The bankruptcy estate of FTX sold a 5% stake in AI coding startup Cursor for $200,000 in April 2023, a stake that would now be worth approximately $3 billion following SpaceX's agreement to acquire the company at a $60 billion valuation. This development has brought attention to the significant losses incurred by FTX's estate, which has been a subject of controversy, particularly with regards to the handling of assets during the bankruptcy process. SpaceX's planned acquisition is part of Elon Musk's strategy to enhance his company's AI capabilities, specifically in AI coding tools, an area where he has acknowledged that his company lags behind competitors. The deal includes an option for SpaceX to acquire Cursor for $60 billion later this year or pay $10 billion if the full acquisition does not proceed, with the latter serving as a breakup fee as SpaceX prepares for an initial public offering targeting a $2 trillion valuation.
The crypto aspect of this deal is rooted in Alameda Research's $200,000 investment in Anysphere, the company behind Cursor, in April 2022, which bought about 5% of the company at a $4 million valuation. After FTX's collapse, the court-appointed estate sold the Cursor stake for the same $200,000, missing out on a potential 15,000x return. This oversight has significant implications, particularly for FTX's creditors, who were supposed to benefit from the estate's asset management. The situation is further complicated by Sam Bankman-Fried's arguments from prison that the estate's quick liquidation of assets destroyed billions in value, and that a more patient approach could have yielded better outcomes for customers.
The Cursor stake's valuation increase is among the steepest in software startup history, highlighting the potential value that could have been realized. While FTX customers have been reimbursed in full according to the bankruptcy distribution plan, they did not benefit from the upside of the assets sold during the bankruptcy process, including the significant increase in value of the Cursor stake. This case is likely to feature prominently in ongoing discussions about the handling of FTX's assets and the implications for all parties involved.