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Elon Musk Cites Twitter Whistleblower in New Letter Seeking Termination of Acquisition

Its take two for Elon Musks legal team, because they seek to terminate the billionaires $44 billion deal to get Twitter.

In a letter to Twitter leadership disclosed in a securities filing Tuesday, Musks team lays out a fresh case for why the offer must called off, predicated on revelations from Twitter whistleblower Peiter Mudge Zatko, the companys former chief security officer.

Zatko alleges that Twitter misled government regulators and the companys own board concerning the prevalence of spam on the platform, along with its security protocols and internal reporting. He spoke out yesterday in interviews with The Washington Post and CNN.

The Zatko Complaint alleges far-reaching misconduct at Twitter which was disclosed to Twitters directors and senior executives, including (CEO) Parag Agrawal that’s more likely to have severe consequences for Twitters business, Musks attorneys wrote in the letter. They previously sent a letter terminating the offer on July 8, with the case now in Delaware Chancery Court.

Zatko made a number of allegations, including that Twitter had not been in compliance with a 2011 FTC consent decree; that the business was susceptible to hackers; that the business was infringing on third-party intellectual property; and that the business gave jobs and user information usage of agents of the Indian government, among other claims.

Zatko has been deposed by Musks team and contains decided to testify.

The reality supporting these breaches, that have been withheld from the Musk Parties but recognized to Twitter by the date of the Merger Agreement and during the July 8 Termination Notice, provided additional bases to terminate the Merger Agreement by that date and offer additional bases to terminate the Merger Agreement today if the Musk Parties termination of the Merger Agreement pursuant to the July 8 Termination Notice is set to be invalid for just about any reason. This offers a basis for rescission [revoking the legality of the merger agreement], the lawyers wrote. For the avoidance of doubt, these bases come in addition to, rather than instead of, the bases for termination identified in the July 8 Termination Notice.

The pivot to rescission marks a legal turn for Musks team, as along with attempting to argue that Twitter is in breach of the contract, they’re now arguing that the merger agreement itself was invalid, because of the alleged fraud from Twitter executives, that was hidden from Musk.

Twitter taken care of immediately Musks team in a letter of its Tuesday morning.

As was the case together with your July8, 2022 purported notice of termination, the purported termination established in your August29, 2022 letter is invalid and wrongful beneath the Agreement, the companys lawyers write. It really is based solely on statements created by an authorized that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context. Unlike the assertions in your letter, Twitter has breached none of its representations or obligations beneath the Agreement, and Twitter have not suffered and isn’t more likely to suffer an organization Material Adverse Effect.

Musks original termination letter was built around Twitters claims concerning the amount of bots on its platform, and whether it represented those numbers accurately in securities filings. Zatkos revelations appear to support Twitters claims concerning the amount of monetizable daily active users (mDAUs), the metric Twitter uses in its filings, but he adds that the platform has a lot more bots than are counted in the mDAU number.

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