SpaceX’s $60 billion acquisition of AI coding startup Cursor has exposed a significant financial misstep in the handling of FTX’s bankruptcy estate. The deal highlights a substantial loss in potential recovery for creditors.

FTX Bankruptcy and the Cursor Stake

In April 2023, FTX’s bankruptcy administrators sold a 5% stake in Cursor for just $200,000. Given SpaceX’s acquisition terms, that same stake is now estimated to be worth approximately $3 billion. This represents a 15,000x return on investment.

Missed Recovery Opportunity

The situation is fueling criticism of the estate’s liquidation strategy and is expected to be a central argument in ongoing legal battles surrounding Sam Bankman-Fried, the founder of FTX. Bankman-Fried and his family argue that the estate’s hasty liquidation destroyed billions in potential value.

SpaceX's Acquisition Details

SpaceX has the option to purchase Cursor later this year for $60 billion, or alternatively, pay a $10 billion breakup fee if the acquisition doesn’t proceed. This move aligns with Elon Musk’s ambitions in the AI coding tools landscape, as xAI, his AI company merged with SpaceX, aims to catch up to competitors like OpenAI and Anthropic.

Origins of the Investment

The Cursor stake originated in April 2022 when Alameda Research, Sam Bankman-Fried’s trading firm, invested $200,000 in Anysphere, the company behind Cursor, securing roughly 5% ownership at a $4 million valuation. Cursor launched its AI coding product in early 2023 and rapidly increased in value.

Impact on FTX Creditors and Future Arguments

FTX customers have been made whole regarding their initial claims plus interest, but they have not benefited from the substantial gains realized by the asset’s appreciation. The $3 billion potential recovery represents a significant loss against the $200,000 actually recovered.

Calls for Re-evaluation and Potential Pardon

Bankman-Fried’s family is advocating for a pardon, citing the estate’s mismanagement of assets. They claim that if the estate had held onto assets, FTX’s net asset value could have reached $78 billion. The Cursor example is presented as key evidence supporting these claims.

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