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Elon Musk’s SpaceX has taken money directly from Chinese investors, according to previously sealed testimony, raising new questions about foreign ownership interests in one of the United States’ most important military contractors.

The recent testimony, coming from a SpaceX insider during a court case, marks the first time direct Chinese investment in the privately held company has been disclosed. While there is no prohibition on Chinese ownership in U.S. military contractors, such investment is heavily regulated and the issue is treated by the U.S. government as a significant national security concern.

“They obviously have Chinese investors to be honest,” Iqbaljit Kahlon, a major SpaceX investor, said 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 investment in SpaceX or the identities of the investors. Kahlon has long been close with the company’s leadership and runs his own firm that acts as a middleman for wealthy investors looking to buy shares of SpaceX.

SpaceX keeps its full ownership structure secret. It was previously reported that some Chinese investors had bought indirect stakes in SpaceX, investing in middleman funds that in turn owned shares in the rocket company. The new testimony describes direct investments that suggest a closer relationship with SpaceX.

SpaceX has thrived as it snaps up sensitive U.S. government contracts, from building spy satellites for the Pentagon to launching spacecraft for NASA. U.S. embassies and the White House have connected to the company’s Starlink internet service too. Musk’s roughly 42% stake in the company is worth an estimated $168 billion. If he owned nothing else, he’d be one of the 10 richest people in the world.

National security law experts said federal officials would likely be deeply interested in understanding the direct Chinese investment in SpaceX. Whether there was cause for concern would depend on the details, they said, but the U.S. government has asserted that China has a systematic strategy of using investments in sensitive industries to conduct espionage.

If the investors got access to nonpublic information about the company — say, details on its contracts or supply chain — it could be useful to Chinese intelligence, said Sarah Bauerle Danzman, an Indiana University professor who has worked for the State Department scrutinizing foreign investments. That “would create huge risks that, if realized, would have huge consequences for national security,” she said.

SpaceX did not respond to questions for this story. Kahlon declined to comment.

The new court records come from litigation in Delaware between Kahlon and another investor. The testimony was sealed until ProPublica, with the assistance of lawyers at the Reporters Committee for Freedom of the Press and the law firm Shaw Keller, moved in the spring to make it public. SpaceX fought the effort, but a judge ruled that some of the records must be released. Kahlon’s testimony was publicly filed this week.

Buying shares in SpaceX is much more difficult than buying a piece of a publicly traded company like Tesla or Microsoft. SpaceX has control over who can buy stakes in it, and the company’s investors fall into different categories. The most rarefied group is the direct investors, who actually own SpaceX shares. This group includes funds led by Kahlon, Peter Thiel and a handful of other venture capitalists with personal ties to Musk. Then there are the indirect investors, who effectively buy stakes in SpaceX through a middleman like Kahlon. (The indirect investors are actually buying into a fund run by the middleman, typically paying a hefty fee.) All previously known Chinese investors in SpaceX fell into the latter category.

This year, ProPublica reported on an unusual feature of SpaceX’s approach to investment from China. According to testimony from the Delaware case, the company allows Chinese investors to buy stakes in SpaceX so long as the money is routed through the Cayman Islands or other offshore secrecy hubs. Companies only have to proactively report Chinese investments to the government in limited circumstances, and there aren’t hard and fast rules for how much is too much.

After ProPublica’s report, House Democrats sent a letter to Defense Secretary Pete Hegseth raising alarms about the company’s “potential obfuscation.” “In light of the extreme sensitivity of SpaceX’s work for DoD and NASA, this lack of transparency raises serious questions,” they wrote. It’s unclear if any action was taken in response.

Kahlon has turned his access to SpaceX stock into a lucrative business. His investor list reads like an atlas of the world. The investors’ names are redacted in the recently unsealed document, but their addresses span from Chile to Malaysia. One is in Russia. At least two are in mainland China. One is in Qatar. (In one email to SpaceX’s chief financial officer, Kahlon said a Los Angeles-based fund had money from the Qatari royal family and was already invested in SpaceX.)

“You made a big fortune,” a China-based financier wrote to Kahlon four years ago. “Lol something like that. SpaceX has been the gift that keeps on giving,” Kahlon responded. “All thanks to you.”

Kahlon first met with SpaceX when it was a fledgling startup, according to court records. SpaceX’s CFO, Bret Johnsen, who’s been there for 14 years, testified that Kahlon “has been with the company in one form or fashion longer than I have.” Johnsen also testified that SpaceX has no formal policy about accepting investments from countries deemed adversaries by the U.S. government. But he said he asks fund managers to “stay away from Russian, Chinese, Iranian, North Korean ownership interest” because that could make it “more challenging to win government contracts.”

