Elon Musk’s latest court filing alleges Twitter is committing fraud based on the testimony of Twitter’s former Security Chief in front of Congress.
In August Twitter’s former Security Chief alleged that Twitter endangered national security through egregious deficiencies at the company.
Then last week, Twitter’s former Security Chief Zatko shared in front of Congress that Twitter leadership is misleading the public and can track any user’s location at any time.
Elon Musk paid attention because in a court filing last week Musk referred to the former Security Chief’s comments in front of Congress to allege that Twitter was committing fraud.
This is really, really serious stuff.
Market Watch reported over the weekend:
Tesla Inc. Chief Executive Elon Musk pointed in a Thursday court filing to a whistleblower’s “devastating analysis” as he alleged “fraud” on the part of Twitter Inc. executives, a dynamic that he says supports his attempt to invalidate his $44 billion deal for the company.
Peiter “Mudge” Zatko, Twitter’s former security chief, spoke of lapses in the social-media company’s security policies, most recently in testimony to the Senate Judiciary Committee on Tuesday. A judge ruled last week that Musk could include information from Zatko in his counterclaim against Twitter, and his legal team filed a 200-plus page updated complaint Thursday afternoon.
Musk’s lawyers referred to Zatko’s commentary as “what can only be described as one of the most significant whistleblower complaints in recent history” in a filing made in Delaware Chancery Court. The court is scheduled to hold a five-day trial in October as Musk seeks to back out of his Twitter acquisition and the social-media company looks to make him go through with the deal under the agreed-upon terms.
Musk’s lawyers said Thursday that Twitter TWTR, -1.64% responded to Zatko’s internal inquiries by doing “exactly what it did to Musk when he started raising questions about the false and spam accounts” and monetizable daily active user [mDAU] numbers on Twitter’s platform, as Twitter fired Zatko and “stonewalled” Musk.
“Both episodes reveal the vast and unlawful lengths that Twitter will go to avoid disclosing the true state of the company — its ‘key’ financial metrics, security infrastructure, intellectual property infringement, and legal compliance — to the public,” Musk’s updated claim said. “And indeed, discovery in this case has already unearthed proof that Twitter executives expressed a completely different view of the proper [user-base] metrics in private than what they have been telling investors for years.”
The lawyers further said that Zatko’s claims show Twitter is in breach of a consent decree with the Federal Trade Commission and that it “has failed to disclose that its executives have committed fraud on the company’s board.”
This does not look good for Twitter. However, as with other cases across the country, the makeup and far-left bias of the court is the biggest factor in this case.