity has sparked debate, particularly from Bankman-Fried, who argues that the estate's decision to liquidate assets too quickly destroyed billions in value, and that customers could have received more than their initial investments if the process had been handled differently.
The Cursor stake's valuation increase represents a 15,000x return, highlighting the potential consequences of the estate's actions. While FTX customers have been repaid in full, they did not receive the upside from the assets' subsequent appreciation, including the $3 billion forgone recovery from the Cursor stake.
This incident is likely to feature prominently in ongoing discussions about the case against Bankman-Fried and the handling of FTX's bankruptcy.