A US&nbsp;judge on Friday rejected Elon Musk&rsquo;s attempt to dismiss a lawsuit alleging he defrauded former Twitter shareholders by delaying the disclosure of his stake in the company, now known as X.
US&nbsp;District Judge Andrew Carter&nbsp;in Manhattan ruled that the plaintiffs adequately argued Musk intended to commit fraud&nbsp;through an improper regulatory filing, misleading tweets about Twitter&rsquo;s future, and a strategy to &ldquo;silently&rdquo; acquire shares. While Carter dismissed some claims, he allowed the fraud allegations to proceed.
The ruling comes as Musk announced a major corporate restructuring, selling X to his artificial intelligence startup xAI&nbsp;in an all-stock deal valuing the social media platform at $33 billion. The transaction merges X&rsquo;s vast user base of 600 million users&nbsp;with xAI&rsquo;s advanced AI capabilities.
&ldquo;This combination will unlock immense potential by blending xAI&rsquo;s advanced AI capability and expertise with X&rsquo;s massive reach,&rdquo; Musk said&nbsp;in a post. &ldquo;This will allow us to build a platform that doesn&rsquo;t just reflect the world but actively accelerates human progress.&rdquo;
The deal values xAI at $80 billion&nbsp;and X at $33 billion, incorporating the platform&rsquo;s $12 billion debt. Musk, who acquired Twitter for $44 billion&nbsp;in 2022, launched xAI the following year, investing heavily in high-end Nvidia chips&nbsp;for AI development.
In February, xAI released its latest chatbot, Grok 3, which Musk described as &ldquo;scary smart&rdquo;. The chatbot is positioned as a rival to OpenAI&rsquo;s ChatGPT, further intensifying Musk&rsquo;s long-running feud with OpenAI CEO Sam Altman.
Meanwhile, advertisers remain cautious&nbsp;about spending on X, with analysts at Emarketer&nbsp;suggesting that brands fear retaliation from politically connected Musk&nbsp;if they do not invest in the platform.
&ldquo;Many advertisers may view spending on X as a cost of doing business in order to mitigate potential legal or financial repercussions,&rdquo; said Emarketer principal analyst Jasmine Enberg.
As Musk faces legal scrutiny&nbsp;over his past Twitter stock disclosures, his focus shifts to integrating AI into X&rsquo;s future&mdash;potentially reshaping the platform&rsquo;s business model.

The deal is part of Musk's consolidation plan

Merger comes even as US judge allows fraud lawsuit against tech billionaire over Twitter stock disclosures

Musk Sells X to AI Startup xAI in $33B Deal

Merger comes even as US judge allows fraud lawsuit against tech billionaire over Twitter stock disclosures

March 29, 2025 | 12:19 IST