The value of a 5% stake in AI coding startup Cursor, sold by FTX's bankruptcy estate for $200,000 in April 2023, has surged to 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 due to the sale of its assets during bankruptcy proceedings. SpaceX's acquisition of Cursor is part of Elon Musk's efforts to enhance his company's capabilities in AI coding tools, an area where xAI, a Musk-run AI company, is currently lagging behind competitors. The deal has been structured to allow SpaceX to either acquire Cursor for $60 billion later this year or pay a $10 billion breakup fee, with the latter serving as a contingency plan as SpaceX prepares for its initial public offering, targeting a $2 trillion valuation.
The Cursor stake was initially acquired by Alameda Research, a trading firm founded by Sam Bankman-Fried, for $200,000 in April 2022, representing a 5% ownership in the company at a $4 million valuation. However, following FTX's collapse and subsequent bankruptcy, the court-appointed estate sold the stake for the same $200,000, resulting in a missed opportunity for creditors. This incident has been cited by Bankman-Fried, currently serving a 25-year federal sentence, as an example of the estate's destruction of billions of dollars in value due to the rapid liquidation of assets during the bankruptcy process.
He has argued that had the estate held onto these assets, customers could have received more than their initial investments. The trajectory of Cursor's valuation, from $4 million to $60 billion in just three years, is one of the steepest in software startup history, and the $3 billion forgone recovery from the sale of the Cursor stake has become a significant point of contention in the ongoing discussions about FTX's bankruptcy and its handling of assets.