Minnesota Defends First-in-Nation AI Deepfake Law Against xAI Challenge

1 hour ago 2 sources neutral

Key takeaways:

  • Regulatory crackdowns on centralized AI may pressure AI-crypto tokens like FET and TAO.
  • Traders should monitor legal rulings as precedents for decentralized AI platform liability.
  • Short-term sentiment in AI-themed coins could sour if enforcement expands broadly.

Minnesota Attorney General Keith Ellison has urged a federal judge to reject xAI's bid to block HF-1606, the first-in-the-nation law targeting AI tools that generate realistic sexual images of identifiable people. In a Friday court filing, Ellison argued that xAI is unlikely to succeed in its constitutional challenge and has failed to show that enforcing the law would cause irreparable harm.

"With Grok Imagine, X.AI has created an unparalleled marketplace for digital sexual violence that poses virtually no barrier to entry," Ellison wrote. The state contends that Grok Imagine is a technological tool, not protected speech, and therefore should not be shielded by the First Amendment.

The law, enacted in April and effective August 1, prohibits platforms and software developers from allowing users to create realistic images showing intimate body parts that did not appear in the original image of an identifiable person. Violations carry penalties of up to $500,000 per image, and depicted individuals can sue separately. Unlike most deepfake laws, HF-1606 does not require that a company knew about the image or intended it — a provision xAI says criminalizes satire, swimsuits, and consensual creations.

xAI sued on July 27 and moved for a temporary restraining order on July 29. On July 31, Judge Donovan Frank rejected the petition, noting the company filed nearly three months after the law was signed and just three days before it took effect, indicating harm was not immediate. A hearing is now set for Wednesday.

The case follows widespread scrutiny of Grok over sexually explicit deepfakes. The Center for Countering Digital Hate estimated that in an 11-day span between December 29 and January 8, Grok created about 3 million sexually explicit images, including roughly 23,000 depicting children. California opened an investigation in January, 35 attorneys general signed a joint demand, the European Commission launched a probe, and Grok has been banned in Malaysia and Indonesia. xAI said it has suspended more than 52,000 accounts and filed over 73,600 reports with the National Center for Missing and Exploited Children in 2026.

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