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The California Attorney General's Office is investigating XAI and its Grok AI assistant, focusing on issues related to the generation of inappropriate AI images by the product. This regulatory action reflects a global trend toward strengthening oversight of generative AI content. As AI models expand their applications within the Web3 and crypto ecosystems, compliance and content governance are becoming key concerns for regulatory authorities worldwide. Such investigations also serve as a warning to other AI product developers — they must find a balance between innovation and legal compliance.