Two Democratic senators have called on the Pentagon to immediately investigate Elon Musk’s company SpaceX on suspicion of collaborating with the enemy. The reason for this is concern about possible secret investments by China in a key rocket manufacturer and satellite operator.
Senators Elizabeth Warren and Andy Kim sent a letter to Defense Secretary Lloyd Austin. They expressed concern that investors linked to China could have acquired shares in the private company SpaceX through offshore companies in the Cayman Islands and the British Virgin Islands. In their opinion, this poses a risk to US national security.
Why is SpaceX a matter of national security?
SpaceX is not just a commercial company. It is a critical partner of the Pentagon: it launches military and reconnaissance satellites, provides communications through the Starlink network, and supports Ukraine’s defense in its active fight against the aggressor. Any potential foreign influence, especially from a strategic competitor such as China, could lead to the leakage of secret technologies.
Lawmakers insist that such investments should be subject to strict rules regarding foreign ownership, control, or influence (FOCI). They are demanding that the Department of Defense disclose the extent of Chinese ownership in SpaceX and assess the need for regulatory authorities to review the agreement.
Precedent with a court case
The problem is not hypothetical. In 2023, a Delaware court upheld the fund manager’s right to exclude Chinese investment company Leo Investments from a special purpose vehicle (SPV) created to purchase SpaceX shares. Musk’s company reported that it could not sell the fund’s shares to the Chinese investor. As a result, the Chinese company was refunded the $50 million it had invested.
An SPV is a common tool for investing in private companies, allowing the capital of many investors to be pooled, thereby simplifying the buying and selling process.
Waiting for a response
Senators have set a deadline of February 20 for the Pentagon to respond. This issue takes on added relevance in light of SpaceX’s recent acquisition of xAI, a company that consolidates cutting-edge technologies in the fields of artificial intelligence, space, and communications.
SpaceX has not yet commented on the allegations. Now it is up to the Pentagon to determine whether US national interests have indeed been placed at risk.
Earlier, we reported on how SpaceX stopped Russian drones carrying Starlink.
According to Reuters
