Baltimore’s lawsuit against Elon Musk’s xAI and its Grok chatbot could decide how far cities can go to regulate artificial intelligence in the absence of federal law, according to one expert.

The Mayor and City Council of Baltimore have sued X Corp., xAI, and SpaceX in a Maryland court, alleging the companies violated local consumer protection laws by designing and deploying Grok, a generative AI system accused of producing and spreading non-consensual sexualized images, including of minors.

The lawsuit claims Grok enables users to “undress” or “manipulate images” of real people with minimal prompting, exposing residents to privacy violations and psychological harm, according to a statement from law firm DiCello Levitt, which is representing the city alongside the Baltimore City Law Department.



“These deepfakes, especially those depicting minors, have traumatic, lifelong consequences for victims,” Baltimore Mayor Brandon M. Scott said in the statement.

The case arrives amid growing global scrutiny of Grok, including investigations across the U.S., EU, France, UK, Australia, and Ireland, as well as a federal class action filed last week by three Tennessee minors alleging the tool generated child sexual abuse material using their real images.

"This lawsuit can be seen as a strategic move by a city to regulate AI in the absence of federal legislation, using consumer protection and public harm doctrines to bring AI companies within its enforcement ambit," Ishita Sharma, managing partner at Fathom Legal, told Decrypt.

“On liability, while users prompting harmful content will be part of the argument, the stronger legal focus is likely to be on whether the AI system itself materially contributed,” Sharma said, adding that if courts view Grok “as an active creator rather than a passive intermediary,” responsibility will fall more heavily on xAI.

By design

The Baltimore suit alleges the companies "designed, marketed, and deployed" Grok, knowing it could generate non-consensual intimate imagery and material resembling child sexual abuse content, while publicly claiming such content was prohibited.

The complaint cites estimates that Grok generated between 1.8 million and 3 million sexualized images in just days between December 29, 2025, and January 8, 2026, including around 23,000 depicting children, according to the Center for Countering Digital Hate and a New York Times analysis.

Baltimore alleges the surge was partly triggered after Elon Musk amplified Grok’s image-editing feature by responding “Perfect” to a bikini image of himself generated by the tool, with output rising from roughly 300,000 images in the nine days before his post to nearly 600,000 per day on X.

"X is now one of the largest distributors of NCII and CSAM," the lawsuit reads, citing the defendants' own platform policies banning such content as evidence of deceptive misrepresentation.

“Evidence of delayed safeguards or inaction in the face of known risks would strengthen claims of negligence or recklessness,” Sharma said, adding that dismissal of the suit appears unlikely, with settlement the most probable outcome, though the case could still result in “a precedent-setting ruling on AI accountability.”

The city is seeking civil penalties, injunctive relief to halt the unlawful conduct, restitution for affected residents, and disgorgement of ill-gotten profits.

Decrypt has reached out to Musk via xAI and SpaceX for comment.

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