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Elon Musk files another notice to cancel Twitter takeover, citing whistleblower’s data privacy concerns

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Tesla CEO Elon Musk filed another notice Monday of his intent to cancel his purchase of social media platform Twitter, citing a whistleblower's recent claims.

Musk's latest attempt to backpedal out of the deal cites revelations found in the "Zatko complaint" — a memo released by a former security chief for Twitter that alleged the platform has misused user data and lacks control of the site's core systems.

Musk's camp filed the notice despite claiming it was legally unnecessary due to a previous motion to cancel the purchase. The Aug. 29 filing is intended to ensure the deal is terminated even in the event Musk's previous complaints fail to hold in court.

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"Because these facts were known to Twitter and withheld from the Musk Parties, and because Twitter has since taken the position that the Merger Agreement remains in effect, the Musk Parties hereby provide this additional notice of termination of the Merger Agreement," Musk lawyers claimed.

Elon Musk speaks at an event in Norway, Aug. 29, 2022

Tesla founder Elon Musk attends Offshore Northern Seas 2022 in Stavanger, Norway, Aug. 29, 2022. (NTB/Carina Johansen via REUTERS / Reuters Photos)

Twitter's former security chief accused the social media giant of "extreme, egregious deficiencies" related to cybersecurity issues that put the company's users and shareholders and national security at risk, according to a whistleblower complaint filed with government agencies.

The whistleblower, who has agreed to be identified as Peiter "Mudge" Zatko, sent an 84-page filing to Congress in July, which has been obtained in a redacted version by FOX Business.

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The complaint states that Twitter executives misled the company's board, shareholders and federal regulators about "extreme, egregious deficiencies" in its cybersecurity defenses.  

Ticker Security Last Change Change %
TWTR TWITTER INC. 39.30 -0.70 -1.76%

Twitter responded to Musk Tuesday, saying his new filing is "based solely on statements made by a third party that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context."

"Contrary to the assertions in your letter, Twitter has breached none of its representations or obligations under the Agreement, and Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect," Twitter continued. "Twitter intends to enforce the Agreement and close the transaction on the price and terms agreed upon with the Musk Parties."

The Zatko Complaint compounds Musk's previous claims of Twitter mismanagement, with the SpaceX CEO's notice claiming the platform could be existentially threatened by the leak's legal ramifications.

"As revealed by the Zatko Complaint, Twitter apparently never acquired the rights to Twitter’s core machine learning models, which the Musk Parties understand to be fundamental to the Twitter platform itself," the Monday notice states. "That infringement threatens not just significant monetary damages, but the potential for injunctive relief that would threaten Twitter’s ongoing business as currently operated."

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FILE – This April 26, 2017, file photo shows the Twitter app icon on a mobile phone in Philadelphia. (AP Photo/Matt Rourke, File / AP Newsroom)

Zakto also claimed that about half of Twitter's 7,000 employees are given access to user data and that the company has "no visibility or control over thousands of devices used to access core company systems."

"The data privacy authorities of Ireland and France are also investigating the claims in the Zatko Complaint. It is likely that the SEC, FTC, and DOJ, as well as additional foreign regulators are not far behind," Musk's camp wrote.

The notice continued, speculating that the company could be facing a dangerous series of legal battles in the near future: "Twitter will also now face a myriad of civil lawsuits, asserting claims pursuant to various privacy and cybersecurity laws, state consumer protection laws, false advertising laws, intellectual property theft and misappropriation and common law claims, such as unjust enrichment, fraud, and breach of contract."

The document added, "Many of these civil claims are likely to be asserted as class action claims that could threaten the viability of the platform."

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