In a surprising turn of events, a 5% stake in AI coding startup Cursor, sold by FTX's estate for $200,000 in April 2023, would now be worth approximately $3 billion following SpaceX's agreement to acquire the company at a $60 billion valuation. This development has brought to light a substantial missed recovery in crypto history. SpaceX has announced its intention to acquire Cursor later this year for $60 billion, or pay a $10 billion breakup fee if the full acquisition does not proceed, as part of Elon Musk's efforts to close the gap with OpenAI and Anthropic in the AI coding tools sector.
The deal is significant for Musk's xAI company, which he admitted is behind competitors in this area. The $10 billion breakup fee will be held off due to SpaceX's planned initial public offering, which is targeting a $2 trillion valuation. The crypto aspect of this story lies in the fact that Alameda Research, founded by Sam Bankman-Fried, invested $200,000 in Anysphere, the company behind Cursor, in April 2022. This investment bought roughly 5% of the company at a $4 million valuation.
However, after FTX's collapse, the court-appointed estate sold the Cursor stake for the same $200,000 Alameda had paid, resulting in a significant loss for creditors. The timing of this sale is particularly awkward for FTX's bankruptcy administration, as it has been argued that the estate destroyed billions in value by liquidating assets too quickly during the bankruptcy. Bankman-Fried has been vocal about his concerns, suggesting that customers could have been made more than whole if the process had held positions instead of selling them into what turned out to be the bottom of crypto prices. The Cursor stake's value has increased dramatically since its launch in early 2023, with the company's trajectory being one of the steepest in software startup history.
While FTX customers have been made whole in dollar terms under the bankruptcy's distribution plan, they did not receive the upside from the assets' increased value between the bankruptcy filing and now, including the $3 billion forgone recovery from the Cursor stake.