US judge rejects Musk bid to dismiss SEC lawsuit over Twitter stake disclosure

A US-based federal judge has denied billionaire Elon Musk’s motion to dismiss a complaint from the US Securities and Exchange Commission (SEC) alleging he exceeded the time allowed to report his accumulating Twitter shares.

In an attempt to defend himself, Musk said the federal agency unfairly targeted him and that the case violated his free speech rights, among other claims. 

After carefully assessing these claims, US District Judge Sparkle Sooknanan just recently issued a ruling in Washington. The ruling stated that a straightforward application of the law indicated that none of these arguments provided a sufficient legal basis for dismissing the lawsuit.

Tech billionaire Musk faces legal battle with the SEC

In January 2025, the SEC filed its complaint against Tesla and SpaceX CEO, just days before Donald Trump assumed the presidency. Regarding this lawsuit, sources with knowledge of the situation disclosed that the federal agency claimed Musk purchased Twitter shares in 2022 but delayed reporting his holdings until it was too late. Afterwards, reports pointed out that the influential tech figure secretly acquired the social media platform for $44 billion and changed its name from Twitter to X.

Following this claim, the SEC pointed to the possibility of Musk purchasing stakes at a reduced price as the main reason for his decision to delay his announcement of an increased stake. At this point, sources confirmed Twitter shareholders spent over $150 million to buy Twitter’s shares.

Even so, the industry executive’s lawyers filed a motion to terminate the proceedings, calling the case a waste of the court’s time and a misuse of public resources. Responding to this statement, the SEC requested that Judge Sooknanan find Musk guilty without a trial, arguing that the failure to meet the disclosure deadline is incontrovertible.

In a statement, Sooknanan mentioned that, “The court understands that Mr. Musk would prefer not to disclose information that could affect stock prices as he seeks control of the company. However, what Congress established in Section 13(d) does not violate the First Amendment.” 

This case is referred to as Securities and Exchange Commission v. Musk, 25-cv-00105. It took place in the US District Court for the District of Columbia (Washington). 

 xAI seeks to solidify its position as a leader in the tech industry 

Reports mentioned that Elon Musk’s company, xAI, has been actively challenging leading AI labs such as OpenAI, the firm he founded and later clashed with, over the past three years.

Nonetheless, the outcome received mixed reactions from individuals since the chatbot Grok, xAI’s key product, drew people’s attention for submitting antisemitic replies and a sexualized image scandal, diminishing its technical achievements.

To offset this impact, reports from reliable sources disclosed that Musk is partnering with one of his most successful ventures to accelerate his efforts to develop advanced AI systems.

Regarding this collaboration, the billionaire shared an X post dated Monday, February 2, noting that he decided to merge xAI with SpaceX to establish a combined firm with $1.25 trillion in valuation. According to Musk, the aim of this collaboration is to help xAI acquire the three major elements required for AI development. Notably,  these elements include more computing power, talent, and data.

Meanwhile, like other AI startups, xAI has allocated significant amounts of funds, which total around  $1 billion monthly, on data centers, chips, and other investments to create artificial intelligence models. 

Consequently, financial reports declared that xAI has incurred $5 billion in corporate debt, a substantial liability for a young startup. However, the company’s AI infrastructure development remains modest compared to OpenAI’s massive $1.4 trillion commitment to data centers and chips.

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