In April 2023, the estate of FTX sold a 5% stake in AI coding startup Cursor for $200,000, a valuation that has since skyrocketed to approximately $3 billion following SpaceX's recent agreement to acquire the company at a $60 billion valuation. This significant increase in value underscores a substantial missed recovery for FTX's creditors. The deal is part of Elon Musk's strategy to enhance SpaceX's AI capabilities, particularly in AI coding tools, an area where Musk's xAI is currently lagging behind competitors like OpenAI and Anthropic. SpaceX has chosen to delay the acquisition due to its upcoming initial public offering, which targets a $2 trillion valuation, with a potential $10 billion breakup fee if the full acquisition does not proceed.
The investment in Cursor traces back to April 2022 when Alameda Research, founded by Sam Bankman-Fried, invested $200,000 in Anysphere, the company behind Cursor, acquiring a 5% stake at a $4 million valuation. Following FTX's collapse and subsequent bankruptcy, the estate sold the stake for the same $200,000, missing out on a potential 15,000% return. This oversight has significant implications, particularly in light of Bankman-Fried's arguments that the estate's rapid liquidation of assets during the bankruptcy destroyed billions in value, suggesting that a more strategic approach could have yielded better outcomes for creditors.
The trajectory of Cursor's valuation, from its AI coding product launch in 2023 to its current valuation, is among the most dramatic in software startup history, further emphasizing the missed opportunity. While FTX customers have been reimbursed in full, plus interest, under the bankruptcy distribution plan, they did not benefit from the substantial upside of the assets sold during the bankruptcy process, including the significant increase in value of the Cursor stake. This case is likely to be a focal point in ongoing discussions about the handling of FTX's assets during its bankruptcy.