Elon Musk Slams Twitter Whistleblower’s Claim As Reason For Backing Out of Deal: Elon Musk has officially terminated a $44 billion takeover bid for the social media business, citing claims made by Twitter whistleblower Peiter “Mudge” Zatko. Zatko’s allegations, which were first published by CNN and The Washington Post last week, were highlighted in a letter that Musk’s legal team addressed to Twitter on Monday.
From November 2020 until his termination in January, Zatko oversaw security at Twitter. Musk’s letter, which was made public in a Securities and Exchange Commission filing, refers to Zatko’s claims that Twitter (TWTR) is in breach of its consent order with the Federal Trade Commission from 2011, that the company has serious security flaws, that it has violated intellectual property rights, and that it consented to hire Indian government agents as a result of pressure from the nation.
Zatko also asserts that the company has serious security vulnerabilities. If true, the charges, according to Musk’s legal team, indicate violations of Twitter’s end of the acquisition arrangement and should entitle him to withdraw from the agreement.
According to the letter, Twitter’s claimed misrepresentations to its board and regulators, as well as any ensuing investigations, have or could have a “substantial detrimental effect” that would permit him to terminate the agreement by the terms of the original contract.
According to the letter, Musk’s reasoning is in addition to, not in place of, those he gave when he originally revealed in July that he was accusing Twitter of breaking the agreement and wanted to withdraw. Days after receiving Musk’s letter of termination in July, Twitter filed a lawsuit against him, charging him with breaking the contract and requesting that a Delaware court ordered the billionaire complete the acquisition.
In October, the matter is scheduled to go to trial. In a letter to Musk on Tuesday, Twitter rejected the billionaire businessman’s most recent attempt to scuttle the agreement, calling it “invalid and unjust.” Twitter has attacked Zatko and generally refuted his accusations.
As Twitter had previously remarked, Musk’s letter “is based purely on comments made by a third party that are rife with contradictions and falsehoods and lack critical context.” The business stated that it still intended to finalize the purchase at the agreed-upon price and terms and that it “has not experienced and is not projected to suffer a Company Material Adverse Effect.” In response to CNN’s request for comment, Twitter referred to its letter to Musk.
The most recent indication of the effect the whistleblower disclosure is expected to have on the legal dispute is the fresh termination letter. Zatko was served with a subpoena by Musk’s legal counsel and is scheduled to show up for a deposition on September 9. In a statement released on Monday, Zatko’s attorneys, Debra Katz and Alexis Ronickher stated that the defendant “would comply with his legal requirements of that subpoena” and that his attendance during the deposition was not his choice.
He didn’t make his whistleblower revelations to the proper government agencies to help Musk or hurt Twitter, but rather to defend the American people and Twitter stockholders. Last week, Musk’s attorney Alex Spiro revealed to CNN that Zatko had already been subpoenaed in the case before his whistleblower complaint was made public.
— TESLARATI (@Teslarati) July 31, 2022
Last Wednesday, at a court proceeding related to the case, Spiro repeatedly brought up Zatko. Spiro made the implication during the hearing that Twitter’s estimate for spam accounts and monetizable daily active users (mDAU), a crucial metric it provides to investors, are not ones the billionaire’s team trusts, and that Musk’s team is looking for information that would enable them to test the measurements. Musk’s letter also makes mention of Zatko’s scheduled testimony at a Senate committee on September 13.
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