Elon Musk XChat launched with controversial “Bitcoin-style encryption” claims that immediately drew criticism from cybersecurity experts, and while…

Elon Musk XChat launched with controversial “Bitcoin-style encryption” claims that immediately drew criticism from cybersecurity experts, and while his xAI company announced a $300 million stock sale valuing the firm at $113 billion. The messaging platform rollout coincides with major financing moves as cryptocurrency markets and also TSLA investors monitor security risks and market implications right now.

All new XChat is rolling out with encryption, vanishing messages and the ability to send any kind of file. Also, audio/video calling.

This is built on Rust with (Bitcoin style) encryption, whole new architecture.

— Elon Musk (@elonmusk) June 1, 2025

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XAI’s $300M Stock Sale and Xchat Draw Fire Over Encryption Risks

$300 Million XAI Stock Sale Targets $113 Billion Valuation

The xAI stock sale represents a secondary offering allowing employees to sell shares while also attracting new investors to the artificial intelligence venture. Morgan Stanley simultaneously launched a $5 billion debt package for the company, and with commitments due June 17 and proceeds designated for general corporate purposes at the time of writing.

This aggressive financing follows xAI‘s March acquisition of X for $33 billion, and creating a combined entity worth $113 billion. The valuation reflects strong investor interest in AI companies, particularly those associated with Musk’s expanding technology empire right now.

Elon Musk XChat Encryption Claims Face Expert Backlash

Security experts immediately dealt with the Elon Musk XChat “Bitcoin-style encryption” terminology after the platform’s Sunday announcement. The messaging service promises end-to-end encryption, vanishing messages, and also cross-platform file sharing without needing phone numbers.

Udi Wertheimer had this to say about the encryption claims:

“To those wondering, the cryptographic components in bitcoin are cryptographic hashing and cryptographic signing. Neither of these are encryption.”

to those wondering, the cryptographic components in bitcoin are cryptographic hashing and cryptographic signing

neither of these are encryption

encryption is when you have a message and want to keep it secret. nothing in the bitcoin protocol is encrypted (kept secret) it’s all…

— Udi Wizardheimer (@udiWertheimer) June 1, 2025

Technical Inaccuracies Highlight Security Risks

Ian Miers stated regarding Bitcoin’s actual utility:

“I’ve always explained Bitcoin’s lack of privacy as ‘It’s Twitter for your bank account.’ Everything you do is broadcast publicly—it’s the opposite of private.”

I’ve always explained Bitcoin’s lack of privacy as ‘It’s Twitter for your bank account.’ Everything you do is broadcast publicly—it’s the opposite of private.

Now it’s come full circle, with Elon describing Twitter’s (sorry, X’s) encrypted DMs as ‘Bitcoin-style encryption. https://t.co/tCw3XHUIpM pic.twitter.com/xntdee58U1

— Ian Miers (@secparam) June 1, 2025

The security risks associated with confusing terms compound existing platform challenges, as X experienced significant outages during the Elon Musk XChat beta testing period right now.

Cryptocurrency Market Response Remains Muted

Wei Dai offered this interpretation:

“What does Elon mean by ‘Bitcoin style encryption’? Here’s one plausible explanation: ‘Bitcoin style’ == ‘Peer-to-peer’ == ‘end-to-end’. So ‘Bitcoin style encryption’ means ‘end-to-end encryption’.”

What does Elon mean by “Bitcoin style encryption”? Here’s one plausible explanation:

“Bitcoin style” ~= “Peer-to-peer” ~= “end-to-end”

So “Bitcoin style encryption” means “end-to-end encryption” pic.twitter.com/zU4zw6ihT5

— Wei Dai (@_weidai) June 1, 2025

Cryptocurrency prices showed minimal reaction to both the xAI stock sale and also Elon Musk XChat announcements, with Bitcoin trading flat near $105,000 despite the technical controversies at the time of writing.

TSLA Stock Faces Pressure from Divided Focus

TSLA stock confronts additional pressure as investors question Musk’s attention split between the messaging platform launch and also the massive AI company fundraising efforts. The dual developments highlight challenges in managing multiple high-stakes ventures simultaneously.

It’s nonsensical. Bitcoin transactions aren’t encrypted—they’re signed. Signatures say who wrote something; they don’t keep secrets.
Some messaging apps use Bitcoin-style addresses as usernames, but 1) not X DMs and 2) you still need to explain what encryption scheme you’re using

— Ian Miers (@secparam) June 1, 2025

The convergence of questionable encryption claims and also aggressive AI value raises concerns about cryptocurrency terminology misuse in mainstream technology products. As both initiatives face scrutiny, and accurate technical communication becomes essential for keeping investor confidence and also regulatory compliance right now.

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