Two former OpenAI employees and a group of AI safety nonprofits are warning that Elon Musk’s AI lab, xAI, could become a liability for prospective investors in SpaceX, which is preparing to file what’s expected to be the largest initial public offering in Wall Street History.

In a letter directed to investors published on Tuesday, the ex-staffers highlighted what they describe as “unpriced risks” related to xAI that could complicate SpaceX’s reported plans to raise up to $75 billion as part of its IPO. The rocket company’s private valuation shot up to over $1 trillion after it acquired xAI last year. Musk claimed his rocket company could launch data centers into space for his AI lab, but the letter's authors argue that xAI’s poor record on safety issues could complicate how investors view the combined company as it gets ready to submit its IPO prospectus filing.

One of the letter’s signatories and coauthors is a new nonprofit called Guidelight AI Standards, which was cofounded by former OpenAI safety researcher Steven Adler and former OpenAI policy advisor Page Hedley. The group, which is backed by private donors, aims to improve the safety practices of frontier AI companies. Other AI safety nonprofits also signed on, including Legal Advocates for Safe Science and Technology, Encode AI, and The Midas Project.

Hedley tells WIRED in an interview that he believes xAI has the worst safety practices “nearly across the board” compared to other frontier AI developers, including OpenAI, Google DeepMind, and Anthropic. As a result, he argues, SpaceX may face a greater risk of regulation and litigation than other AI labs.

The letter's authors argue that SpaceX should make several disclosures to investors, including whether xAI intends to continue developing frontier AI models. SpaceX recently struck a deal to sell a significant portion of its GPU capacity to Anthropic, and the letter claims the agreement “leaves it unclear whether xAI is still a frontier-AI competitor inside a larger holding company.” If xAI continues to develop frontier AI models, the authors say that it should be required to publish a public safety and governance plan.

SpaceX and xAI did not immediately respond to WIRED’s request for comment.

The letter also outlines examples of how xAI has not kept up with industry standard safety practices, such as publishing detailed frameworks for mitigating risks around its AI models being used in cyber attacks. The authors also outline specific safety incidents at xAI that they say warrant additional scrutiny. Among the most notable include when xAI’s flagship AI chatbot, Grok, spontaneously brought up white genocide in its responses. In another case, xAI allowed Grok to generate thousands of sexualized images of women and children, which spread widely across Musk’s social media platform X. The latter case prompted at least 37 US attorneys general to send a letter demanding that Musk’s AI lab take steps to protect women and children on its platform.

Hedley says the number of safety incidents xAI has experienced and the regulatory attention they received is “far out of proportion to its market share.” As lawmakers grow increasingly alarmed by the cyber capabilities of advanced AI models like Anthropic’s Claude Mythos, new security regulations may be on the horizon. The Trump administration is reportedly already weighing an executive order that would give US intelligence agencies more oversight over AI models.

“It takes serious investment to reign in [AI safety] risks, and it seems that xAI has historically under invested here,” says Adler. The letter cites reporting from the Washington Post that said xAI had just “two or three” people working on safety as of January. “A question investors should be wondering is if xAI stays at the frontier, how costly might it be to, in fact, manage these [risks] responsibly? If they don't, what might be the consequences?”

The letter acknowledges that Musk’s AI lab has made some improvements related to safety recently, such as expanding an existing agreement with the White House to allow tests of its AI models before they’re publicly deployed. However, the authors say more disclosures are needed in order for investors to be able to fully assess the AI safety risks associated with SpaceX.

“xAI’s historical record has been serious enough to warrant scrutiny; it has not, by itself, foreclosed a better future for the company,” the letter reads.

New Watchdog

Adler and Hedley say Guidelight AI Standards is aiming to create new uniform benchmarks that AI labs can reasonably follow. They also want to offer clear assessments of AI safety practices that can be easily understood by people outside the AI world, such as policymakers, investors, and journalists. The letter on xAI is their first public action in this vein.

The cofounders say their experience working at OpenAI inspired them to launch the nonprofit which they hope can help hold AI labs accountable as an independent third party.

“While I was at OpenAI, one of the updates for me was that people on the inside are also worried about this, they don't have all the answers,” says Hedley, who left the ChatGPT maker in 2019.

Adler, who resigned from OpenAI in 2024, says that there’s significant pressure inside of commercial AI labs to handle safety issues quickly, which he says is often appropriate to get the technology out in the world. “At the same time, there are some classes of problems—if you listen to the safety staff inside of the companies—that you just can’t handle on a just-in-time basis,” he says.