Stability AI Pushes Back Against ‘Seller’s Remorse’ Allegations in Lawsuit

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Stability AI seller remorse

Stability AI has launched a vigorous defense against claims of “seller’s remorse” brought by artificial intelligence expert Cyrus Hodes in a California federal court. Hodes alleged that he played a pivotal role in developing the technology behind Stability AI but was deceived into selling his minority stake in the company. Stability AI and its CEO, Mohammad Emad Mostaque, have countered that Hodes’ allegations are an attempt to undo a legitimate business transaction.

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Hodes had asserted that he and Mostaque collaborated on creating Stability AI, responsible for the innovative Stable Doodle tool, using generative AI to aid governments in responding to the COVID-19 pandemic. Hodes claimed to have been instrumental in securing funding and marketing for the startup.

However, when Hodes discovered alleged embezzlement by Mostaque and his history of misleading investors, he decided to sell his 15% minority stake for $100 in May 2022, believing it to be of little value. He now alleges that the stake, which Mostaque was secretly developing into a text-to-image generator, is worth $500 million.