It makes sexual images of real people without their consent. That's what's breaking the law.
Not by this article, for sure.
"The service prohibits pornography involving real people’s likenesses and sexual content involving minors, which is illegal to create or distribute.
Still, users have prompted Grok to digitally remove clothing from photos — mostly of women — so the subjects appeared to be wearing only underwear or bikinis."
Didn't you know? Grok does not actually remove people's clothes. Instead it pastes from photos of /other people who are already naked/.