There are indications that by 2021, Kahlon was wary of raising funds from China. The U.S. government had grown increasingly concerned about Chinese investments in tech companies, and that June, Kahlon told an associate he was “being picky” with who he’d let buy into a new SpaceX opportunity. “Only people I want to have a relationship with long term. No one from mainland China,” Kahlon said.

But as he raced to assemble a pool of investors, those concerns appeared to fade away. By November 2021, Kahlon was personally raising money from China to buy SpaceX stakes. He told a Shanghai-based company that if it invested with him, it would get quarterly updates on SpaceX’s business development, “visits to SpaceX, and the opportunities to interview with Space X’s CFO,” court records show.

The Shanghai company ultimately sent Kahlon $50 million to invest in Musk’s business, according to court records. SpaceX had the deal canceled after the plan became public.

Alex Mierjeski contributed research.

This story was originally published by ProPublica.

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Hegseth expands war on leaks. Washington Post: “The Pentagon plans to impose strict nondisclosure agreements and random polygraph testing for scores of people in its headquarters, including many top officials, according to two people familiar with the proposal and documents obtained by The Washington Post, escalating Defense Secretary Pete Hegseth’s war on leakers and internal dissent.” 

A draft memo from Deputy Defense Secretary Steve Feinberg says that all troops, civilian employees, and contract workers within the Office of the Defense Secretary and the Joint Staff—likely more than 5,000 people—would be required to sign a nondisclosure agreement that “prohibits the release of non-public information without approval or through a defined process.” 

Chief Pentagon spokesperson Sean Parnell declined to answer questions about the plan, saying in an email that The Post’s reporting is “untrue and irresponsible.” Read on, here.

The Trump administration has introduced the limited use of NDAs at other federal departments, including the Veterans Affairs Department and Interior Department.

Silicon Valley in St. Louis? Movers and shakers in the Gateway City, having welcomed the recently opened National Geospatial-Intelligence Agency campus in the Bottle District, now have their sights set on turning the city into a hub for geospatial startups, arguing, perhaps, that St. Louis and defense technology go together like toasted ravioli and marinara. Defense One’s Lauren C. Williams reports, here.

Additional reading: 

• AEI’s Kori Schake warns, “Trump’s Speech to Generals Was Incitement to Violence Against Americans,” writing Wednesday in Foreign Policy;
• “Trump’s Language Upends Principle of a Nonpartisan Military,” Helene Cooper of the New York Times reported Wednesday, though the Times later changed their hed to “‘Dangerous Cities,’ the Military, Trump and the Founding Fathers”; 
• “Trump sounded ‘exhausted, incoherent and stupid’ in his speech to military top brass, says retired [four-star] general” Barry McCaffrey; the UK’s Independent reported after an appearance on MSNBC;
• “How a Silicon Valley ‘warlord’ got the Pentagon’s attention,” Reuters reported Thursday from New York.

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Welcome to this Thursday edition of The D Brief, a newsletter dedicated to developments affecting the future of U.S. national security, brought to you by Ben Watson and Bradley Peniston. It’s more important than ever to stay informed, so thank you for reading. Share your tips and feedback here. And if you’re not already subscribed, you can do that here. On this day in 2018, Washington Post journalist and Saudi dissident Jamal Khashoggi was assassinated and cut into pieces with a bone saw during a visit to the Saudi consulate in Istanbul, Turkey.

Trump 2.0

Amid a government shutdown, at least 15 government oversight websites were down Wednesday evening, removing access to watchdog reports and required hotline and whistleblower links, Natalie Alms of Nextgov reported. 

The outages are not due to the shutdown—it's a deliberate move by the White House, whose Office of Management and Budget is withholding funds from the Council of the Inspectors General on Integrity and Efficiency. CIGIE is an independent entity charged by Congress with addressing oversight issues that involve more than one government agency. It provides training for investigators and auditors and acts as a watchdog for the government watchdog community. 

OMB claims the IGs “have become corrupt, partisan, and in some cases, have lied to the public,” a spokesperson told Nextgov/FCW in a statement. With the websites gone, so is access to the reports of those offices as well as links for whistleblowers. Read more, here. 

Some of the affected OIG offices have posted to social media to offer phone numbers and alternative online hotline complaint forms. And links to the pre-Oct. 1 versions of the sites are available here. 

The move is part of the Trump administration’s campaign against the government’s independent watchdogs, which began with Trump’s firing of 17 IGs soon after he took office, a move that a federal judge recently said was an “obvious” violation of the law. 

