Sources say Musk has asked the state AG to auction OpenAI's stake in the nonprofit's restructuring. Billionaire Elon Musk's lawyer has asked the attorneys general of the states of California and Delaware to pressure OpenAI to auction off a major stake in his business to determine the fair value of its charitable assets during a corporate restructuring, people familiar with the matter said. Sources told Reuters on Thursday.
Musk's attorney Mark Toberoff sent a letter to the states' top law officials on Tuesday, arguing that they should provide a competitive bidding process to determine the fair market value of OpenAI's charitable assets in order to “protect the public interest.” interests” as the startup works on removing its nonprofit control, according to sources.
“Alan is involved in a legal battle,” an OpenAI spokesperson said in a statement. We are focused on our mission and work.” The startup previously said the valuation of its charitable assets would be determined by independent financial advisors. The Financial Times reported on the letter earlier in the day. Sam Altman co-founded OpenAI with Musk and others and became one of the biggest names in the technology world after the launch of the artificial intelligence tool ChatGPT in 2022. Backed by Microsoft (MSFT.O), OpenAI was valued at $157 billion after raising $6.6 billion from investors in October.
Reuters first reported in September the ChatGPT maker's plan to restructure its corporate structure so that its profit-based business is independent of nonprofit control. The company detailed the plan in late December, saying it would create a public benefit corporation to make it “easier to raise more capital than we thought” and that the plan would result in “the best-resourced nonprofit in history.” Organizations”.
Musk, who owns AI startup xAI, is suing OpenAI in the courts in an effort to block the transformation of OpenAI, which he argues as detracting from the mission for which he funded the company. The court will likely rule on the preliminary injunction filed by Musk's lawyers later this month.
Delaware Attorney General Kathy Jennings took a stand on the case by sending an amicus brief to the Court on December 29, stating that she is currently reviewing OpenAI's proposed changes. “Delaware has claimed on record that it is monitoring the situation closely, which certainly reduces the judge's willingness to block that transaction,” Darryl Jones, a law professor at Florida A&M University, wrote in a blog. “What Musk and Encode consider to be dangerous, unwise, or the product of a fiduciary breach.” Encode is an AI security nonprofit that joined Musk's efforts to stop the for-profit transition of OpenAI.
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