In a surprising turn of events, a 5% stake in AI coding startup Cursor, sold by FTX's bankruptcy estate for $200,000 in April 2023, would now be worth approximately $3 billion following SpaceX's agreement to acquire the company at a $60 billion valuation. This deal, led by founder Elon Musk, aims to bridge the gap with competitors OpenAI and Anthropic in the AI coding tools sector. The acquisition is part of Musk's strategy to enhance xAI, the AI company he runs, which has been lagging behind its competitors. SpaceX has chosen to delay the acquisition due to its planned initial public offering, which targets a $2 trillion valuation, with the $10 billion serving as a potential breakup fee.
The crypto aspect of this story revolves around Alameda Research, founded by Sam Bankman-Fried, which invested $200,000 in Anysphere, the company behind Cursor, in April 2022. This investment purchased roughly 5% of the company at a $4 million valuation.
However, after FTX's collapse, the court-appointed estate sold the Cursor stake for the same $200,000, resulting in a significant loss for the creditors. The stake's current value of $3 billion, based on SpaceX's $60 billion price tag, represents a substantial 15,000x return, which was instead realized by the buyer from the bankruptcy rather than the creditors. This development has awkward timing for FTX's bankruptcy administration, as Bankman-Fried has been arguing from prison that the estate destroyed billions in value by liquidating assets too quickly during the bankruptcy. He has suggested that customers could have been made whole if the process had held positions instead of selling them into what turned out to be the bottom of crypto prices.
The trajectory of Cursor, which launched its AI coding product in early 2023, is one of the steepest in software startup history, with a valuation increase of $60 billion in just three years. While FTX customers have been repaid in dollar terms under the bankruptcy's distribution plan, they did not receive the upside from the assets' subsequent growth, including the $3 billion forgone recovery from the Cursor stake. This significant loss is likely to be highlighted by Bankman-Fried's family, who have been advocating for a pardon, and by Bankman-Fried himself in his letters from prison, as a prime example of the value destroyed by the estate's forced selling.