Pentagon asked to probe SpaceX for potential Chinese ownership

Two Democratic US senators urged the Pentagon on Thursday to conduct an immediate review of SpaceX amid allegations that Chinese investors have secretly acquired stakes in the closely held rocket maker, citing potential national security risks, according to a letter seen by Reuters.

Senators Elizabeth Warren and Andy Kim wrote to Defense Secretary Pete Hegseth expressing concern that Chinese investment in SpaceX could present "a national security threat, potentially jeopardizing key military, intelligence, and civilian infrastructure."

The lawmakers cited media reports and court testimony suggesting that investors with ties to China routed funds through entities in the Cayman Islands and British Virgin Islands to mask purchases of SpaceX shares.

Founded by Elon Musk, the world's richest man, SpaceX plays a central role in US national security infrastructure, launching military and intelligence satellites and operating its Starlink communications network, which is used by the Pentagon and to support Ukraine's defense.

SpaceX did not immediately return a request for comment.

The senators warned that any Chinese ownership could trigger US rules governing foreign ownership, control or influence, known as FOCI, given the potential exposure of sensitive information or technologies.

The letter asked the Department of Defense to disclose the extent of any Chinese ownership, assess whether SpaceX is subject to FOCI mitigation requirements, and determine whether foreign investments should be reviewed by the Committee on Foreign Investment in the United States. The senators requested a response by February 20.

SpaceX’s recent acquisition of xAI, which Musk has described as “the most ambitious, vertically integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile communications, and the world’s foremost real-time information and free speech platform,” adds to the immediacy of questions about Chinese investment in the company, the senators argued.

A Delaware court last year backed a fund manager's decision to remove a Chinese investor from a fund set up to buy SpaceX shares, according to court filings.

Iqbaljit Kahlon, who managed the fund, had admitted Leo Investments, a publicly traded Chinese company, as a limited partner. SpaceX told Kahlon the fund could not purchase shares if Leo remained involved, prompting him to remove the investor and return its $50 million.

The fund was structured as a special-purpose vehicle (SPV), a common way for investors to pool money to buy shares in private companies like SpaceX. SPVs let multiple investors combine capital into a single ownership stake, making it easier to trade smaller slices of stock without the company having to deal with a large number of individual shareholders.

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