Elon Musk files publicly updated counterclaims against Twitter based on whistleblower disclosure | CNN Business


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Elon Musk’s legal team on Thursday submitted a public version of its updated counterclaims in response to a Twitter lawsuit that seeks to force the billionaire to pursue his $44 billion deal to buy the company.

The revised argument, which was originally submitted under seal last week, is based on allegations by Twitter’s former chief of security, Peter “Mudge” Zatko, who recently blew the whistle over the company’s alleged information security vulnerabilities. A Delaware judge overseeing the case ruled last week that Musk’s team could update its allegations based on Zatko’s disclosure.

In the amended counterclaims, Musk’s team claimed that Zatko’s disclosure and the events surrounding it “revealed that misrepresentations regarding MDAU [monetizable daily active users] It was just one element of a broader conspiracy among Twitter executives to deceive the public, investors, and government about dysfunction at the heart of the company.”

Musk’s original argument centered on allegations that Twitter misrepresented the number of wrong accounts and spam on its platform and used the mDAU metric to publicly report its growth while using other metrics internally. By contrast, Twitter accuses Musk of using bots as an excuse to get out of a deal that he developed buyer’s remorse for after the market slumped.

New counterclaims from Musk’s team point to Zatko’s allegations that Twitter has information security holes, that it infringed intellectual property rights to operate some of its key features and that it violated the 2011 Federal Trade Commission approval decree.

“Those previously concealed problems, according to Zatko, are so serious that Zatko…has concluded that they threaten US national security and democracy itself,” the lawsuit states.

In response to a request for comment on the amended allegations, Twitter spokesperson Brian Polyakov referred to CNN in an earlier statement from the company that described Musk’s claims as “factually inaccurate, legally inadequate and commercially irrelevant.”

“We look forward to the trial in Delaware court,” Twitter said in the statement. The company has previously widely defended itself against Zatko’s claims, saying his disclosure paints a “wrong narrative” about the company.

Musk’s team previously submitted two additional letters to close the deal to Twitter based on Zatko’s disclosure, which the company called “invalid and illegal.”

At a hearing earlier this month about whether Musk should be able to update his allegations, Twitter lawyers painted Zatko as a disgruntled ex-employee with an ax to grind, and cited the coincidental timing of his disclosure. Zatko was fired in January, a move Twitter said was due to “poor performance”, but Zatko maintains it was retaliation for raising internal concerns over security issues.

Zatko previously said he had nothing to do with Musk and that his disclosure had nothing to do with the takeover dispute, but rather was aimed at protecting Twitter users and the state.

Zatko expanded earlier this week on his allegations at a Senate hearing, telling lawmakers that Twitter is struggling to find and remove foreign clients who might be on their payroll. In response, Twitter said his testimony “only confirms that Mr. Zatko’s allegations are riddled with contradictions and inaccuracies.”

Twitter and Musk are due to go to trial over the deal in October, after a judge denied Musk’s request to postpone the trial in light of the whistleblower’s revelations. On the same day Zatko testified, Twitter shareholders voted to approve Musk’s acquisition.

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