On Tuesday, Defense Secretary Pete Hegseth announced a review of the reporting processes for his department’s IG, which is currently investigating him for allegedly using an unsecure, unapproved app to conduct official business in the form of sending strike plans over Signal.

In a Tuesday memo, Hegseth said IG offices must now decide whether tips are backed by "credible evidence" within seven days and to track any "repeat complainants." Reuters: “One U.S. official who approved of Hegseth's move said the memo could mean fewer frivolous complaints, allowing investigators to focus on more important tips. But critics of the reforms argue they could ultimately hamper oversight, weaken the independence of the IG and put whistleblowers in an impossible situation.” More, here.

Trump falsely claimed National Guard troops were “in place” in Portland on Wednesday, but “no troops could be seen anywhere around the outside of the ICE facility on South Macadam Avenue,” Portland’s KGW news reported shortly afterward, though they are expected sometime early next week.

“I'm guessing [Trump] means that the 200 individuals have been selected and sent to Camp Rilea for training,” Sen. Jeff Merkley, D-Oregon, told KGW. “He may also mean the command structure from Northern Command has arrived in Oregon. He may mean that. It's definitely the sort of thing where it would be nice to have the right appointed person clarify those details. We're all trying to get the best information we can, and it's very fuzzy.”

Trump also falsely claimed “ANTIFA and the Radical Left Anarchists” were attacking federal law enforcement and immigration officers, and “many people have been badly hurt, and even killed” because he said the city is “a NEVER-ENDING DISASTER” that’s “run like a Third World Country.”

In reality, “The ICE facility in the South Waterfront neighborhood has been the site of small-scale but frequent protests in recent months, leading to a handful of arrests and some complaints about noise and tear gas, though there have been no significant injuries or deaths reported, and nearby residents and Portland police have both described the marches as relatively peaceful,” KGW reports. 

Local police reax: “The city of Portland is about 145 square miles. This is one city block,” Portland Police Chief Bob Day told reporters Tuesday. “And even the events that are happening down there do not rise to the level of attention that they are receiving.”

And ICYMI: “Federal officers have arrested just 5 people at Portland ICE building since July 4,” KGW8 reported Tuesday.

Legal insight: “The Trump administration is hoping no one notices that, although federal law defines ‘domestic terrorism,’ it provides no special authorities against anyone whose behavior meets that definition,” Georgetown University national security law professor Steve Vladeck writes on Substack. 

He’s talking about Trump’s recent “National Security Presidential Memorandum-7” (NSPM-7), which is a memo signed last Thursday titled “Countering Domestic Terrorism and Organized Political Violence.” That memo, Vladeck says, “reflects a dramatic escalation in the Trump administration’s efforts to cast a whole lot of constitutionally protected speech and political activity as unlawful ‘political violence and intimidation.’” The point of the memo seems to be “to scare, intimidate, cajole, and harass a wide array of non-governmental (and non-profit) organizations into self-censoring—lest they risk triggering the investigations and potential prosecutions the memorandum threatens,” Vladeck writes. 

On its face, the memo is “an exercise in legally empty but rhetorically dangerous symbolism,” says Vladeck, “one that is trying to coerce more and more individuals and groups to ‘obey in advance,’ even though there are no new substantive rules that they need to actually obey.” Read on, here.

Additional reading: 

• “How Political Violence in America Became Personal,” via Bruce Hoffman and Jacob Ware of the Council on Foreign Relations, writing Wednesday for Just Security; 
• “Bondi and Hegseth rally federal agents and troops in Memphis as part of crime task force,” the Associated Press reported Wednesday from Memphis;
• “Drones, Helicopters, Scores of Arrests: Immigration Crackdown in Chicago So Far”—a wrapup from a trio of New York Times reporters;  
• And don’t miss, “Trading on Tom Homan: Inside the Push to Cash in on the Trump Administration’s Deportation Campaign,” via ProPublica, reporting Thursday.

Russia’s Ukraine war, day 1317

Developing: The U.S. will soon begin helping Ukraine strike deeper inside Russia via a new intelligence-sharing agreement pertaining to “long-range missile strikes on Russia’s energy infrastructure,” the Wall Street Journal reported Wednesday. “President Trump recently signed off on allowing intelligence agencies and the Pentagon to aid Kyiv with the strikes,” U.S. officials said as Trump’s recent efforts to end Vladimir Putin’s Ukraine invasion have gone nowhere so far. 

