A federal judge has upheld Minnesota's ban on AI tools that can transform photos of real people into nude images and media, rejecting a request by Elon Musk's xAI to suspend the statute while the company's free-speech challenge proceeds. The ruling allows regulators to begin imposing fines of up to $500,000 per image immediately.

U.S. District Judge Donovan Frank denied xAI's request for a preliminary injunction, an order that would have paused the law until the conclusion of the lawsuit. Weighing what he called the "balance of harms," Frank found that the "public interest tips steeply in favor of the State," according to a memorandum cited by CBS Minnesota.

The judge characterized the measure as a "civil statute aimed at protecting the public from the undisputed harm stemming from AI-nudification technology" and noted it was passed "democratically and nearly unanimously." At the same time, he acknowledged that the underlying First Amendment questions remain complex given the novelty of the technology, expressing confidence the issues would be resolved as the case progresses. For now, the ban stands. The case sits at the center of a broader unresolved legal question: whether generating synthetic images from user prompts counts as protected speech for AI providers, an issue courts have only begun to address as states race to regulate deepfake and nonconsensual imagery.

Last-minute filing undercuts xAI's case

Minnesota's legislature approved the bill this spring, and the governor signed it into law. Yet xAI did not file suit until July 27 — roughly three months later and only days before the August 1 enforcement date. The company then sought a temporary restraining order on July 29, which Judge Frank denied on July 31.

That timing worked against xAI. "If xAI genuinely feared irreparable harm, the Court does not doubt it would have acted more quickly to file this action and move for injunctive relief," Frank wrote.

In other words, a company racing to avoid catastrophic penalties does not wait until the eve of enforcement to seek court help.

Scope of the law and its penalties

The statute, known as HF 1606, is the first of its kind in the United States. It prohibits a provider from letting users generate realistic images that add intimate body parts absent from an original photo of an identifiable person, and from producing such an image on any user's behalf. Each violation carries a civil penalty of up to $500,000, and individuals depicted in these images may bring their own claims for damages.

The federal Take It Down Act and a 2025 Texas law targeting deepfakes both hinge on whether the maker knew the image was nonconsensual. Minnesota removed that requirement entirely, meaning a provider can be held liable even without knowledge that a nude image was created. That provision is the core of xAI's objection. The bill cleared the House 132-1 and the Senate 65-0 following reports of a man who used social-media photos to fabricate sexual images of more than 80 women he knew.

The strict-liability design matters beyond Minnesota. Because the per-image penalty structure leaves no room for a provider to claim it was unaware of specific violations, other states watching how courts treat HF 1606 could model future AI content laws on its approach — or steer away from it if the challenge succeeds on appeal.

The scale behind Grok Imagine

Minnesota Attorney General Keith Ellison, who defended the law, called the ruling a victory for the state's residents. "I am extremely proud to be defending this law, and along with it, the dignity of the people of Minnesota," he said, adding that the statute continues to block products like xAI's Grok Imagine from generating sexualized images.

According to a report cited in the ruling, Grok generated approximately 3 million sexualized images in the 11 days after a new image-editing feature launched, including roughly 23,000 that appeared to depict children. Cryptopolitan previously reported that xAI, defending its record, said it suspended 52,222 accounts this year and filed 73,604 reports with the National Center for Missing and Exploited Children.

xAI's attorneys have now filed notice that they will ask the 8th Circuit Court of Appeals to review the injunction denial. In earlier arguments, the company had proposed suspending features for Minnesota users rather than risk fines. The appeal means the underlying constitutional questions will move to a higher court, with the Eighth Circuit's eventual handling of the injunction — and the district court's final merits ruling still to come — shaping how much of the law survives in practice.