xAI has sued former engineer Xuechen Li, alleging that he copied confidential Grok materials while exiting to join OpenAI. The complaint states that Li liquidated approximately $7 million of xAI stock weeks before resigning, admitted to taking files in an internal meeting, and attempted to cover his tracks. OpenAI is not named as a defendant. xAI seeks damages and a restraining order blocking Li from taking the OpenAI role. Elon Musk weighed in publicly, claiming on X that the engineer “uploaded our entire codebase.”
What Happened
- The lawsuit: Filed in California federal court, it accuses Li of misappropriating trade secrets tied to Grok and related internal systems. The filing asserts the material could give a rival a shortcut worth billions in effort.
- The stock cash-out: Court-filed details reported by The San Francisco Standard say Li cashed out around $7 million across two transactions (about $4.7 million and $2.2 million), then resigned days later.
- Alleged admission and forensics: The complaint says Li admitted taking files during a 14 August meeting, and investigators later found additional material on his devices.
Elon Musk’s Quotes on the Matter
Elon Musk commented directly on X. He wrote:
“He accepted an offer at OpenAI and then uploaded our entire codebase!”
Who Is Named (and Who Isn’t)
- Defendant: Xuechen Li.
- Not a defendant: OpenAI (at least in this specific case). xAI also filed a separate antitrust-style suit against Apple and OpenAI earlier in the week, but that is a different action.
Timeline at a Glance
- July 2025: Li liquidates ~$7m of xAI stock. Same day, some files are allegedly copied, per the complaint details recapped by SF Standard.
- 28 July 2025: Li resigns from xAI.
- 14 August 2025: Internal meeting where xAI says Li admitted to taking files; further review finds more.
- 29 August 2025: Reports surface of the lawsuit filing and relief sought (damages and a restraining order to block the OpenAI role).
What xAI Alleges Was Taken
The complaint describes “cutting-edge AI technologies” and Grok-related assets with features superior to ChatGPT, plus internal artefacts that would reduce a rival’s time and spend. It also alleges log deletions, file renaming, and compression steps intended to conceal activity.
Where Things Stand Now
xAI wants monetary damages and a court order stopping Li from starting at OpenAI. As of now, OpenAI is not a defendant and declined immediate comment; Li also did not comment. The case will turn on logs, device images, and whether the alleged “admission” and forensic trail meet the threshold for misappropriation and injunctive relief.