Also pending: Possible U.S. delivery of Tomahawk and Barracuda cruise missiles as well as “other American-made ground- and air-launched missiles that have ranges of around 500 miles,” officials told the Journal. Vice President JD Vance teased the Tomahawk possibility Sunday. The Kremlin’s reaction the following day seemed relatively muted compared to November 2024, e.g., according to Reuters reporting Monday.

Even without the new intelligence, Ukraine has attacked 21 of Russia’s 38 large oil refineries since January, triggering fuel shortages and price hikes that one gas station manager compared “to the hyperinflation experienced by post-Soviet Russia,” according to the BBC. “In my opinion we haven't had a crisis like this since 1993-1994,” he said. 

An estimated 38% of Russia’s oil refining capacity is reportedly offline, and about 70% of that was caused by Ukrainian drone strikes, according to Moscow-based newspaper Lenta, reporting Tuesday. 

Panning out: “Retail petrol prices have surged, while wholesale prices—the cost at which retailers buy from producers—have risen even faster, growing by 40% since January.”

One large plant near Moscow has been hit five times this calendar year, but August was the busiest month with more than a dozen such attacks. Read more, here. 

New: Russia appears to have modified its ballistic missiles to better evade Patriot air defense systems, the Financial Times reports. That includes Moscow’s “Iskander-M mobile system, which launches missiles with an estimated range of up to 500km, as well as Kinzhal air-launched ballistic missiles, which can fly up to 480km,” officials said. 

“The missiles now follow a typical trajectory before diverting and plunging into a steep terminal dive or executing manoeuvres that ‘confuse and avoid’ Patriot interceptors,” according to Ukrainian and western officials. These adjustments appear to have helped Russia attack “At least four drone-making plants in and around Kyiv” over the summer, including “strike on August 28 on a facility producing Turkish Bayraktar drones.” 

Related: The Polish government believes Russia deliberately sent drones into its airspace last month to test the resolve of the country and its NATO allies—and that such tests will keep coming. That means the Polish military needs a better counter-unmanned systems plan, Foreign Minister Radosław Sikorski told reporters on Wednesday. The European Union is leading that effort, he added, securing $150 billion in loans for member states, as well as joint ventures with Ukraine, whose counter-UAS prowess was born out of necessity in the nearly four years it’s been fighting off Russian drones, Defense One’s Meghann Myers reports. 

Also this week: Finland said it’s gonna help protect Denmark’s airspace, which is one of several European nations that have experienced suspicious overflights of sensitive sights. 

Additional reading: “Suspicious drones apparently spied on critical infrastructure,” Germany’s Der Spiegel reported Wednesday, highlighting newly-revealed overflights of German army and naval bases in Sanitz and Rostock as well as defense industry locations elsewhere.

Around the world

Lastly: President Trump seems to have quietly committed the U.S. to defending Qatar, according to an executive order Trump signed Monday during Israeli prime minister Benjamin Netanyahu’s visit to the White House. 

The order is “bizarre,” observed Ankit Panda of the Carnegie Endowment for International Peace, writing Wednesday on Substack. He then focuses on what he says are “two big problems with this from the broader perspective of the practice of U.S. extended deterrence and alliances. First of all—and I’ve expressed this frustration elsewhere—it matters to the United States, its people, and U.S. allies that assurances and extended deterrence relationships are codified in treaties,” he writes. And secondly, “from the vantage point of U.S. treaty allies, these relatively empty assurances to Qatar could be seen as cheapening the value of actually being in a treaty alliance with the United States.”

After some consideration, he goes on to describe Trump’s order as “a perverse reflection of the domestic political incentives that shape how the United States thinks about its various allied relationships” under the current president, in particular. “I won’t go as far as to argue that this new executive order for the Qataris is a huge problem for American alliances in 2025,” he continues. “[T]hat would be hyperbolic and there are far more obvious culprits. But it’s certainly not the sort of thing that makes the actual treaty allies remember or recognize any value in an actual treaty-based relationship.”

Second opinion: “An executive order is not a treaty and can be overturned by another president, but the declaration of a military commitment to a foreign nation without ratification by the Senate as the Constitution requires shows the belief of administration officials that they can act as they wish without consulting Congress,” writes Heather Cox Richardson of Boston College. 

However, “the deal shows just how ill-advised Trump’s illegal demand for, and then receipt of, a $400 million luxury 747-8 from Qatar turned out to be, for now it certainly looks as if Qatar received U.S. military commitments in exchange for a used plane,” she adds. 

Additional reading: 

• “S. Korea selects U.S. firm L3Harris for airborne control aircraft procurement,” Seoul’s Yonhap news agency reported Tuesday; 
• “US, France step up joint military satellite moves to counter China in space,” Reuters reported Tuesday as well. 

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