Moonshot executives in settlement talks with shareholder ahead of Hong Kong IPO
Moonshot AI executives are in settlement talks with shareholder Recurrent.ai over alleged wrongdoing. The dispute, in Hong Kong arbitration since 2024, could raise governance issues for Moonshot's planned Hong Kong listing. Moonshot confidentially filed for IPO in September.
Top executives of Chinese AI startup Moonshot are in talks ahead of its planned Hong Kong listing to settle a legal dispute with a shareholder demanding compensation for alleged wrongdoing, people familiar with the matter said.
Recurrent.ai, a developer of AI software, and some of its investors have accused Moonshot CEO Yang Zhilin and chief technology officer Zhang Yutao of making false representations to Recurrent investors and enriching themselves at Recurrent's expense, according to a 11 March letter from Recurrent's lawyers seen by Reuters. Yang and Zhang co-founded Recurrent in 2016 before establishing Moonshot in 2023 and remain directors of Recurrent's holding company, corporate records show.
The dispute, which is in arbitration in Hong Kong, has been ongoing since 2024. Recurrent has alleged that servers containing large-language-model data were transferred without authorisation from Recurrent to a Moonshot subsidiary in April 2023, and that some key data was deleted in September 2024 at Zhang's instructions, according to the letter. Recurrent and its investors are also considering separate legal action in the Cayman Islands against Moonshot President Zhang Yutong, who received a significant shareholding in Moonshot, the letter said, without providing evidence.
Yang has previously denied the allegations. David Morrison, senior partner at MinterEllison, which represents Yang, Zhang Yutao and Moonshot, told Chinese media in November 2024 the case 'lacked both legal and factual basis'. Moonshot declined to comment. Recurrent did not respond to a request for comment.
Beijing-based Moonshot is among a group of Chinese AI developers challenging US companies such as OpenAI and Anthropic. It confidentially filed for a Hong Kong IPO in September, Reuters reported, as it seeks to capitalise on the popularity of its Kimi AI models. While the dispute is not expected to jeopardise Moonshot's IPO plans, an unresolved fight with Recurrent could raise governance, ownership and disclosure issues for prospective investors, one person said.
Recurrent received 9.5 per cent of Moonshot's original shares when the startup was established. Recurrent and its investors are seeking compensation equal to 10.5 per cent of Moonshot's original shares, which could be worth more than US$700 million based on Moonshot's US$30 billion valuation in a June fundraising, one person said.