In a lawsuit filed in federal court on Aug 28, xAI sues former employee Xuechen Li, a 
national, for taking confidential information and trade secrets before resigning from the company to join rival OpenAI.
The trade secrets stolen by Li include “cutting-edge AI technologies with features superior to those offered by ChatGPT and other competing products” that could save OpenAI and other competitors billions in research and development dollars and years of effort.
Li earned his PhD in Computer Science from Stanford in 2024, and was among the 20 earliest employees at xAI. He was working on developing and training Grok, xAI’s advanced AI model.
In June 2025, Li sold some of his shares in xAI for $4.7 million and received the cash proceeds on July 23. As Li was seeking more liquidity, he persuaded xAI to purchase an additional $2.2 million of shares from him in July, and he received the cash proceeds on July 25. All told, Li sold ~$7 million of his xAI stock.
On July 25 — the very same day he concluded his second sale of equity, Li “willfully and maliciously” copied xAI’s “confidential Information” and “trade secrets” from his xAI-issued laptop to “non-xAI physical or online storage systems within his personal control”.
Li took “extensive measures” to conceal his misconduct, including deleting his browser history and system logs, renaming files, and compressing files before uploading them to his personal device.
Three days later after this theft, Li resigned. He had already accepted an offer from OpenAI prior to this, and was slated to start working at OpenAI on Aug 19. xAI discovered Li’s actions on Aug 11 during a routine review of logs from security software designed to detect and prevent data exfiltration. The same day, xAI emailed Li, asking him to return and delete the data. At this point, xAI says that Li hired a criminal attorney. During a meeting between xAI’s lawyers and Li’s lawyers, Li allegedly admitted to intentionally taking xAI’s files and covering his tracks. Li let xAI create copies of his personal laptops to examine them, but xAI alleges that he hasn’t given them the passwords for critical accounts that could indicate what exactly he’d stolen.
sfstandard.com/2025/08/29/xai
national, for taking confidential information and trade secrets before resigning from the company to join rival OpenAI.
The trade secrets stolen by Li include “cutting-edge AI technologies with features superior to those offered by ChatGPT and other competing products” that could save OpenAI and other competitors billions in research and development dollars and years of effort.
Li earned his PhD in Computer Science from Stanford in 2024, and was among the 20 earliest employees at xAI. He was working on developing and training Grok, xAI’s advanced AI model.
In June 2025, Li sold some of his shares in xAI for $4.7 million and received the cash proceeds on July 23. As Li was seeking more liquidity, he persuaded xAI to purchase an additional $2.2 million of shares from him in July, and he received the cash proceeds on July 25. All told, Li sold ~$7 million of his xAI stock.
On July 25 — the very same day he concluded his second sale of equity, Li “willfully and maliciously” copied xAI’s “confidential Information” and “trade secrets” from his xAI-issued laptop to “non-xAI physical or online storage systems within his personal control”.
Li took “extensive measures” to conceal his misconduct, including deleting his browser history and system logs, renaming files, and compressing files before uploading them to his personal device.
Three days later after this theft, Li resigned. He had already accepted an offer from OpenAI prior to this, and was slated to start working at OpenAI on Aug 19. xAI discovered Li’s actions on Aug 11 during a routine review of logs from security software designed to detect and prevent data exfiltration. The same day, xAI emailed Li, asking him to return and delete the data. At this point, xAI says that Li hired a criminal attorney. During a meeting between xAI’s lawyers and Li’s lawyers, Li allegedly admitted to intentionally taking xAI’s files and covering his tracks. Li let xAI create copies of his personal laptops to examine them, but xAI alleges that he hasn’t given them the passwords for critical accounts that could indicate what exactly he’d stolen.
sfstandard.com/2025/08/29/xai