Elon Musk’s AI startup xAI has just closed an oversubscribed Series E round of $20 billion — up from an initial $15 billion target — as deep-pocketed tech names pile into the AI race despite regulatory scrutiny and bubble warnings. Who backed it The blockbuster round includes heavyweight strategic investors such as Nvidia and Cisco Investments, alongside institutional players like Valor Equity Partners, StepStone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX, and Baron Capital Group. xAI says the money will accelerate its infrastructure buildout and the rollout of consumer and enterprise products powered by its Grok models and the X platform. Scale and roadmap xAI touted 2025 as a year of “breakthrough momentum,” pointing to the expansion of its Colossus I and II data centers and claiming more than one million H100 GPU equivalents across its clusters — positioning them among “the largest GPU clusters in the world.” The company is training Grok 5 and developing Grok Imagine, an image- and video-generation tool, while hiring aggressively to scale both research and product work. Why crypto watchers care The funding and massive GPU capacity matter to crypto and Web3 firms because large GPU fleets and advanced agent models underpin everything from on-chain analytics and tooling to compliance automation and AI-driven trading strategies. Crystal aOS — a compliance agent OS for crypto firms — founder and CEO Joni Pirovich flagged the strategic importance of X’s data and Grok models to Decrypt: “It's worth asking whether X data, used as Grok model training data, could ultimately produce better models than the data that other large language model providers like OpenAI are training on. The oversubscribed round shows that major backers are willing to bet the answer is yes.” Risks and regulatory heat The raise arrives as xAI faces international backlash over Grok’s capacity to generate non-consensual deepfakes and sexualized images of minors. The European Commission publicly condemned Grok’s so-called “Spicy Mode” for producing “illegal” and “appalling” content, and regulators in France, the UK, India, and Malaysia have opened separate probes. On compliance, Pirovich warned that AI misuse and the need for guardrails will remain front and center as rules and standards evolve. She noted xAI has not announced voluntary adherence to standards such as ISO 42001 and said the company’s public materials emphasize model capability over explainability — a red flag for firms in regulated sectors like crypto that rely on auditability and clear governance. What’s next xAI will use the proceeds to expand infrastructure, train bigger models, and ship Grok-powered products to consumers and enterprises. The company declined detailed comment in its statement beyond the fundraising news; Decrypt has reached out to xAI for further response. Bottom line: Musk’s xAI just secured one of the largest private AI financings to date, underscoring investor confidence in scale and proprietary data — but the cash infusion arrives amid serious content-safety and regulatory questions that will be watched closely by crypto firms and regulators alike. Read more AI-generated news on: undefined/news