X owner Elon Musk was found to have misled investors when he bought the platform, then known as Twitter, in a $45 billion deal in 2022.
During the acquisition process, Musk claimed that fake and spam accounts accounted for at least 20% of Twitter users at the time, a claim that could have had a significant impact on the value of the company.
The Tesla CEO even tweeted a poop emoji in response to Twitter’s former CEO Parag Agrawal chiming in to say there was no way for third parties to verify his claims regarding bot numbers. As a result of the ruling in the class-action lawsuit, Musk will now be expected to pay damages based on the price of Twitter’s stock from May 13, 2022, the day of the Tweet, to Oct. 3, 2022, when the purchase was finalized. Damages could top $2.6 billion, according to plaintiffs’ estimates. Musk’s lawyers plan to appeal the decision.
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In a now-deleted tweet, Musk said the deal was “temporarily on hold” while he waited for the company to provide data on the proportion of fake accounts. Twitter’s shares fell sharply in the immediate aftermath of the tweet.
The California court found that while Musk did mislead investors with his series of tweets, he was not guilty of a wider scheme to defraud investors.
The fact that X struggled with, and continued to struggle with, bots is no secret and has been highlighted by numerous third parties. However, figures like Agrawal have pointed out that high-level spam campaigns will use a mixture of automated and human-controlled accounts—for example, buying the accounts of legitimate users—making objective estimates tricky.
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“Musk’s status as the world’s richest man is not a free pass,” said Francis Bottini, a lawyer for the shareholders, in a statement. “If you’re able to move markets with your tweets, you’re responsible for the harm you cause to investors.”
Musk is no stranger to long legal disputes with shareholders in his companies, though he has frequently come out on top. Musk was embroiled in a legal battle over his Tesla pay package, which could grant him roughly $56 billion, and was struck down by a judge before being reapproved by shareholders late last year.
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I’ve been a PC gamer since you had to install games from multiple CD-ROMs by hand. As a reporter, I’m passionate about the intersection of tech and human lives. I’ve covered everything from crypto scandals to the art world, as well as conspiracy theories, UK politics, and Russia and foreign affairs.
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