Elon Musk’s Rocket Company SpaceX has enabled Chinese investors to buy the stock as long as the funds are routed through the Cayman Islands and other offshore hubs, according to a report from ProPublica.
SpaceX is the Pentagon defense contractor and handles sensitive tasks such as building classified spy satellite networks. Investments from China raise national security concerns as they could grant foreign hostile access to sensitive military technology, intelligence reports, or supply chains.
SpaceX’s insight into investment approach surfaces new questions about Musk’s own relationship with China, particularly in reports that the Department of Defense has explained to Musk about a potential war with China. The billionaire executive who leads the charges to Gat Federal expenditure met with Chinese Communist Party officials regularly to discuss his business interests. Tesla’s Shanghai Giga Factory has built about half of Tesla’s cars, and the country makes up a major (if it’s shrinking) in sales.
Details about how SpaceX will enable Chinese investors to participate in the company were revealed through testimony from CFO Bret Johnsen and leading investor Iqbaljit Kahlon in the recent corporate dispute in Delaware.
The dispute centers around a 2021 contract with a Chinese company that had planned to buy $50 million in the company. When the news came out, SpaceX executives retreated to avoid potential issues with national security regulators.
Kahlon testified in December that SpaceX is “acceptable” for Chinese investors to buy into the company via offshore vehicles.
Experts who spoke to Propublica said the practice was troubling as it is a potential indication that the company is taking aggressive steps to conceal foreign ownership. It is unclear exactly why SpaceX does this. The company did not immediately respond to requests for comment.
Passive and non-dominant interests from foreign investors are welcome, but it is the Trump administration’s position that enemies like China use hidden investment strategies to gain technology, IP and utilization in strategic industries. As a result, such investments are usually reviewed by the Committee on Foreign Investment in the United States (CFIU).
There are no official records of SpaceX that have received formal CFIUS reviews. TechCrunch contacted CFIUS and SpaceX to find out more.
Propublica’s report follows a survey from the Financial Times, which found Chinese investors quietly leaking millions of people to Musk-Controlled companies, including SpaceX, Xai and Neuralink.
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