Musk drops fraud claims against OpenAI before April trial

Elon Musk has quietly shed the fraud charges at the centre of his lawsuit against OpenAI, but the trial, now days away, is very much alive. A US federal judge in Oakland dismissed Musk's fraud and constructive fraud claims at his own request, leaving the case to proceed on narrower but potentially more consequential grounds of breach of charitable trust and unjust enrichment.

This was a strategic move rather than a compromise. Musk maintained that dropping the accusations of fraud will "streamline" the trial and focus the jury on the main point, which is the departure of OpenAI from its original objective of developing AI technology for the good of mankind to becoming a "wealth machine".

Judge Yvonne Gonzalez Rogers, who serves on the US District Court for the Northern District of California in Oakland, has made the ruling. Without the fraud charges remaining, the case set to begin on April 27 will now centre around OpenAI’s alleged breach of the conditions of its formation as a charitable trust, as well as any enrichment of its leaders.

Musk’s primary argument centres on the fact that OpenAI was supposed to be formed as a non-profit with an emphasis on developing publicly beneficial AI, but that its change into a capped-profit company with ties to Microsoft was a violation of this agreement. The suit was initially filed in November 2024, withdrawn, and refiled in 2026.

The amount of money involved in this case is quite alarming; Musk claims that the figure stands at $150 billion, as per a source close to the case who stated that all proceeds from this case would go to the charitable wing of OpenAI and not personally to Musk, a key point he makes about why this isn’t purely a business issue.

OpenAI does not subscribe to the notion raised in the litigation. It is imperative to note that OpenAI has always been portraying the legal challenge as a ploy by its rival to divert attention away from itself because Musk now heads xAI, which directly competes with OpenAI.