In April 2023, FTX's bankruptcy estate sold a 5% stake in AI coding startup Cursor for $200,000, a move that has become one of the largest missed recoveries in crypto history. This decision has been thrown into sharp relief by SpaceX's recent agreement to acquire Cursor at a valuation of $60 billion, which would make the stake worth approximately $3 billion today.

The deal is part of Elon Musk's efforts to enhance SpaceX's AI capabilities, particularly in the area of AI coding tools, where the company currently lags behind competitors like OpenAI and Anthropic. SpaceX has opted to delay the acquisition until later in the year, citing its planned initial public offering, which is targeting a $2 trillion valuation. The $10 billion breakup fee will be paid if the full acquisition does not proceed.

The crypto aspect of this story revolves around Alameda Research, a trading firm founded by Sam Bankman-Fried, which invested $200,000 in Anysphere, the company behind Cursor, in April 2022. This investment secured roughly 5% of the company at a $4 million valuation. However, following FTX's collapse, the court-appointed estate sold the Cursor stake for the same $200,000, resulting in a significant loss of potential value for the creditors.

The gap between the sale price and the current valuation represents a 15,000x return, which would have been realized by the creditors if the estate had held onto the stake. This development has awkward implications for FTX's bankruptcy administration, particularly in light of Sam Bankman-Fried's arguments that the estate's rapid liquidation of assets destroyed billions of dollars in value. Bankman-Fried has suggested that if the estate had retained its assets, FTX's net asset value could have reached $78 billion, and customers could have received more than their initial investments.

The Cursor stake's valuation has increased dramatically since its launch in early 2023, making it one of the steepest trajectories in software startup history. While FTX customers have been reimbursed in full, they have not benefited from the significant upside of the assets sold during the bankruptcy process, including the $3 billion potential value of the Cursor stake.

This example is likely to feature prominently in ongoing discussions about the case against Bankman-Fried and the campaign for his pardon.