Ex-employee accused of illicitly acquiring groundbreaking tech similar to ChatGPT, leading to a lawsuit by xAI.

In a dramatic turn of events, Elon Musk's artificial intelligence (AI) company, xAI, has filed a federal lawsuit against its former engineer, Xuechen Li, on August 28, 2025. The lawsuit alleges that Li stole confidential information prior to resigning and joining OpenAI.

Li, who began employment at xAI as a Member of the Technical Team on February 26, 2024, had access to and responsibility for components across xAI's technology stack. On June 20, 2025, he sold $4.7 million in xAI stock through a company-facilitated transaction. This was followed by another sale of approximately $7 million in company stock on July 23 and July 25, 2025, facilitated by xAI itself.

On July 25, 2025, Li allegedly uploaded proprietary data to his personal storage systems, three days before resigning to work at OpenAI. xAI discovered the data theft during a routine security review on August 11, 2025, and sent a demand letter to Li, who changed critical account passwords in response.

The stolen information is said to relate to Grok, xAI's conversational AI system launched in November 2023, which is described as one of the most, if not the most, advanced and powerful generative AI systems in the world.

In addition to the initial lawsuit, xAI has also filed an antitrust lawsuit against OpenAI and Apple on August 29, 2025. The details of this lawsuit are yet to be disclosed.

The Northern District of California court will determine whether xAI's emergency relief requests merit temporary restrictions on Li's employment while the underlying trade secret claims proceed to trial. Li's scheduled start date at OpenAI was August 19, 2025, but it remains uncertain whether he will be able to commence work.

It is important to note that there is no evidence that Li was employed or bribed by another company before his tenure at OpenAI. Li admitted to misappropriating xAI's confidential information and trade secrets during meetings with his criminal defense attorney on August 14 and 15, 2025, at Winston & Strawn offices.

The lawsuit seeks damages, emergency injunctive relief, and a permanent injunction against the disclosure or use of xAI's trade secrets. The case is expected to shed light on the measures companies should take to protect their intellectual property in the rapidly evolving field of AI.

Ex-employee accused of illicitly acquiring groundbreaking tech similar to ChatGPT, leading to a lawsuit by xAI.