xAI Accuses OpenAI of Luring Engineers, Stealing Core Tech

Written by Aaron S.,

Editor-In-Chief

Last Updated: September 26, 2025

Key Takeaways

xAI claimed OpenAI lured away engineers with big offers, which led to theft of code, training data, and infrastructure details;
The lawsuit cites engineer Xuechen Li, who uploaded xAI’s full codebase to his own cloud and confessed to taking training materials;
Another engineer and a finance executive are accused of transferring files and praising xAI’s "secret sauce" before joining OpenAI.

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Elon Musk’s company, xAI, has accused OpenAI of stealing trade secrets by targeting its employees.

The lawsuit alleged that recruiters at OpenAI approached several xAI engineers at once and offered them high salaries and benefits.

xAI alleged that after these conversations, some staff copied sensitive files, including code, training materials, and data center designs, onto personal devices or accounts.

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One example in the case involves early xAI engineer Xuechen Li. According to the filing, Li uploaded the company’s codebase to his own cloud account in July 2025. He later wrote a confession admitting he had taken both the code and presentation slides about xAI’s training methods.

The lawsuit also pointed to timing records showing that Li’s actions happened hours after he exchanged encrypted messages with OpenAI recruiter Tifa Chen.

The complaint also highlighted former engineer Jimmy Fraiture. After agreeing to join OpenAI, he allegedly used AirDrop multiple times to move confidential files. The suit stated that he took much of the code he was responsible for, as well as test projects that belonged to four co-founders.

Additionally, a senior finance manager who later joined OpenAI is accused of praising xAI’s "secret sauce", which refers to the company’s data center team.

Despite having no background in artificial intelligence (AI), the executive then took a role at OpenAI focusing on data center costs. When questioned about his legal duties to xAI, he responded with insults and refused to sign termination papers.

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