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Elon Musk accuses Twitter of fraud and says 'he has the full right' to end deal

In a court filing, Musk said the influential social media platform covered up security flaws, adopting allegations by a Twitter whistleblower who testified before the Senate on Tuesday.
Image: Elon Musk
Elon Musk on June 14, 2018, in Chicago, Ill.Joshua Lott / Getty Images file
/ Source: Reuters

WILMINGTON, Del. — Billionaire Elon Musk accused Twitter of fraud by concealing serious flaws in the social media company’s data security, which the entrepreneur said should allow him to end his $44 billion deal for the company, according to a Thursday court filing.

Musk, the world’s richest person, amended his previously filed lawsuit by adopting allegations by a Twitter whistleblower, who told Congress on Tuesday of meddling on the influential social media platform by foreign agents.

The chief executive of electric vehicle maker Tesla also alleged that Twitter hid from him that it was not complying with a 2011 agreement with the Federal Trade Commission regarding user data.

“Needless to say, the newest revelations make undeniably clear that the Musk Parties have the full right to walk away from the Merger Agreement -- for numerous independently sufficient reasons,” said the amended countersuit.

Musk said the claims by the whistleblower, former head of Twitter security Peiter “Mudge” Zatko, amounted to fraud and breach of contract by Twitter.

Musk has asked a Delaware judge to find that he was not obligated to close the deal while Twitter wants the judge to order Musk to buy the company for $54.20 per share. A five-day trial is scheduled to begin Oct. 17.

Twitter shares were up 0.6% in late Thursday trading.

Twitter has said it conducted an internal investigation of Zatko’s allegations and determined they lacked merit. The company has said Zatko was fired for poor performance.

Twitter’s lawyers have said in court that the whistleblower claims that Musk folded into his case were either not grounds for terminating the deal agreement or failed to meet the standard for fraud.