Moonshot AI Executives in Talks to Settle Shareholder Dispute Ahead of IPO
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Illustrative image of data center cables and equipment, representing technology infrastructure ahead of Moonshot AI’s planned Hong Kong IPO. |
BEIJING — October 12, 2026
Executives at Chinese artificial intelligence startup Moonshot AI are negotiating a possible settlement with a shareholder involved in a long-running legal dispute, as the company prepares for a planned initial public offering (IPO) in Hong Kong, according to people familiar with the matter.
Recurrent.ai, an artificial intelligence software developer, and some of its investors have accused Moonshot Chief Executive Yang Zhilin and Chief Technology Officer Zhang Yutao of misleading investors and benefiting personally at Recurrent’s expense. The allegations were detailed in a letter sent by Recurrent’s lawyers to Moonshot investors on March 11, which has not previously been publicly reported.
Yang and Zhang co-founded Recurrent in 2016 before establishing Moonshot in 2023. Corporate records show that both continued to serve as directors of Recurrent’s holding company. Moonshot declined to comment on the settlement discussions, while Yang and Zhang did not respond to emailed requests for comment.
The dispute has been in arbitration in Hong Kong since 2024. Recurrent alleges that the executives established Moonshot without approval from Recurrent’s board and made false representations to investors. Reuters could not independently verify the claims contained in the legal letter.
The letter also alleged that servers containing important large language model data were transferred from Recurrent to a Moonshot subsidiary without authorisation in April 2023. It further claimed that other key data was deleted in September 2024 on Zhang Yutao’s instructions. The letter did not provide evidence for these allegations.
Yang has previously rejected accusations of wrongdoing. In November 2024, David Morrison, a senior partner at MinterEllison, the law firm representing Yang, Zhang Yutao and Moonshot, told Chinese media that the case lacked legal and factual grounds and that the firm would defend its clients.
Chinese media have also reported that Yang disputed the allegations in a 2024 post on his personal WeChat account. According to those reports, he said he had reached an agreement with Recurrent board members to establish Moonshot and that Zhang Yutong’s compensation reflected her professional abilities. Reuters could not access the original post.
The dispute also involves Moonshot President Zhang Yutong, who resigned as a Recurrent director in 2022. Recurrent and its investors are considering separate legal action in the Cayman Islands against her, according to the letter. It alleged that she received a significant stake in Moonshot for her personal benefit without disclosing it to Recurrent shareholders. Reuters could not independently confirm the claim, and Zhang Yutong did not respond to emailed requests for comment.
Recurrent received 9.5% of Moonshot’s original shares when the startup was established. Recurrent and its investors are seeking compensation equivalent to 10.5% of those original shares, one person familiar with the matter said. The claim could be worth more than $700 million based on Moonshot’s $30 billion valuation during a fundraising round in June.
The negotiations come as Moonshot moves towards a possible Hong Kong listing. The Beijing-based company has confidentially filed for an IPO, according to a September report, as it seeks to benefit from growing demand for its Kimi artificial intelligence models.
Although the dispute is not expected to derail the listing, an unresolved conflict could raise questions about ownership, corporate governance and disclosures to prospective investors. One person familiar with the matter said the dispute could complicate the listing process, while people involved in the discussions said they did not know whether a settlement was imminent.
Moonshot has emerged as a competitor to leading US AI companies, including OpenAI and Anthropic. Its Kimi chatbot gained attention for its ability to process long documents, while backing from Alibaba helped raise the company’s profile.
In July, Moonshot introduced Kimi K3, a model with 2.8 trillion parameters. The company described it as the world’s largest open-weight AI system and said its performance approached that of Anthropic’s models. Other investors in Moonshot include Tencent Holdings, Meituan and China Mobile.
The Hong Kong Stock Exchange and the Securities and Futures Commission declined to comment on the dispute. China’s securities regulator and the Cyberspace Administration of China did not respond to requests for comment.
The settlement discussions remain ongoing, with no confirmed agreement announced. The outcome could affect how Moonshot addresses the shareholder claims as it prepares for its proposed public offering.
