Executives at Moonshot AI, the Beijing startup behind the Kimi chatbot, are negotiating to settle a legal dispute with former investors of Recurrent.ai, the company CEO Yang Zhilin and CTO Zhang Yutao co-founded in 2016 before setting up Moonshot in 2023, according to Reuters reporting citing people familiar with the matter.
The dispute dates to the founding period. Recurrent and its investors accuse Yang and Zhang of setting up Moonshot without board authorization and enriching themselves at Recurrent’s expense, allegations Yang has denied. A lawyers’ letter seen by Reuters alleges that servers hosting large-language-model data were transferred from Recurrent to a Moonshot subsidiary without authorization in April 2023, and that Yutao instructed the deletion of critical information in September 2024. A former GSR Ventures partner, Zhang Yutong, is separately accused of privately holding roughly 14 percent of Moonshot’s shares while concealing the stake from GSR and Recurrent shareholders.
Recurrent received 9.5 percent of Moonshot’s original shares when the startup was established, and Recurrent and its investors are now seeking compensation equal to 10.5 percent of those original shares. Based on Moonshot’s $30 billion valuation in a June fundraising, that claim could be worth more than $700 million. The case has been in arbitration in Hong Kong since 2024, with a tribunal formed earlier in 2025. Yang previously offered to relinquish some of his own shares, but the amount fell short of the investors’ expectations.
The settlement push comes as Moonshot prepares for a Hong Kong listing. The company filed confidentially, is targeting a first-quarter 2027 window to raise between $3 billion and $5 billion, and converted its mainland operating entity into a joint-stock company in July 2026 as part of IPO preparation. Its valuation has climbed to about $50 billion after a funding round exceeding $2 billion in May 2026, with total funding raised above $5.5 billion; backers include Alibaba, Tencent, Meituan and China Mobile. At a $50 billion valuation, any equity-based settlement would cost existing shareholders considerably more than the $700 million implied at the June valuation.
Reuters reported the dispute is not expected to derail the listing, though an unresolved fight would raise governance and disclosure questions for Hong Kong exchange reviewers and prospective IPO investors.