Two Democratic senators have asked the Pentagon to immediately review reports that Chinese-linked investors may have covertly acquired stakes in SpaceX, citing potential national security risks. They requested disclosure of any Chinese ownership, assessment of FOCI mitigation needs, and consideration of CFIUS review, with a response requested by Feb. 20. The inquiry follows court filings showing a fund manager removed a Chinese investor and returned $50 million, and comes as SpaceX expands, including its acquisition of xAI.
Senators Urge Immediate Pentagon Review of SpaceX Over Alleged Secret Chinese Stakes
FILE PHOTO: SpaceX headquarters is shown in Hawthorne, California, U.S. June 5, 2025. REUTERS/Daniel Cole/File Photo
Feb 5 (Reuters) - Two Democratic U.S. senators have asked the Department of Defense to launch an immediate review of SpaceX following reports that investors with ties to China may have covertly acquired stakes in the privately held aerospace company. In a letter reviewed by Reuters, Senators Elizabeth Warren and Andy Kim warned the alleged transactions could present national security risks.
The senators addressed their concerns to Acting Defense Secretary Pete Hegseth, saying any Chinese investment in SpaceX "could pose a national security threat, potentially jeopardizing key military, intelligence, and civilian infrastructure." They asked the Pentagon to disclose the extent of any such ownership, assess whether SpaceX is subject to foreign ownership, control or influence (FOCI) mitigation requirements, and determine whether the investments should be referred to the Committee on Foreign Investment in the United States (CFIUS).
Reports and court testimony cited by the lawmakers indicate some investors with links to China routed funds through entities in the Cayman Islands and the British Virgin Islands to conceal purchases of SpaceX shares. The senators requested a formal response from the Department of Defense by Feb. 20.
Why it matters: SpaceX, founded by Elon Musk, plays a central role in U.S. national security infrastructure. The company launches military and intelligence satellites and operates the Starlink communications network, which is used by the Pentagon and has supported Ukraine's defense efforts. The senators said those roles make foreign stakes especially sensitive.
“Any degree of Chinese ownership might trigger FOCI rules given the risk of exposing sensitive technologies or information,” the senators wrote.
The letter also highlighted SpaceX’s recent acquisition of xAI — which Musk described as a broad, vertically integrated project spanning AI, rockets, space-based internet and communications — as a factor that increases the urgency of clarifying any foreign ownership.
Court filings show a Delaware judge last year upheld a fund manager's decision to remove a Chinese investor from a special-purpose vehicle (SPV) formed to buy SpaceX shares. Fund manager Iqbaljit Kahlon admitted Leo Investments, a publicly traded Chinese company, as a limited partner; SpaceX informed Kahlon the fund could not proceed while Leo remained involved. Kahlon removed the investor and returned its $50 million.
SPVs are commonly used to pool investor capital to buy shares in private companies, allowing multiple investors to hold a single combined stake and simplifying shareholder management. SpaceX did not immediately respond to a request for comment.
(Reporting by Echo Wang in New York; Editing by Stephen Coates)
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