Elon Musk’s legal team cited allegations from a Twitter whistleblower in a new request to terminate Musk’s agreement to purchase Twitter for about $44 billion, according to a document filed with the Securities and Exchange Commission (SEC) Monday.
The filing is the latest salvo in Musk’s battle to back out of the deal as he awaits a trial set for mid-October with Twitter to resolve whether he has to go through with the purchase.
Musk’s argument to retreat from his purchase, agreed to in April, is based largely on allegations that Twitter failed to provide him with accurate information about the number of spam bot accounts on the platform in breach of the term agreements.
In former Twitter security chief Peiter Zatko’s complaint, reported by The Washington Post and CNN last week, he alleged the company is susceptible to hacks by foreign governments and is not in compliance with a 2011 consent decree from the Federal Trade Commission (FTC) to improve security on the platform.
He also alleged the company does not accurately represent the number of spam bots on the account based on its count of monetizable daily active users.
“These allegations, if true, demonstrate that Twitter has breached the following provisions of the Merger Agreement, thereby giving the Musk Parties the right to terminate the Merger Agreement,” Musk’s lawyers wrote in the SEC filing.
A spokesperson for Twitter cited a letter the company filed Tuesday in response to Musk’s latest request.
Twitter’s letter calls the argument “invalid and wrongful” under the terms of the agreement.
“It is based solely on statements made by a third party that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context,” the letter states.
After the complaint was reported last week, a Twitter spokesperson called it a “false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context.”
“Mr. Zatko’s allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders,” the spokesperson added.
Musk’s legal team is leaning into Zatko’s disclosure: Musk’s lawyers subpoenaed Zatko after the disclosure was reported.
Debra S. Katz and Alexis Ronickher, attorneys for Zatko, confirmed in a statement late Monday night that Zatko was served with a subpoena from Musk in the trial against Twitter and that he will comply to appear at the deposition.
“He did not make his whistleblower disclosures to the appropriate governmental bodies to benefit Musk or to harm Twitter, but rather to protect the American public and Twitter shareholders,” Zatko’s attorneys said.
The complaint was reportedly sent to the SEC, FTC and Department of Justice, as well as several congressional committees.
Zatko is scheduled to appear before the Senate Judiciary Committee on Sept. 13.
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This story was originally published August 30, 2022 9:55 AM.