SpaceX Listed Grok's ‘Spicy’ Mode as a Risk in Its IPO Filing

A striking development has emerged in artificial intelligence. Maxwell ZeffParesh DaveBusinessMay 20, 2026 8:43 PMSpaceX Listed Grok's ‘Spicy’ Mode as a Risk in Its IPO FilingThe rocket company has set aside more than $500 million for potential litigation losses, in part to account for complaints alleging Grok created sexualized images. Photograph: Anna Barclay/Getty Images Save this story Save this storySpaceX warned investors that AI features such as Grok’s “Spicy" and “Unhinged” modes, which allow the chatbot to generate raunchy image or voice responses with fewer safety filters, could expose the company to regulatory scrutiny and reputational damages, according to a filing submitted Wednesday as part of the company’s planned initial public offering. As of December, SpaceX had set aside $530 million for potential litigation losses, some of which could stem from ongoing complaints filed against its AI unit over sexualized imagery generated by its Grok chatbot.

The disclosures show how SpaceX took on new financial and reputational risks when it acquired Elon Musk’s artificial intelligence startup xAI in February, a deal which sent the rocket maker’s private valuation soaring to over $1 trillion. In the filing, SpaceX repeatedly claims that xAI’s mission is to develop “truth-seeking artificial intelligence. ” In practice, that has often meant launching AI features with minimal guardrails.

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While Grok’s free-wheeling nature is often framed by Musk as a selling point, it has landed xAI in hot water with regulators. Disclosing potential business risks is a routine and legally required part of IPO filings, and some of the concerns outlined by SpaceX may never materialize. The company is one of a number of chatbot makers that is being scrutinized by regulators as governments grapple with the societal impacts of generative AI tools.

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SpaceX disclosed in the filing that it is currently under investigation in the United States and other countries over allegations that Grok was used to create sexualized imagery of apparent minors. The company also noted that it’s the defendant in several ongoing class action lawsuits, and that future "misuse” of its AI products could expose it to more regulatory sanctions, “including loss of access to certain markets, which has occurred in the past. ”Some of SpaceX’s AI products, including Grok’s Spicy and Unhinged modes, are “designed to generate more candid, direct, or less reserved or irreverent outputs,” notes the filing.

This advance offers important signals about the future of the sector, and the tech world is watching closely.