FTX's SpaceX Stake Now a Rocket 🚀 for Creditor Payouts

FTX's investment in SpaceX, held via venture firm K5 Global, is emerging as a significant asset in the collapsed crypto exchange's bankruptcy proceedings, with creditor advocates pointing to Elon Musk's company's soaring post-IPO valuation as a potential driver of higher recoveries. SpaceX shares hit a new high on Tuesday after the company announced a $60 billion all-stock deal to acquire AI coding startup Cursor, extending a rally that has pushed the stock above $210 per share, according to MarketWatch. The acquisition was disclosed in a Form 8-K filed with the U.S. Securities and Exchange Commission.

Creditor advocate Kyle Schmidt, known as "Mr. Purple," estimated that final distributions could total 171% of claims for customers who had claims above $50,000, a figure reflecting a surplus derived from the estate's asset liquidations and accrued interest. Barbara Fried, mother of FTX co-founder and former CEO Sam Bankman-fried, highlighted the estimate in a blog post dedicated to telling the "untold story" of her son, who recently lost a bid to overturn his 25-year prison sentence and fraud conviction. "It's always great news seeing good investments that could help recovery and payment to FTX creditors," Sunil Kavuri, a British investor who lost around $2 million to FTX's collapse, told Decrypt. The defunct exchange has doled out $10.3 billion to customers.

FTX's recovery trust CEO John J. Ray III unveiled a settlement with K5 Global in January of last year that resolved a lawsuit the exchange had brought in June 2023, with both parties agreeing to work together to maximize recoveries for FTX stakeholders. The lawsuit had sought to claw back $700 million in transfers that FTX had allegedly made with misappropriated funds. "It is clear that K5 is a bright spot in the FTX portfolio," Ray said in a statement. "The expected strong performance of their investments will be a key driver in the recovery efforts." K5 Global still lists SpaceX in its portfolio, and the venture firm's SpaceX stake, originally part of the FTX estate, has appreciated substantially as Musk's company traded far above its initial market valuation of $1.77 trillion.

The estate's SpaceX-linked holdings have drawn particular attention as SpaceX completed its Wall Street debut, a milestone that creditors said could translate into meaningful returns on top of distributions already made. Decrypt reached out to FTX's bankruptcy estate and K5 Global for comment but did not immediately receive a response from either party.