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Elon Musk says the testimony of a whistleblower gives him more reasons to terminate his Twitter contract

Photo by Souvik Banerjee / Unsplash

Elon Musk claims that the revelations of Twitter's former security chief have provided him with new reasons to abandon his $44 billion deal to acquire the social media platform.

On August 29th, Musk's attorneys filed a new "Termination Letter" with the SEC, citing the testimony of Twitter whistleblower Peiter "Mudge" Zatko as evidence that Twitter misled Musk in the parties' merger agreement. Musk specifically asserts, based on Zatko's allegations, that Twitter's assertion in the merger agreement that it had not misled the SEC is false. In his own complaints, which were published last week, Zatko alleged that Twitter repeatedly and intentionally misled regulators about the platform's security.

Musk's new termination letter states, "[Zatko's] allegations, if true, demonstrate that Twitter has violated the following provisions of the Merger Agreement, giving the Musk Parties the right to terminate the Merger Agreement pursuant to its terms as more fully described below."

Musk is, of course, desperate to get out of the deal, but he must first convince a judge that Twitter violated a provision of the merger agreement. If he does not, he will be required to pay a $1 billion fine and perform "specific performance" (meaning: actually buy Twitter).

However, it is unclear whether Musk's latest termination letter strengthens his case. Musk's first termination letter was filed at the start of July and contained similar accusations that Twitter misled the SEC in its regulatory filings (among other claims). This new letter reiterates the same accusation and adds Zatko's complaint as supporting evidence.

Ann Lipton, a law professor who has analyzed the credibility of Musk's legal case for abandoning the Twitter deal, previously stated that Zatko's complaint would be a "wild card" in the legal case. Prior to the appearance of this new termination letter, she stated that Musk's arguments "appear to be rather weak."