Co-Founder of Generative AI Startup Stability AI Files Lawsuit Alleging Fraud and Embezzlement by CEO Emad Mostaque

Cyrus Hodes, a co-founder of generative AI startup Stability AI, has filed a lawsuit against the company and its CEO, Emad Mostaque, alleging fraud and embezzlement. Hodes claims that Mostaque misled him regarding the value of his stake in the business, which was sold for $100 but would have been worth $150 million.

The lawsuit also accuses Mostaque of destroying evidence and embezzling funds from external investors. These allegations cast a shadow over Stability AI, which gained recognition for its viral text-to-image generation system Stable Diffusion.

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