Elon Musk's private rocket company, SpaceX, has been allowing Chinese investors to buy stakes in the company, as long as the funds are routed through the Cayman Islands or other offshore hubs, according to a recent report by ProPublica. This revelation has raised significant national security concerns, as it could grant a foreign adversary access to sensitive military technology, intelligence, or supply chains.

SpaceX, a defense contractor for the Pentagon, handles sensitive work, including building a classified spy satellite network. The company's willingness to accept Chinese investment through offshore vehicles has sparked concerns that it may be taking active steps to conceal foreign ownership interests. Experts have warned that this practice could be a sign of concealed investment strategies, which are often used by adversaries like China to obtain technologies, intellectual property, and leverage in strategic industries.

The details of SpaceX's investment approach came to light through the testimony of its CFO, Bret Johnsen, and major investor Iqbaljit Kahlon during a recent corporate dispute in Delaware. The dispute centered around an aborted 2021 deal with a Chinese firm that had planned to buy $50 million of the company's stock. When the news became public, SpaceX executives pulled out to avoid potential problems with national security regulators.

Kahlon testified in December that SpaceX finds it "acceptable" for Chinese investors to buy into the company through offshore vehicles, which are often used to keep investors anonymous. This practice has raised eyebrows, as it is unclear why SpaceX would permit such investments, especially given the company's sensitive work with the Pentagon.

The Trump administration has taken a strong stance against concealed investment strategies, and it is the administration's position that adversaries like China use such tactics to obtain technologies, IP, and leverage in strategic industries. As a result, typically such investments would be vetted by the Committee on Foreign Investment in the United States (CFIUS). However, there is no public record of SpaceX undergoing a formal CFIUS review.

ProPublica's reporting follows an investigation from The Financial Times that found that Chinese investors are using special-purpose vehicles to quietly funnel millions into Musk-controlled companies, including SpaceX, xAI, and Neuralink. This has sparked concerns about Elon Musk's own ties with China, particularly amid reports that the Pentagon briefed Musk on a potential war with China. Musk has regularly met with Communist Party officials in China to discuss his business interests, and Tesla's Shanghai gigafactory builds about half of Tesla's cars, with the country making up a significant chunk of its sales.

The implications of SpaceX's investment approach are far-reaching, and it remains to be seen how the company will respond to these concerns. As a defense contractor handling sensitive work, it is crucial that SpaceX prioritizes national security and transparency in its investment practices. The lack of clarity around the company's motivations and the potential risks associated with concealed investment strategies only add to the uncertainty surrounding this issue.

In the coming days, TechCrunch will continue to investigate this story and provide updates as more information becomes available. In the meantime, the lack of transparency and accountability in SpaceX's investment practices raises important questions about the company's commitment to national security and its role as a defense contractor.