Musk accuses Twitter of fraud in legal filing

Twitter has accused Elon Musk, in a lawsuit, of abandoning his planned acquisition of the company because stock market turbulence made the deal more difficult for him. But firing back in a legal filing, Musk said it was Twitter that torpedoed the $44 billion acquisition.

Musk argued that Twitter concealed the true number of inauthentic accounts on its platform, accusing the company of fraud. Such accounts made up at least 10% of Twitter’s daily active users who see ads, Musk’s legal team asserted, reiterating worries that he expressed shortly after signing the deal in April. Twitter has maintained that the figure is less than 5%.

Twitter also hid the number of its users who see ads, lawyers for Musk said in the filing, which was made public Thursday. During the first quarter of the year, 65 million of the company’s 229 million daily active users did not see ads, according to the filing.

Twitter said Musk was trying “to distort data received from Twitter to sponsor wild conclusions” and that its figures were accurate.

Using Botometer, a tool designed to measure inauthentic accounts, analysts for Musk found higher numbers of inauthentic accounts than Twitter had disclosed, according to the filing.

The misrepresentations hid weaknesses in Twitter’s business model and tricked Musk into agreeing to buy Twitter at “an inflated price,” lawyers for the Tesla executive said.

“Twitter was miscounting the number of false and spam accounts on its platform, as part of its scheme to mislead investors about the company’s prospects,” lawyers for Musk wrote. “Twitter’s disclosures have slowly unraveled, with Twitter frantically closing the gates on information in a desperate bid to prevent the Musk parties from uncovering its fraud.”

The filing, made July 30 but kept confidential until Thursday, was Musk’s first extensive response in what is expected to be a prolonged legal battle. A trial is scheduled for October.