Texas sues OpenAI and Sam Altman as it seeks $30 billion at a $1.25 trillion pre-money valuation

Texas makes it ten

Texas Attorney General Ken Paxton sued OpenAIPVT$1.18T — OpenAI, private, latest valuation $1.18T and chief executive Sam Altman on October 23, 2026, alleging ChatGPT was marketed as "trustworthy, reliable, and safe" while it produced fake results, known as hallucinations, and endangered minors ¹². The filing lands in the closing window of a round that would value the company at $1.25 trillion ³.

The 67-page complaint↗, filed in Collin County District Court, rests on the Texas Deceptive Trade Practices Act and the SCOPE Act, the state's children's online safety law, and asks the court to block new ChatGPT releases in Texas until a court-appointed independent evaluator approves them ¹². Texas is the tenth state to sue OpenAI this year, and the second, after Florida, to name Altman personally ¹⁴⁵.

The suits came in waves

Florida Attorney General James Uthmeier opened the sequence on June 1 with an 83-page complaint seeking civil penalties that could reach into the billions; on September 28 his office moved to bar OpenAI from developing new models without third-party oversight ⁵. Eight states filed individually on October 14: Iowa, Kansas, Nebraska, West Virginia, Arkansas, Arizona, Idaho and Montana ⁴.

No federal AI law exists, so each state is enforcing its own consumer-protection statute; federal lawmakers have so far failed to keep AI companies in check, Kansas Attorney General Kris Kobach said ⁶. "We are not going to hold our breath" waiting for Congress, he added ⁶.

The price was set in the same weeks

The filings landed inside that window. OpenAI told investors on October 22 it wants signatures by the end of next week on a round of up to $30 billion at a $1.25 trillion pre-money valuation↗, the price before the new cash arrives, led by United Arab Emirates investors and the investment firm Coatue ³.

That price is down from the $1.4 trillion discussed in September, a cut investors trace to doubts about AI spending rather than to the lawsuits; the last closed round, in March, raised $122 billion at an $852 billion valuation ⁷.

What the buyers inherit

Whoever signs inherits a company defending ten state suits plus a reported 42-state coalition investigation↗ ⁵. The IPO prospectus went confidentially to the Securities and Exchange Commission in June, and finance chief Sarah Friar has told employees OpenAI "will be a public company in 2027" ³.

Ten attorneys general have now written the first draft of its risk factors. OpenAI answers that no system is perfect, points to age-specific protections including a restricted ChatGPT for Teens launched in August, and wants industry-wide rules rather than one-company suits ¹⁴; a California jury also found OpenAI not liable in Musk's mid-2026 case against Altman ².

Paxton is in a tight Senate race against Democrat James Talarico ¹, and campaign finance filings show Elon Musk, Altman's chief rival, spent nearly $200 million on ads supporting Paxton ².

Watch the signatures

Two readings will price the risk: the round's final size, with commitments expected by the end of October ⁷, and Anthropic's expected IPO, where a rival carrying the same questions seeks $1.5 trillion to $2 trillion after raising $65 billion at a $965 billion valuation in May ³. The Inference last tracked this race on October 20, reporting that AnthropicPVT$350B — Anthropic, private, latest valuation $350B had told investors it turned its first profit ⁷³.