Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.
Elon Musk Outlines New Reasons to Terminate Twitter Deal Citing Whistleblower – Featured Bitcoin News
Tesla CEO Elon Musk has outlined new reasons for calling off the $44 billion deal to buy Twitter in a new filing with the US Securities and Exchange Commission (SEC). Citing a whistleblower report, Musk’s lawyer said the allegations, known to the social media giant but not disclosed to Musk, indicate “widespread misconduct at Twitter.”
Elon Musk presents several reasons for ending the Twitter deal in new SEC filing
Tesla CEO Elon Musk has found more reasons to drop his $44 billion offer to buy Twitter Inc. Musk’s lawyer filed a letter he sent to Twitter with the US Securities and Exchange Commission (SEC) on Monday to provide further notice on termination of the agreement.
Musk officially ended his offer to buy Twitter on July 8. Twitter then sued the Spacex CEO to force him to end the deal, prompting Musk to sue the social media giant.
In the letter sent to Twitter’s chief legal officer Vijaya Gadde, Musk’s lawyer said:
Allegations regarding certain facts known to Twitter prior to and as of July 8, 2022, but not disclosed to the Musk Parties prior to and at that time, have since come to light that provide additional and distinct grounds for terminating the merger agreement.
The letter refers to a whistleblower report to Congress, the SEC, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) filed on July 6 by Peiter “Mudge” Zatko, Twitter’s former chief security officer. The report was recently published in the Washington Post.
Musk’s lawyer argued that “the Zatko complaint alleges widespread misconduct at Twitter — all of which was disclosed to Twitter’s directors and senior executives, including [CEO] Parag Agrawal — it is likely to have serious consequences for Twitter’s business.”
For example, Zatko alleged that “Twitter is in material breach” of data protection, unfair trade practices, and consumer protection laws and regulations. Additionally, he said Twitter has violated a consent decree it entered into with the FTC in 2011.
Alleging that “Twitter’s platform is substantially built on the misappropriation and infringement of third-party intellectual property rights,” the whistleblower claimed:
Twitter is uniquely vulnerable to systemic disruptions resulting from data center failures or malicious actors, a fact that Twitter management (including the CEO) has ignored and attempted to obscure.
Moreover, Zatko explained that “Twitter’s SEC filing contained untrue statements of material facts or omitted to state material facts necessary to make the statements therein not misleading.”
He further alleged that “Twitter’s CEO, Parag Agrawal, knowingly presented false and misleading reports to Twitter’s board of directors to cover up obvious vulnerabilities in Twitter’s security and data protection infrastructure.”
A number of authorities in different countries are currently investigating the allegations made by Zatko, Musk’s lawyer relayed, adding:
Twitter will now also face a myriad of civil lawsuits, asserting claims under various privacy and cybersecurity laws, state consumer protection laws, false advertising laws, intellectual property theft and misrepresentation, and common law claims, such as unjust enrichment, fraud and infringement contract.
There are also questions about intellectual property. The whistleblower revealed that “Twitter apparently never acquired the rights to Twitter’s core machine learning engines, which the Musk parties understand are fundamental to the Twitter platform itself,” Musk’s lawyer wrote.
The case is scheduled to go to trial in Delaware Chancery Court for five days starting on October 17. However, Musk’s legal team is trying to delay the trial by a month in light of the whistleblower’s disclosure.
Do you think Elon Musk has enough reasons to walk away from the $44 billion deal to buy Twitter? Let us know in the comments section below.
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