Musk Calls Most Crypto 'Scams' During OpenAI Trial

Musk Drops Crypto Bombshell in OpenAI Courtroom

Elon Musk declared that most cryptocurrencies are 'scams' during sworn testimony at his ongoing trial against OpenAI, delivering the blunt assessment while explaining digital currencies to a federal jury in Oakland, California. The remark came in response to questions about OpenAI's previously unreported plans to raise funds through an Initial Coin Offering (ICO) back in 2018 — a revelation that adds yet another layer to the already complex legal battle between the billionaire and the AI company he co-founded.

New York Times tech reporter Mike Isaac reported Musk's exact words from the courtroom: 'Some of them make sense, but most of them are scams.'

Key Takeaways

• Musk testified that most cryptocurrencies are scams during the OpenAI federal trial in Oakland
• The comment responded to questions about OpenAI's 2018 plans for an ICO fundraising effort
• Musk has previously compared crypto investing to gambling at a casino
• Tesla, SpaceX, and xAI have not responded to requests for comment
• The statement contrasts with Musk's own history of promoting certain cryptocurrencies like Dogecoin
• ICOs were extremely popular in 2017-2018 before widespread regulatory crackdowns

OpenAI's Secret ICO Plans Surface in Court

The testimony revealed a little-known chapter in OpenAI's early history. Back in 2018, the AI research organization apparently discussed raising money through an ICO — a crypto-based fundraising mechanism that was wildly popular during that era. ICOs allowed companies to issue digital tokens to investors, often raising millions of dollars with minimal regulatory oversight.

The 2017-2018 ICO boom saw thousands of projects launch token sales, raising an estimated $20 billion globally. However, regulators including the U.S. Securities and Exchange Commission (SEC) later cracked down on many of these offerings, classifying numerous tokens as unregistered securities.

That OpenAI even considered this route is notable. The organization, which launched in 2015 as a nonprofit AI research lab, has since transformed into a capped-profit entity that has raised over $13 billion from investors including Microsoft. Had OpenAI pursued the ICO route, the company's trajectory — and the entire AI industry landscape — could look dramatically different today.

Musk's Hot-and-Cold Relationship With Crypto

Musk's courtroom comments stand in stark contrast to his own complicated history with cryptocurrency. The billionaire has been one of the most influential figures in the crypto world, capable of moving markets with a single social media post.

Here is a brief timeline of Musk's crypto involvement:

• 2021: Tesla purchased $1.5 billion worth of Bitcoin, sending prices soaring
• 2021: Tesla briefly accepted Bitcoin as payment for vehicles before reversing the decision
• 2021-present: Musk repeatedly promoted Dogecoin, a meme cryptocurrency originally created as a joke
• 2025: During an appearance on Joe Rogan's podcast, Musk compared crypto investing to gambling at a casino
• 2025: Musk's Department of Government Efficiency (DOGE) — sharing its acronym with Dogecoin — sparked renewed speculation about his crypto ties

The contradiction is hard to miss. A man who helped send Dogecoin's market cap into the tens of billions now tells a jury under oath that most crypto is fraudulent. Critics will undoubtedly point to this dissonance, while supporters may argue Musk has always distinguished between 'legitimate' projects and outright scams.

The OpenAI Trial: What's Really at Stake

Musk's crypto commentary, while headline-grabbing, is a sideshow to the main event. The OpenAI trial centers on Musk's allegations that the company abandoned its original nonprofit mission to become a profit-driven enterprise, allegedly breaking promises made to him and other early donors.

Musk co-founded OpenAI in 2015 alongside Sam Altman and others, contributing roughly $50 million to the venture. He departed the board in 2018, and the relationship has deteriorated sharply since then. Musk launched his own AI company, xAI, in 2023, which directly competes with OpenAI through its chatbot Grok.

The trial is being closely watched across the tech industry for several reasons:

• It could set legal precedents for how nonprofit-to-profit conversions are handled in tech
• Internal communications between Musk, Altman, and other OpenAI founders are being made public
• The outcome could impact OpenAI's planned corporate restructuring
• It reveals the internal dynamics of one of the most consequential tech organizations in history
• The case could influence how future AI companies structure their governance

The ICO discussion emerged from these internal communications, offering a rare glimpse into the fundraising strategies OpenAI considered before ultimately securing traditional venture capital and its landmark partnership with Microsoft.

Crypto Industry Reacts to Musk's Comments

Musk's 'scams' characterization has predictably stirred debate across the crypto community. While Bitcoin and Ethereum advocates may agree that many smaller tokens lack substance, Musk's blanket statement paints with an extraordinarily broad brush.

The global cryptocurrency market currently exceeds $2.5 trillion in total capitalization. Bitcoin alone accounts for roughly half of that figure, while Ethereum, stablecoins like USDT and USDC, and a handful of other established projects make up the majority of the rest. The long tail of thousands of smaller tokens — many of which launched during the ICO craze Musk referenced — is where most fraud allegations concentrate.

Industry analysts note that Musk's comments carry particular weight given his influence. Previous tweets and public statements from Musk have triggered massive price swings in Dogecoin, Bitcoin, and other digital assets. Whether his courtroom testimony will similarly move markets remains to be seen, though the context of sworn legal testimony is quite different from a casual social media post.

Benzinga reported that it could not independently verify all of Musk's claims. Tesla, SpaceX, and xAI had not responded to requests for comment at the time of reporting.

Why This Matters for the AI Industry

The intersection of AI and cryptocurrency has become increasingly relevant as both industries mature. Several AI projects have launched their own tokens, and the concept of decentralized AI — where AI models are trained and deployed on blockchain networks — has gained traction among developers and investors alike.

Musk's dismissal of most crypto as fraudulent, combined with the revelation that OpenAI once considered an ICO, raises important questions about how AI companies should fund their operations. The AI industry requires enormous capital — OpenAI reportedly spends billions annually on computing resources alone. The fundraising mechanisms companies choose have profound implications for governance, transparency, and accountability.

Compared to the ICO model OpenAI briefly considered, its current structure — backed by Microsoft's multi-billion-dollar investment — offers more stability but has also drawn criticism for concentrating power in the hands of a single corporate partner. Neither approach is without tradeoffs.

Looking Ahead: Trial Implications and Market Impact

The OpenAI trial is expected to continue for several more weeks, with additional testimony likely to surface more internal discussions and strategic deliberations from the company's early years. Each revelation adds context to the broader narrative of how OpenAI evolved from a small nonprofit into one of the most valuable private companies in the world.

For the crypto market, Musk's comments are unlikely to cause lasting damage, but they underscore a growing sentiment among mainstream tech leaders that the industry needs more rigorous standards. As regulatory frameworks continue to develop in the U.S. and Europe, the line between legitimate blockchain projects and outright scams is likely to become clearer.

For now, the tech world watches Oakland with intense interest — not just for what Musk says about crypto, but for what the trial reveals about the future of artificial intelligence, corporate governance, and the promises that powerful people make when they believe nobody is keeping records.