On August 28, 2025, xAI, the artificial intelligence company founded by Tesla’s Elon Musk, filed a lawsuit in federal court in California against former engineer Xuechen Li, accusing him of stealing trade secrets related to xAI’s chatbot Grok before leaving the company and taking them to competitor OpenAI.
According to the complaint, Li joined xAI in February 2024 as an engineer responsible for the training and development of the Grok model. Before his departure, Li allegedly copied confidential files containing advanced AI technologies from his company-issued laptop to personal devices, while attempting to conceal his actions by deleting browser histories, renaming files, and compressing them.
xAI claims that during a meeting on August 14, Li admitted to stealing company files, and additional undisclosed stolen materials were later discovered on his devices. The complaint notes that these stolen trade secrets could potentially give OpenAI an advantage in its competition with xAI.
The complaint further states that before his departure, Li sold approximately $7 million worth of xAI stock, including $4.7 million cashed out earlier in the summer and another $2.2 million obtained after persuading the company to repurchase his shares. The timing of these transactions coincided with the alleged data transfer incidents, raising further concerns at xAI.
Currently, xAI is seeking a temporary injunction from the court to bar Li from working on or discussing generative AI–related matters at OpenAI until it is confirmed that all confidential data has been deleted. On September 3, a U.S. District Court judge approved the injunction, prohibiting Li from interacting with OpenAI personnel on AI topics. The next hearing is scheduled for October 7 to determine whether the injunction will be extended.
This case marks the first lawsuit filed by xAI since its founding and underscores the escalating battle for talent in the AI industry. Previously, Musk had repeatedly criticized OpenAI for straying from its original nonprofit mission and in 2024 filed a lawsuit accusing OpenAI and Microsoft of violating antitrust laws. That legal dispute remains unresolved and is expected to go to jury trial in the spring of 2026.
Li’s publicly available résumé shows that he received his bachelor’s degree in computer science from the University of Toronto in 2019, then went on to Stanford University for graduate studies, earning a master’s degree in computer science in 2022 and a Ph.D. in 2024, specializing in machine learning. Additionally, information provided by Zhihu user “Diogenes” indicates that Li attended Zhongguancun Middle School in Beijing for junior high, then Beijing No. 4 High School for senior high, and won second prize in the National High School Physics Competition.
