Seventh Circuit affirms dismissal of AI-CSAM possession charge, upholds production and distribution counts

On 25 August 2026, the Seventh Circuit affirmed the dismissal of a single federal possession count against Steven Anderegg, a Wisconsin software engineer who used Stable Diffusion to generate hundreds of photorealistic sexual images depicting prepubescent children, holding that 18 U.S.C. 1466A could not constitutionally apply to private in-home possession where the government conceded the images did not depict or could be linked to an actual child. The ruling left three federal charges intact: production, distribution and transfer of the AI-generated material to a minor under 16. The case began after Meta reported to the National Center for Missing and Exploited Children that an Instagram user had sent apparent AI-generated CSAM to an account belonging to a minor; investigators executed a search warrant and found Anderegg had installed Stable Diffusion locally and used curated prompts to generate the images. Two judges wrote separately urging the Supreme Court to revisit the 2002 precedent that constrained their decision.

Production, distribution and transfer remain crimes because they involve conduct directed at another person, and it is precisely that directed conduct that Guardii is built to intercept. The anti-CSAM detection module identifies an adult account sending sexual imagery depicting a minor to a child, whether the material is photographed, rendered or AI-generated, and blocks transmission before the image reaches the target. The anti-grooming filter flags the preceding conversation in which trust was built and a request for imagery was made, surfacing the exchange to a parent, school or platform moderator before a child produces material in response. Where a child is coerced into generating or sharing explicit content, the anti-sextortion module detects the threat pattern and escalates the case to the right authority in real time. Guardii operates at the layer where harm is transmitted and received, not where it is privately possessed, targeting the transmission vectors the Seventh Circuit acknowledged remain fully prosecutable.