Controversy over sexually explicit AI images may have been ploy to ‘artificially boost the value of companies’ ahead of merger

French prosecutors said on Saturday they had alerted US authorities to a suspicion that tech tycoon Elon Musk had encouraged sexualised deepfakes on X to “artificially” increase the value of his company.

“The controversy sparked by sexually explicit deepfakes generated by Grok (X’s AI) may have been deliberately generated in order to artificially boost the value of companies X and X AI,” with a view to “the planned June 2026 stock market listing of the new entity created by the merger” between Space X and X AI, the Paris prosecutor’s office said.

It said it had reached out on Tuesday to the US Department of Justice, as well as French lawyers at the US Securities and Exchange Commission (SEC), a financial market regulation body, to share its concerns.

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