Elon Musk’s new Twitter letter seeks to end deal based on whistleblower’s “Mudge” – The Hollywood Reporter

It took Elon Musk’s legal team twice as they sought to end the billionaire’s $44 billion purchase of Twitter.

In a letter to Twitter leadership disclosed in a securities filing Tuesday, Musk’s team made a new case for why the deal needs to be shelved, based on disclosures from the company. Twitter whistleblower Peiter “Mudge” Zatko, the company’s former chief security officer.

Zatko alleges that Twitter misled government regulators and the company’s own board about the prevalence of spam on the platform, as well as its own internal reporting and privacy protocols. . He said it a week ago in interviews with washington articles and CNN.

“The Zatko complaint alleges far-reaching misconduct at Twitter — all of which were disclosed to Twitter executives and senior executives, including (CEO) Parag Agrawal — potentially with consequences.” serious consequences for Twitter’s business,” Musk’s attorney wrote in the letter. They previously sent a letter of “termination” of the agreement on July 8, with the case now at Delaware Chancery Court.

Zatko has made various allegations, including Twitter’s failure to comply with the 2011 FTC consent decree; that the company is vulnerable to hackers; that the company has infringed the intellectual property rights of a third party; and that the company provided employment and access to user information to agents of the Indian government, among other claims.

Zatko was brought down by Musk’s team and has agreed to testify.

“The facts supporting these violations, which were withheld by the Musk Parties but made known to Twitter on the date of the Merger Agreement and at the time of the Notice of Termination on July 8, provided additional grounds for termination of the Merger Agreement as of that date, and provide additional grounds for termination of the Merger Agreement today if Musk’s Parties terminate the Merger Agreement pursuant to a Notice of Termination of May 8. 7 is determined to be invalid for whatever reason. This also forms the basis for cancellation [revoking the legality of the merger agreement],” the lawyers wrote. “For the avoidance of doubt, these grounds supplement and do not supersede the termination grounds identified in the July 8 Notice of Termination.”

The pivot to annulment marks a legal turning point for Musk’s team, as in addition to trying to argue that Twitter is in breach of contract, they also argue that the merger agreement itself is invalid, due to alleged fraud from the Twitter executive, which has been “hidden” by Musk.

Twitter responded to Musk’s team in a letter on Tuesday morning.

“As was the case with you with the July 8, 2022 purported termination notice, the purported termination set forth in your August 29, 2022 letter is invalid and wrong under the Agreement. ,” wrote the company’s attorney. “It is based solely on statements made by a third party, which, as Twitter has previously stated, are full of contradictions and inaccuracies and lack significant context. Contrary to the assertions in your letter, Twitter has not breached any of its statements or obligations under the Agreement, and Twitter has not suffered and is unlikely to suffer a serious Adverse Effect. importance of the Company. “

Musk’s initial termination letter built on Twitter’s claims about the number of bots on its platform and whether it accurately represented those numbers in stock filings. Zatko’s disclosure seems to support Twitter’s claim of monetizable daily active users (mDAU), a metric Twitter uses in its profile, but he added that the platform has more bots than mDAU counts.

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