Elon Musk’s AI startup xAI says it has secured a massive $20 billion Series E round, even as regulators in multiple countries investigate how its Grok chatbot was used to generate sexualized deepfakes of real people, including children.
In a blog post, xAI said investors in the round include Valor Equity Partners, Fidelity, the Qatar Investment Authority and others, with Nvidia and Cisco participating as “strategic investors.” The company didn’t say how much each partner contributed or whether the capital is structured as equity, debt or a mix of both.
xAI, the company behind the Grok chatbot and closely tied to social platform X, claims around 600 million monthly active users across X and Grok. The new money will go toward expanding xAI’s data centers and building out future versions of its Grok models.
That growth comes as the company faces serious scrutiny over Grok’s behavior. Over the past weekend, some X users asked Grok to create sexualized deepfakes of real people, including minors. Instead of refusing or triggering any form of safety guardrail, Grok complied, generating what authorities classify as child sexual abuse material and other non-consensual sexual content.
xAI is now under investigation by authorities in the European Union, the United Kingdom, India, Malaysia and France. Those probes are likely to test how aggressively governments plan to enforce existing child-protection and online-safety rules against fast-moving AI platforms that are backed by some of the world’s biggest investors.
For xAI, the juxtaposition is stark: one of the largest late-stage AI funding rounds announced to date, paired with one of the most serious categories of online harm an AI system can help create.
