SpaceX reportedly has a secret backdoor for Chinese investment
Elon Musk’s rocket firm SpaceX has allowed Chinese language buyers to purchase stakes so long as the funds are routed by way of the Cayman Islands or different offshore hubs, in line with reporting from ProPublica.
SpaceX is a defense contractor for the Pentagon, one which handles delicate work like constructing a categorized spy satellite tv for pc community. Funding from China raises national security concerns, because it may grant a international adversary entry to delicate navy expertise, intelligence, or provide chains.
The perception into SpaceX’s funding strategy surfaces new questions round Musk’s personal ties with China, notably amid reviews that the Pentagon briefed Musk on a possible conflict with China. The billionaire govt who’s main the cost to intestine federal spending has usually met with Communist Celebration officers in China to debate his business interests. Tesla’s Shanghai gigafactory builds about half of Tesla’s vehicles, and the nation makes up a major (if shrinking) chunk of its gross sales.
The main points of how SpaceX permits Chinese language buyers to purchase into the corporate got here to gentle by way of the testimony of its CFO, Bret Johnsen, and main investor Iqbaljit Kahlon throughout a current company dispute in Delaware.
The dispute centered round an aborted 2021 cope with a Chinese language agency that had deliberate to purchase $50 million of the corporate’s inventory. When the information turned public, SpaceX executives pulled out to keep away from potential issues with nationwide safety regulators.
Kahlon testified in December that SpaceX finds it “acceptable” for Chinese language buyers to purchase into the corporate by way of offshore autos, which are sometimes used to maintain buyers nameless.
Specialists who spoke to ProPublica stated this apply is troubling as a result of it’s a possible signal that the corporate is taking energetic steps to hide international possession pursuits. It’s unclear precisely why SpaceX does this; the corporate didn’t instantly reply to a request for remark.
Whereas passive, noncontrolling stakes from international buyers are welcome, it’s the Trump administration’s position that adversaries like China use hid funding methods to acquire applied sciences, IP, and leverage in strategic industries. In consequence, sometimes such investments could be vetted by the Committee on Overseas Funding in the US (CFIUS).
There’s no public document of SpaceX present process a proper CFIUS evaluate. TechCrunch has reached out to CFIUS and SpaceX to be taught extra.
ProPublica’s reporting follows an investigation from the Financial Times that discovered that Chinese language buyers are utilizing special-purpose autos to quietly funnel tens of millions into Musk-controlled firms, together with SpaceX, xAI, and Neuralink.
