Musk accuses Twitter of fraud as buyout battle heats up

SAN FRANCISCO – Elon Musk has accused Twitter of fraud, claiming the social media platform misled him about key aspects of its business before agreeing to a $44 billion buyout as their legal battle heats up.

The Tesla boss filed the lawsuit as he fights a lawsuit from Twitter that seeks to force him to shut down a deal he tried to reverse.

In a filing with a Delaware court, Musk argued that the number of users actually showing ads on the platform is about 65 million fewer than the firm’s 238 million.

“The Twitter revelations are slowly unraveling, and Twitter is frantically closing the floodgates on information in a desperate attempt to prevent Musk’s side from exposing his fraud,” the statement said.

Musk is asking the court to release him from the agreement and force Twitter to pay him an amount of damages to be determined at the trial, which begins on October 17.

At stake are billions of dollars, but so is the future of Twitter, which Musk has said must allow all legal speech — an absolutist stance that has raised fears the network could be used to incite violence.

In its own statement, Twitter rejected the mercurial billionaire’s argument, calling it “as implausible and contradictory as it sounds.”

“According to Musk, he is a billionaire founder of several companies who was advised by Wall Street bankers and lawyers – he was duped by Twitter into signing a $44 billion merger agreement,” Twitter said in a statement.

Musk filed a countersuit last week, which was finally made public on Thursday.

The entrepreneur accused Twitter not only of cheating him, but also of lying to US market regulators.

Musk relied on Twitter’s filings with the Securities and Exchange Commission because he believed conducting his own due diligence — examining the company’s value — was “expensive and ineffective,” according to his lawsuit.

Analyst Dan Ives said the social media platform’s share price gives a clear indication of where investors think the fight will end.

“Musk’s countersuit against Twitter raises some interesting points, but legally speaking, the Street sees it as more of a sign of weakness than strength for Musk,” he told AFP.

Twitter shares rose 3.5 percent to $42.52 on Friday, while Tesla shares fell more than 6.5 percent.

“TWITTER PERFORMED IN ALL ASPECTS”

The legal battle is gathering pace as preparations begin for a five-day trial in the Delaware Court of Chancery, which specializes in complex, high-stakes business battles.

The battle stems from Musk courting Twitter’s board with an offer of $54.20 a share in April, but then announcing in July that their deal had been terminated because the firm had misled him about its count of fake and spam accounts.

Twitter stands by its estimates that bots make up less than five percent of users.

The social media platform said in court that Musk’s claim that the account’s false figure exceeded 10 percent was “unsubstantiated.”

Twitter also disputed Musk’s claim that he has the right to walk away if his bot count is found to be wrong, as he did not seek information on the subject when he made the buyout offer.

The company accuses Musk of making up the story to avoid a merger deal he no longer found attractive.

“Twitter has complied in all respects with the terms of the merger agreement,” the company said in a court filing.

“Musk’s counterclaims, based on misrepresentation, misrepresentation and outright deception, change nothing.”

The social media platform urged shareholders to support the deal, scheduling a vote on the merger for September 13.

Taking questions at Tesla’s annual shareholder meeting on Thursday, Musk was asked if his potential ownership of Twitter could distract him from running the electric car company.

“I think Tesla would, you know, continue to do very well even if I were abducted by aliens or returned to my home planet,” he joked, drawing laughter and applause.

“Honestly, I don’t have a simple answer,” Musk added.

He assured shareholders that he has no plans to leave his position as Tesla CEO at this time.