Elon Musk's xAI sues Minnesota over ban on AI nudification tools

Elon Musk’s artificial intelligence company, xAI, filed a federal lawsuit on Monday to block a new Minnesota law banning the creation of AI-generated fake intimate images. The statute, which takes effect this Saturday, is the first of its kind in the United States and targets the underlying technology used to digitally undress identifiable people.

Minnesota’s HF 1606 prohibits platforms from allowing users to generate realistic fake images of intimate parts or advertise such tools. Violations carry civil penalties of up to $500,000, with the revenue directed toward services for victims of sexual assault and abuse. State Senator Erin Maye Quade championed the legislation after a man used social media photos to create sexual images of more than 80 women he knew.

xAI argues the statute violates the First Amendment by acting as "an overbroad, content-based ban on free speech and the tools of visual expression." The company claims the financial penalties are ruinous, warning that a service generating 100,000 banned images could face $50 billion in fines. xAI contends the law is so broad it could restrict images of shirtless men or people in swimsuits, forcing it to strip back editing features in its Grok Imagine tool.

For European regulators and investors, the lawsuit highlights the growing friction between rapid AI deployment and fragmented regional laws. xAI’s technology sits upstream of the very nudify applications that European authorities are currently trying to ban. The outcome of this case will signal how aggressively US states can regulate artificial intelligence independently, a factor that directly impacts the compliance strategies of global tech firms operating in both markets.

The free-speech argument arrives as xAI faces intense scrutiny over the exact harms the Minnesota law targets. The company is defending a proposed class action alleging users utilized Grok to generate child sexual abuse material from real photographs. Furthermore, regulators in California, the UK, the EU, and Ireland have all launched investigations into the platform, while a UK MP stated the tool generated sexualised images of her.

The legal fight also intersects with broader US political strategies regarding technology governance. The Trump administration intends to challenge individual state AI laws in favour of a unified national framework, making Minnesota a primary test case for regional autonomy. Minnesota officials remain defiant, with Attorney General Keith Ellison stating "there are plenty of worthy debates to have about AI policy" but "this is not one of them," and Governor Tim Walz adding: "See you in court, creep."