SpaceX Secured Funding Directly from Chinese Investors, Insider Reveals to ProPublica

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spacex Received Direct Investment From China, Testimony Reveals

October 26, 2024

Washington D.C. – Elon Musk’s Space Exploration Technologies Corporation, commonly known as SpaceX, has received direct financial backing from Chinese investors, according to recently unsealed court testimony. This revelation introduces new complexities regarding foreign ownership in a vital U.S. defense contractor and has ignited debate about potential national security risks.

Details of The Investment Emerge

Iqbaljit Kahlon, a important investor in SpaceX, stated during a deposition last year that Chinese investors hold a direct stake in the company’s capitalization table. this marks the first official disclosure of direct Chinese investment in the privately-held aerospace manufacturer.While current regulations do not outright prohibit chinese ownership in U.S. military contractors, such investment undergoes intense scrutiny due to national security implications.

A Complex Ownership Structure

SpaceX maintains a closely-guarded ownership structure. Previously, reports indicated that Chinese investors had gained indirect ownership through intermediary funds. Though, Kahlon’s testimony suggests a more direct involvement, potentially deepening the financial ties between SpaceX and chinese entities. Kahlon, who facilitates investments in SpaceX for high-net-worth individuals, did not disclose the amount of the investment or the specific identities of the Chinese investors involved.

SpaceX’s Government Contracts And security Concerns

SpaceX has become a crucial partner for the U.S. government, securing contracts for building spy satellites for the Department of Defense and launching spacecraft for NASA.The company’s Starlink internet service is also utilized by U.S. embassies and the White House.With Musk’s estimated $168 billion stake – as of late 2024 – in SpaceX, even self-reliant of his other holdings, he remains one of the world’s wealthiest individuals. This concentration of power and the sensitive nature of SpaceX’s work raise significant concerns, particularly regarding potential espionage or the compromise of sensitive technologies.

National security experts emphasize that federal authorities will likely investigate the extent and nature of the Chinese investment. Sarah Bauerle Danzman, a professor at Indiana University specializing in foreign investment scrutiny, highlighted the risk of investors gaining access to non-public facts about SpaceX’s contracts and supply chain, which could be exploited by Chinese intelligence.

Routing Investments through Offshore Hubs

Further complicating matters, it has been reported that SpaceX permits chinese investments routed through locations like the Cayman Islands, jurisdictions known for financial secrecy. This practise, combined with limited reporting requirements, raises questions about clarity and oversight. In February 2025, house Democrats sent a letter to the Department of Defense expressing concerns about potential obfuscation of Chinese investment in SpaceX, though no immediate action was taken.

Investment Details & Key Players

kahlon’s network of investors spans the globe with reported investment origin from countries including Russia, Qatar, Malaysia and China. Allegedly, kahlon initially expressed reservations about accepting funds from China in 2021, but later personally solicited investments from Shanghai-based companies promising privileged access to SpaceX developments. A $50 million investment from a Shanghai firm was reportedly canceled after coming to light.

Investor Origin	Reported Involvement
China	Direct investments through Kahlon’s network, potential access to SpaceX information.
Qatar	Funds from the Qatari royal family reportedly invested via Kahlon.
Russia	Investor identified within Kahlon’s network.
United States	Kahlon and other venture capitalists with close ties to Elon Musk.

Did You Know? SpaceX allows investments from China provided that the money passes through the Cayman Islands or similar offshore financial centers.

Pro Tip: Understanding the complex web of investment and ownership is crucial to evaluating a company’s long-term stability and potential vulnerabilities.

SpaceX did not respond to requests for comment. Kahlon declined to provide further information.

The Broader Context of Foreign Investment in U.S. Tech

The situation with SpaceX exemplifies a growing trend: the increasing scrutiny of foreign investment in critical U.S.technology sectors. The committee on Foreign Investment in the United States (CFIUS) plays a key role in reviewing transactions that could result in foreign control of a U.S.business. However,navigating these regulations can be complex,and loopholes sometimes exist. The Biden administration has taken steps to strengthen CFIUS’s authority, aiming to protect national security while fostering economic growth.

Frequently Asked Questions About spacex & Chinese Investment

• What is SpaceX’s role in U.S. national security? SpaceX provides essential services to the Department of Defense and NASA, including satellite launches and secure communications.
• is all foreign investment in U.S. companies restricted? No, but certain types of investments, particularly those from countries considered adversaries, are subject to rigorous review.
• What is a “cap table” in the context of SpaceX investment? It refers to the company’s capitalization table, a record of all shareholders and their respective ownership percentages.
• Why are the Cayman Islands relevant to this story? SpaceX reportedly allows Chinese investments to be routed through the Cayman islands, a known tax haven, potentially to obscure the origin of funds.
• What is CFIUS and what does it do? The Committee on Foreign Investment in the United States (CFIUS) reviews transactions that could result in foreign control of a U.S. business to determine the effect on national security.

What are your thoughts on the implications of foreign investment in critical U.S. infrastructure companies? Share your opinion in the comments below! Don’t forget to share this breaking story with your network.