Musk’s xAI Files for Private Sale of $1B Unregistered Securities


Austin, Texas, Wednesday, November 29 – Elon Musk’s X-linked artificial intelligence (AI) modeler, xAI, has filed a Form D with the Securities and Exchange Commission (SEC) to raise $1 billion in a private sale of unregistered securities. 1

The filing indicates that xAI has already secured $134.7 million in investments, with the first sale taking place on November 29, 2023.

While the Form D filed with the SEC on December 5, 2023, disclosed the intent to raise $1 billion, the sale process itself had already been underway for several weeks. Mainly because Form D does not specify how xAI plans to use the $1 billion it seeks to raise.

Form D is a legal document required by the Securities and Exchange Commission (SEC) in the United States for companies offering and selling securities not registered under the Securities Act of 1933. These offerings are typically referred to as exempt offerings, meaning they fall under specific exemptions from the registration requirements.

According to the Form D securities being offered, they are “other equity” and not categorized as either “computers” or “telecommunications.”

Industry reports speculated that xAI was seeking investment for a broader range of AI-related projects beyond its current focus on conversational AI.

However, some analysts were sceptical about the use of unregistered securities and said that it raises questions about transparency and accountability.

Unregistered securities are not subject to the same regulations as publicly traded securities, meaning investors have fewer protections.

This lack of clarity may raise concerns among potential investors.

Regulation and oversight: The use of unregistered securities raises questions about regulatory compliance and potential legal challenges.

Financial performance: As a private company, xAI is not obligated to disclose its financial information publicly.

This lack of transparency makes it difficult to assess the company’s financial health and its ability to meet its investment obligations.

It remains to be seen how successful xAI will be in raising the remaining $865.3 million from private investors.

Although this sale is seen as a significant step forward for xAI and its ambition to become a major player in the AI development landscape, it should also be remembered that Musk has always been sceptical about the development of Artificial Intelligence.

However, Musk’s perspectives on AI have undergone a notable evolution, transitioning from early scepticism -when he called it an Existential Threat to humanity- and caution to a more embracing yet still circumspect approach.

Sources
  1. Yahoo Finance: https://finance.yahoo.com/news/elon-musks-xai-files-sec-051012523.html[]
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