Elon Musk’s artificial intelligence company has raised $20bn in its latest funding round, the startup announced Tuesday, even as its marquee chatbot Grok faces backlash over generating sexualized, nonconsensual images of women and underage girls.

xAI’s Series E funding round featured big-name investors, including Nvidia, Fidelity Management and Resource Company, Qatar’s sovereign wealth fund, and Valor Equity Partners – the private investment firm of Musk’s longtime friend and former Doge member Antonio Gracias. The funding round exceeded its initial $15bn target, according to xAI’s press release. The company touted Grok’s image-generation abilities in the announcement of its latest funding round.

xAI lacks the prominence of its rival OpenAI, the maker of ChatGPT, and has continually drawn criticism for generating misinformation, antisemitic content and now potentially illegal sexual material. Nonetheless, the company has been able to win government contracts and billions of dollars in investment amid the AI boom. xAI’s latest funding round comes during some of the fiercest pushback against the company yet, with lawmakers in multiple countries demanding answers regarding Grok’s output.

Over the past week, Grok has responded to tens of thousands of prompts from users on X requesting the chatbot remove women’s clothing in images or pose them in sexualized ways. Many of the prompts have included images of women who have not given their consent to be digitally undressed, including Ashley St Clair, the estranged mother of one of Musk’s children.

“I felt horrified, I felt violated, especially seeing my toddler’s backpack in the back of it,” St Clair told the Guardian, adding that her complaints to X did not go anywhere. The Guardian’s request for comment from xAI resulted in an automated response stating “Legacy Media Lies”.

Some of Grok’s images included a photo of a 12-year-old girl, which the chatbot manipulated to remove the child’s actual clothing and depict her instead in a bikini. Other suggestive images have featured children as young as 10 years old. The chatbot posted an apology on Friday that stated lapses in its safeguards led to generating images of minors, but continued to generate sexualized images of children in the ensuing days.

xAI has been seeking investment for months as it works to increase its AI models’ capabilities and build out enormous data centers in Memphis, Tennessee. The company claimed the new funding would help its core mission of “Understanding the Universe”.

French ministers reported Grok’s output to prosecutors on Friday and referred the episode to media regulators to decide whether the images violate the European Union’s Digital Services Act. Liz Kendall, the UK’s technology secretary, also condemned Grok’s deepfakes on Tuesday as “appalling and unacceptable”, calling on the British regulator Ofcom to take action. Ofcom posted on X that it had made contact with xAI to determine whether an investigation is warranted. Lawmakers in the US, where xAI is headquartered, have remained comparatively mum.

The company made a similar funding announcement in July of last year during another controversy over Grok. A week after the chatbot began posting antisemitic content and pro-Nazi ideology, including describing itself as “MechaHitler”, xAI announced it had secured a contract with the US Pentagon worth nearly $200m.