Musk’s xAI sues former employee, alleging theft of trade secrets
Elon Musk’s xAI has filed suit in Northern California federal court against a former engineer, alleging that he stole trade secrets from the company just before leaving for a job at OpenAI.
Xuechen Li started working for xAI in February 2024 after receiving his Ph.D. in computer science from Stanford University.
In late July, Li sold $7 million worth of his xAI shares to the company as part of a liquidity grant for employees.
The complaint alleges that once the sale was complete, Li illegally copied xAI files:
“On July 25, 2025 — the same day he concluded his second sale of equity and had millions in cash on hand — Defendant betrayed the trust and faith xAI had placed in him by willfully and maliciously copying xAI Confidential Information (as defined in the Agreement) and trade secrets from his xAI-issued laptop to one or more non-xAI physical or online storage systems within his personal control (collectively, ‘Personal System’).”
Three days later, Li resigned to take a job at OpenAI.
Reuters wrote that Li didn’t immediately respond to its request for comment.
The complaint also alleges:
“Defendant, with his attorney present, admitted in a handwritten document he provided to xAI that he misappropriated xAI’s Confidential Information and trade secrets, and again, with his attorney present, admitted verbally during in-person meetings with xAI that he engaged in such misappropriation and further admitted that he tried to hide his theft.”
The complaint also alleges Li withheld accounts and credentials from forensic investigators after handing over personal devices to the company.
The complaint alleges that once the sale was complete, Li illegally copied xAI files:
“On July 25, 2025 — the same day he concluded his second sale of equity and had millions in cash on hand — Defendant betrayed the trust and faith xAI had placed in him by willfully and maliciously copying xAI Confidential Information (as defined in the Agreement) and trade secrets from his xAI-issued laptop to one or more non-xAI physical or online storage systems within his personal control (collectively, ‘Personal System’).”
Three days later, Li resigned to take a job at OpenAI.
Reuters wrote that Li didn’t immediately respond to its request for comment.
The complaint also alleges:
“Defendant, with his attorney present, admitted in a handwritten document he provided to xAI that he misappropriated xAI’s Confidential Information and trade secrets, and again, with his attorney present, admitted verbally during in-person meetings with xAI that he engaged in such misappropriation and further admitted that he tried to hide his theft.”
The complaint also alleges Li withheld accounts and credentials from forensic investigators after handing over personal devices to the company.
