Elon Musk SpaceX has taken money directly from Chinese investors, said the initiate of the company

The recent testimony, coming from an initiate of SpaceX during a judicial case, marks the first time that direct Chinese investment in the private company was disclosed. Although there is no ban on Chinese property in American military entrepreneurs, such an investment is strongly regulated and the problem is treated by the US government as an important national security problem.

“They obviously have Chinese investors to be honest,” said Iqbaljit Kahlon, an important investor of SpaceX, in a deposition last year, adding that some are “directly on the CAP table”. “Cap Table” refers to the company’s capitalization table, which lists its shareholders.

Kahlon’s testimony does not reveal the scope of Chinese investments in SpaceX or the identity of investors. Kahlon has long been close to the business leaders and runs its own business which acts as an intermediary for rich investors who seek to buy SpaceX actions.

SpaceX maintains its complete property structure secret. It has already been reported that certain Chinese investors had bought indirect participations in SpaceX, investing in intermediate funds which in turn had shares in the rocket company. The new testimony describes direct investments that suggest a closer relationship with SpaceX.

SpaceX prospered while it increases sensitive contracts of the US government, the construction of spy satellites for the Pentagon at the launch of the spacecraft for NASA. American embassies and the White House have also connected to the company’s Internet Starlink service. The participation of around 42% of musk in the company is worth around 168 billion dollars. If he had nothing else, he would be one of the 10 richest people in the world.

Experts in national security law have said that federal officials are likely to be deeply interested in understanding direct Chinese investment in SpaceX. The question of knowing if there were concerns would depend on the details, they said, but the US government said that China had a systematic strategy to use investments in sensitive industries to spy.

If investors have had access to non -public information on the company – say, details on its contracts or its supply chain – it could be useful to Chinese information, said Sarah Bauerle Danzman, a professor of the University of Indiana who worked for the State Department by examining foreign investments. This “would create enormous risks which, if made, would have enormous consequences for national security,” she said.

SpaceX did not answer questions from this story. Kahlon refused to comment.

The new judicial files come from the dispute to the Delaware between Kahlon and another investor. The testimony was sealed until Propublica, with the help of lawyers from the Committee of Journalists for Press Freedom and Lawyer Shaw Keller, moved to the spring to make it public. SpaceX fought the effort, but a judge judged that some of the files should be published. Kahlon’s testimony was posted publicly this week.

The purchase of shares in SpaceX is much more difficult than buying a piece of a listed company like Tesla or Microsoft. SpaceX has control of who can buy challenges, and company investors are entering different categories. The most rarefied group is direct investors, who in fact have SpaceX actions. This group includes funds led by Kahlon, Peter Thiel, and a handful of other venture capital having personal links with musk. Then there are indirect investors, who actually buy issues in SpaceX through an intermediary like Kahlon. (Indirect investors actually buy a fund managed through, generally paying high costs.) All Chinese investors previously known in SpaceX fell into this last category.

This year, Propublica reported an unusual characteristic of the SpaceX approach to investment from China. According to the testimony of the Delaware affair, the company allows Chinese investors to buy participations in SpaceX as long as money is transported through the Cayman islands or other offshore secret centers. Companies have only to proactively report Chinese investments in government in limited circumstances, and there are no strict and rapid rules on the quantity too.

After Propublica’s report, the Democrats of the Chamber sent a letter to the Secretary of Defense, Pete Hegseth, claiming to be “the potential obscuration of the company”. “In the light of the extreme sensitivity of SpaceX’s work for DOD and NASA, this lack of transparency raises serious questions,” they wrote. We do not know if measures have been taken in response.

Kahlon transformed its access to SpaceX Stock into a lucrative business. His list of investors can be read like an atlas of the world. The names of investors are expurrated in the recently uncharted document, but their addresses extend from Chile to Malaysia. One is in Russia. At least two are in continental China. One is in Qatar. (In an email at the SpaceX financial director, Kahlon said that a fund based in Los Angeles had money from the Royal Qatari family and was already invested in SpaceX.)

“You made a fortune,” wrote a financier based in China in Kahlon four years ago. “Lol something like that. SpaceX was the gift that continues to give,” replied Kahlon. “All of this thank you.”

Kahlon met SpaceX for the first time when it was an emerging startup, according to the judicial archives. SpaceX’s financial director Bret Johnsen, who has been there for 14 years, testified that Kahlon “was with the company in a form or fashion longer than me”. Johnsen also testified that SpaceX has no official policy concerning the acceptance of investments in countries judged by opponents by the United States government. But he said that he asked fund managers to “stay away from Russian, Chinese, Iranian and North Korean participation” because it could make “more difficult to earn government contracts”.

There are indications that by 2021, Kahlon was wary of raising funds from China. The US government was increasingly concerned about Chinese investments in technological companies, and in June, Kahlon told a partner that he “was paint” with whom he would have let a new SpaceX opportunity buy. “Only people I want to have a long -term relationship. Nobody from Continental China,” said Kahlon.

But while he was running to assemble an investor pool, these concerns seemed to be fading. In November 2021, Kahlon personally collected China funds to buy SpaceX issues. He told a Shanghai -based company that if it was investing with it, it would obtain quarterly updates to the commercial development of SpaceX, “Visits To Spacex and the interview opportunities with the CFO of Espace X”, according to the judicial archives.

The Shanghai company finally sent $ 50 million to Kahlon to invest in Musk’s activities, according to the judicial archives. SpaceX had the agreement canceled after the plan became public.