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 protection contractor for the Pentagon, one which handles delicate work like constructing a categorised spy satellite tv for pc community. Funding from China raises nationwide safety issues, because it may grant a overseas adversary entry to delicate army know-how, intelligence, or provide chains.
The perception into SpaceX’s funding method surfaces new questions round Musk’s personal ties with China, significantly amid stories that the Pentagon briefed Musk on a possible battle with China. The billionaire govt who’s main the cost to intestine federal spending has often met with Communist Get together officers in China to debate his business interests. Tesla’s Shanghai gigafactory builds about half of Tesla’s automobiles, and the nation makes up a major (if shrinking) chunk of its gross sales.
The small print of how SpaceX permits Chinese language buyers to purchase into the corporate got here to mild by way of the testimony of its CFO, Bret Johnsen, and main investor Iqbaljit Kahlon throughout a latest 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 grew to become 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 automobiles, which are sometimes used to maintain buyers nameless.
Consultants who spoke to ProPublica stated this follow is troubling as a result of it’s a possible signal that the corporate is taking lively steps to hide overseas possession pursuits. It’s unclear precisely why SpaceX does this; the corporate didn’t instantly reply to a request for remark.
Whereas passive, non-controlling stakes from overseas 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 can be vetted by the Committee on International Funding in the USA (CFIUS).
There’s no public report 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 automobiles to quietly funnel hundreds of thousands into Musk-controlled corporations, together with SpaceX, xAI, and Neuralink.