In April 2023, FTX’s bankruptcy estate sold a 5% stake in AI coding startup Cursor for $200,000, which is now valued at approximately $3 billion following SpaceX’s acquisition agreement this week. SpaceX announced its intent to buy Cursor for up to $60 billion or pay a $10 billion breakup fee if the purchase does not go through. This move by founder Elon Musk aims to compete with AI coding tools developed by OpenAI and Anthropic, areas where his company xAI, now merged with SpaceX, is reportedly lagging.
The acquisition will be deferred due to SpaceX’s upcoming IPO targeting a $2 trillion valuation, with the breakup fee serving as a financial safeguard. Originally, in April 2022, Alameda Research, associated with FTX and founded by Sam Bankman-Fried, invested $200,000 for about 5% of Cursor at a $4 million valuation through Anysphere, Cursor’s parent company. By April 2023, amid FTX’s collapse, the bankruptcy estate sold the stake for the same amount Alameda had initially paid.
This sale means that whoever acquired the stake from the bankruptcy realized a potential 15,000x return, rather than creditors of the estate who could have benefited significantly more. Sam Bankman-Fried, serving a 25-year sentence in federal prison, has contended that FTX’s rapid asset liquidation during bankruptcy destroyed billions in value and that customers might have been fully compensated had assets not been sold at crypto market lows.
In February, he projected an $78 billion net asset valuation for FTX if the estate had retained its holdings through the subsequent recovery period rather than selling them between 2023 and 2024. Cursor’s AI coding tool was launched in early 2023, marking a meteoric rise to its current valuation.
FTX customers have been compensated in dollar terms under the bankruptcy distribution plan, receiving their claim values plus interest, though they missed out on potential asset value appreciation, such as the $3 billion increase of the Cursor stake. Bankman-Fried’s parents continue advocating for his pardon, citing full repayment to FTX customers and arguing that the case against him should be revisited. The significant appreciation in Cursor’s valuation exemplifies the argument that the estate’s forced liquidation destroyed substantial value.