Elon Musk Faces Scrutiny Over Potential Market Manipulation
Paris – Elon Musk is facing increased legal pressure as French authorities have flagged potential concerns regarding the valuation of his companies, X and X AI, to U.S. Officials. The move comes less than a month before Musk is scheduled to appear in Paris for a separate inquiry related to the social media platform X, formerly known as Twitter.
According to the Paris prosecutor’s office, the concerns center around the possibility that Musk intentionally fostered a controversial situation involving deepfake images generated by his artificial intelligence tool, Grok. These images, depicting explicit content featuring real individuals, sparked widespread debate and the prosecutor believes this controversy may have been deliberately engineered to artificially inflate the value of X and X AI. The Tribune reports that this alleged manipulation is linked to a planned initial public offering (IPO) in June 2026, resulting from the merger between SpaceX and X AI, at a time when X was experiencing declining performance.
The prosecutor’s office transmitted information to the U.S. Department of Justice on March 17 via the French Ministry of Justice’s international criminal cooperation office. This transmission was also shared with lawyers representing the Securities and Exchange Commission (SEC), the U.S. Federal agency responsible for regulating and overseeing financial markets. Le Monde details that the aim was to alert the SEC to information already in the public domain.
This development occurs alongside an ongoing preliminary investigation by the Paris prosecutor’s office into X, which included a voluntary hearing scheduled for Musk on April 20. The current allegations suggest further potential wrongdoing by Musk came to light during that investigation. 20 minutes notes that the SEC is now being informed of these concerns.
Musk responded to the French legal action with strong criticism, reportedly labeling the prosecutors as “mentally retarded” in a post on X, according to Le Figaro. The situation underscores the increasing regulatory scrutiny facing Musk and his companies as they navigate complex legal landscapes across multiple jurisdictions. The allegations, if substantiated, could have significant implications for the planned IPO and the overall valuation of Musk’s business empire.
The controversy also stems from reports that messages encouraging the creation of non-consensual images were present on the platform. The HuffPost reported that the deepfake scandal may have been intentionally sparked to boost X’s value.
Meanwhile, a California jury recently found Musk liable for misleading Twitter shareholders during his tumultuous 2022 acquisition of the social network.
