Elon Musk has quietly dropped the fraud allegations at the center of his lawsuit against OpenAI, but the lawsuit, now days away, is very much alive. A US federal judge in Oakland dismissed Musk’s fraud and constructive fraud claims at his own request, leaving the case to proceed on the narrower but potentially more consequential grounds of breach of charitable trust and unjust enrichment.
This was not a compromise but a strategic move. Musk said that dropping the fraud charges would “streamline” the trial and focus the jury’s attention on the main point, which is OpenAI’s goal of becoming a “money machine” away from its original purpose of developing AI technology for the good of mankind.
The ruling was handed down by Judge Yvonne Gonzalez Rogers, serving in the U.S. District Court for the Northern District of California in Oakland. Without fraud allegations, the case, scheduled to begin on April 27, will now center around OpenAI’s alleged violations of the terms of its formation as a charitable trust, as well as any enrichment of its leaders.
Musk’s primary argument focuses on the fact that OpenAI was supposed to be formed as a nonprofit with an emphasis on developing publicly beneficial AI, but its transformation into a capped-for-profit company with ties to Microsoft was a violation of this agreement. The lawsuit was initially filed in November 2024, withdrawn and re-filed in 2026.
The amount of money involved in this case is quite worrying; Musk claims the figure is $150 billion, according to a source close to the matter, who said that all proceeds from the matter will go to OpenAI’s charitable wing and not to Musk personally, an important point he made about why this is not purely a business issue.
OpenAI does not agree with the notion raised in the lawsuit. It is important to note that OpenAI has always portrayed the legal challenge as a ploy by its rival to divert attention from itself as Musk now heads XAI, which competes directly with OpenAI.
