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 acquisition deal at a $60 billion valuation. This deal is part of Elon Musk's strategy to enhance SpaceX's AI capabilities, particularly in AI coding tools, an area where the company currently lags behind competitors like OpenAI and Anthropic. The acquisition is contingent on SpaceX's planned initial public offering, which aims to achieve a $2 trillion valuation, with a potential breakup fee of $10 billion.
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. However, after FTX's collapse, the court-appointed estate sold the stake for the same $200,000, resulting in a significant loss of potential recovery for the estate's creditors. This incident has sparked debate, particularly from Bankman-Fried, who argues that the estate's decision to liquidate assets too quickly has destroyed billions in value, and that customers could have received more than their initial investments if the assets had been held. The case of the Cursor stake is a prime example, with a potential return of 15,000x, which could have significantly impacted the recovery for FTX's creditors.
The timing of this revelation is awkward for the bankruptcy administration, as it underscores the potential consequences of rapid asset liquidation. Meanwhile, FTX customers have been reimbursed in full, but they have not benefited from the substantial upside of the assets sold during the bankruptcy process, including the $3 billion potential recovery from the Cursor stake.