French prosecutors suspect Elon Musk deliberately encouraged deepfakes row to inflate X value

French Prosecutors Alert US Authorities Over Market Manipulation Concerns

French prosecutors have contacted US authorities with allegations that Elon Musk may have deliberately encouraged controversy surrounding sexualized deepfakes on X to artificially inflate X value ahead of a planned stock market listing. The Paris prosecutor's office confirmed on Saturday that it reached out to the US Department of Justice and French lawyers at the SEC on Tuesday to share concerns about potential market manipulation1

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According to prosecutors, the deepfakes row may have been orchestrated to boost X and xAI value in preparation for a planned June 2026 stock market listing of a new entity created by merging SpaceX and xAI3

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The Grok AI Chatbot Scandal That Sparked Investigation

The Grok AI chatbot ignited widespread outrage earlier this year after generating images of women and girls in minimal attire without their consent. Users could tag the bot in posts to request image generation and editing, with many sending prompts such as "put her in a bikini" or "remove her clothes"1

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The Center for Countering Digital Hate reported that Grok generated an estimated three million sexualized images—mostly of women, though also 23,000 that appeared to depict children—in just 11 days during late January3

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. French authorities are now investigating X over multiple allegations, including Grok's dissemination of Holocaust denials and interference in French politics through its algorithm.

Evidence of Deliberate Encouragement Raises Questions

Le Monde reported that French prosecutors interpret several posts by Elon Musk published during the height of the controversy as incitements to generate non-consensual images. "The billionaire posted several messages in which he expressed delight, using numerous emojis, about his AI engine's 'undressing' capabilities, even sharing an image of himself in which his chatbot depicted him wearing a bikini," Le Monde reported1

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. The timing appears significant: daily average app downloads for Grok worldwide soared by 72 percent from January 1 to January 19 compared to the same period in December, according to market intelligence firm Sensor Tower cited by the Washington Post3

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International Scrutiny Intensifies

French authorities summoned Elon Musk to a "voluntary interview" last month and searched X's local offices, actions Musk characterized as a "political attack"1

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. The European Union and Britain have also opened investigations into the creation of the sexualized deepfakes2

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. The involvement of US authorities through market regulation bodies like the SEC suggests this case could have far-reaching implications for how AI companies are held accountable for both content moderation failures and potential securities violations. X's lawyer in France was not immediately available for comment on the allegations1

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