Elon Musk's xAI Sues Minnesota Over New State Law Banning AI 'Nudify' Technology

Elon Musk's artificial intelligence company has taken Minnesota to federal court days before the state's ban on AI 'nudification' tools was due to take effect. xAI, now formally known as SpaceXAI following its February merger with Musk's rocket company, filed suit against Attorney General Keith Ellison on Monday, arguing the statute amounts to an unconstitutional 'content-based ban on free speech and the tools of visual expression'.

The law, House File 1606, takes effect Saturday, 1 August 2026, and carries civil penalties of up to £370,000 ($500,000) per unlawful image. xAI's complaint warns a platform whose users produced 100,000 such images could face liability of roughly £37 billion ($50 billion).

Why xAI Says Minnesota's Deepfake Ban Goes Too Far

Filed in the US District Court for the District of Minnesota, xAI's complaint does not dispute the state's underlying aim. The company says it 'does not contest Minnesota's interest in prohibiting the dissemination of artificially generated nude images of real people without their consent', but contends the statute 'extends far beyond that goal' and exposes a wide range of protected expression to liability.

Central to xAI's case is the absence of any intent requirement. According to the complaint, reviewed via the CourtListener docket, HF 1606 creates a strict-liability regime in which a company's exposure turns solely on what a user does with a service, not on what the owner knew, intended or could have anticipated. The filing notes the law provides no safe harbour for a service whose terms prohibit nudification or whose filters are 'state-of-the-art and function to near-perfection'.

xAI's lawyers also cite testimony from a February Senate hearing, where a staffer flagged that the bill's prohibition would apply even to a person editing a photograph of themselves with their own consent. Senate sponsor Erin Maye Quade confirmed on the record that the inclusion of consensual images was intentional, a response xAI's filing calls a deflection rather than a defence.

The complaint also challenges the statute's definition of 'intimate part' as overly broad, arguing it could sweep in depictions of men without shirts, people in shorts or swimsuits, and other images 'far beyond what an ordinary person would consider nudification'. xAI asks the court to declare the law unconstitutional and block its enforcement.

The Law That Began With One Woman's Discovery

HF 1606 grew out of the experience of Molly Kelley, a Minnesota woman who discovered in 2024 that a close family friend had used a nudification website to generate non-consensual deepfake images of her and roughly 80 other women, drawn from their public social media photographs. With no existing law that allowed her to sue for restitution, Kelley began contacting lawmakers, eventually connecting with state Senator Erin Maye Quade, who introduced the bill.

Kelley has spent two years educating legislators and advocating for the measure while also juggling a full-time job, two children and law school.

The bill passed with overwhelming bipartisan support, 132–1 in the House and 65–0 in the Senate, and was signed into law by Governor Tim Walz earlier this year. 'My bill simply requires that apps, platforms, and websites have the nudification functions turned off,' Maye Quade said of the measure, which she authored alongside colleagues from both parties.

Unlike the federal TAKE IT DOWN Act, signed in 2025, which requires platforms to remove non-consensual intimate imagery within 48 hours of a victim's request, HF 1606 targets the creation of the imagery rather than its distribution. Backers argue distribution-focused laws act only after harm has occurred, since by the time an image circulates in a school or workplace, a takedown can remove the file but not undo its spread. Penalty proceeds are earmarked for victim services, and the ACLU of Minnesota, an organisation more often found opposing speech restrictions, backed the bill.

xAI Fights Legal Battles on Multiple Fronts

xAI frames itself in the complaint as an ally rather than a target of anti-nudification efforts, stating it 'strictly prohibits its users from generating nude or sexualised images of people without their consent' and has 'filed suit against users who evade its extensive technological blockers to generate such images', pointing to a prior case against a South Carolina user accused of using Grok Imagine to create non-consensual images of adults and minors.

That framing sits alongside mounting separate pressure on the company. SpaceXAI is facing a proposed class action filed in US federal court, in which plaintiffs have alleged that Grok's chatbot and image generator were used to create and share child sexual abuse material. Regulators including authorities in California, the UK's Ofcom, the European Commission and Ireland's data protection authority have opened investigations following reports in multiple news outlets that it allowed users to sexualise images of real women and children.

xAI previously challenged a California deepfake law on First Amendment grounds and won a partial victory when a federal court struck down part of that statute, a precedent its lawyers may lean on here.

Minnesota Officials Hit Back

Minnesota's attorney general did not mince words. 'AI nudification robs the target of their dignity and could cause them immense harm on many levels,' Ellison wrote, adding, 'There are plenty of worthy debates to have about AI policy. This is not one of them.' Governor Walz was more succinct, posting on social media: 'See you in court, creep.'

Rep. Jess Hanson, the bill's lead House sponsor, called it 'absolutely disgusting that Elon Musk and his xAI are fighting a law designed to protect children from sexual exploitation', branding nudification 'an indefensible tool of AI'. Ellison's office said it was awaiting formal service of the suit before responding in court.

Similar bills modelled on HF 1606 were under consideration in California, New York and other states when xAI filed suit, meaning a ruling either way could shape how far legislatures nationwide are willing to go in regulating AI image tools. A hearing on xAI's request to block the law before Saturday's deadline had not been scheduled as of publication.