Elon Musk Sells X to xAI Amid Legal Setback, Sparking Controversy

Elon Musk has sold his social media platform X, formerly Twitter, to his artificial intelligence startup xAI in an all-stock transaction that has drawn both attention and criticism.

The announcement came on March 28, coinciding with a U.S. judge’s rejection of Musk’s attempt to dismiss a class-action lawsuit related to his acquisition of Twitter.

The lawsuit accuses Musk of misleading former Twitter shareholders by delaying the disclosure of his initial stake in the company.

With xAI now owning X, critics say the legal stakes have grown.

“It’s a whole lot spicier now,” said Adam Cochran, a partner at Cinneamhain Ventures, adding that the move exposes xAI to legal risk as well.

Musk said the deal values xAI at $80 billion and X at $33 billion, incorporating $12 billion in debt. He originally purchased X for around $44 billion in April 2022.

Announcing the merger, Musk wrote, “xAI and X’s futures are intertwined… This combination will unlock immense potential by blending xAI’s advanced AI capabilities with X’s massive reach.”

@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).

Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at…

Cochran, however, criticized the structure of the deal, alleging that Musk used xAI’s inflated valuation to absorb X at an overestimated price while still reporting a significant loss.

“He’s screwing over xAI investors and X investors,” Cochran argued, suggesting the deal may be a mechanism to transfer user data to xAI.

xAI is the creator of Grok, an AI chatbot integrated into X that Musk claims outperforms the original version of ChatGPT on several academic benchmarks.

Musk has positioned Grok as a tool designed to assist human progress and support research.

Still, the $80 billion valuation for xAI has drawn skepticism. “An insanely dumb valuation,” Cochran said, while others, including crypto developer “Keef,” defended the move, saying Grok may well be a leading model for various AI tasks.

This lawsuit just got a whole lot spicer though, as now he has opened up his AI entity to exposure here too and it’s a much bigger pie https://t.co/wO3sM8DfOE

Meanwhile, Elon Musk’s Department of Government Efficiency (DOGE) is reportedly being integrated into the U.S. Securities and Exchange Commission (SEC) under a newly formed liaison initiative.

As reported, the SEC has agreed to allow DOGE representatives access to its internal systems and data, effectively treating them as staff for integration and network purposes.

An internal SEC email cited in the report confirmed that DOGE team members will be granted the same access rights as SEC employees when it comes to networks, systems, and sensitive data.

The SEC has begun assembling a dedicated liaison team tasked with working alongside DOGE representatives.

The internal communication emphasized that all processes will adhere to standard protocols, including ethics clearances, IT security reviews, and access approvals.

While specific goals of DOGE’s work with the SEC have not yet been made public, the collaboration raises questions about the role private-sector influence may play in regulatory frameworks moving forward.

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