In April 2023, FTX's estate sold a 5% stake in AI coding startup Cursor for $200,000, a valuation that has skyrocketed to approximately $3 billion following SpaceX's recent agreement to acquire the company at a $60 billion valuation. This significant increase in value has brought attention to one of the largest missed recoveries in crypto history. The deal is part of Elon Musk's efforts to enhance SpaceX's AI capabilities, particularly in AI coding tools, where the company currently lags behind competitors like OpenAI and Anthropic.
The acquisition is contingent upon SpaceX's planned initial public offering, which aims for a $2 trillion valuation, with a potential $10 billion breakup fee if the full acquisition does not proceed. 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, then valued at $4 million. After FTX's collapse, the court-appointed estate sold the stake for the same $200,000, resulting in a substantial loss of potential recovery for the estate's creditors.
This missed opportunity has sparked debate, particularly from Bankman-Fried, who argues that the estate's rapid liquidation of assets, including the Cursor stake, destroyed significant value that could have been realized if the assets were held longer. The Cursor stake's valuation increase represents a 15,000x return, a substantial upside that was not realized by the estate's creditors.
The timing of this revelation is awkward for FTX's bankruptcy administration, as it highlights the potential consequences of forced asset sales during the bankruptcy process. While FTX customers have been repaid in full, the estate's handling of assets like the Cursor stake has raised questions about the potential for greater recoveries if assets were held for longer periods. This issue is likely to feature prominently in ongoing discussions about the bankruptcy and its management.