Featured Image Credit: FREDERIC J. BROWN / Contributor / Getty
Elon Musk is currently facing a fraud trial surrounding the circumstances of his purchase of Twitter, as former investors of the social media platform believe they were 'cheated' by a number of his posts amid the takeover.
Purchases as big as what befell Twitter in 2022 are often never as smooth as both parties would like, yet Elon Musk's somewhat hostile takeover was a veritable rollercoaster that looked like it had fallen off the rails at several points.
Musk's plans began initially back in April 2022 by becoming the single largest shareholder of Twitter with a 9.1 ownership stake, after which he made an unsolicited offer to purchase the company which board members believed to be a 'poison pill' and part of a hostile takeover attempt.
His $44 billion offer was eventually accepted unanimously though, and all appeared to be going well until July when Musk announced the termination of the agreement following concerns over bots on the platform.
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Throughout this complicated process, which eventually saw Musk settle with the original offer in late October, the world's richest man was incredibly active on social media, sharing numerous tweets referencing the deal and his objections to certain conditions.
By far the most notable, however, came in May when Musk tweeted: "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users."
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
As reported by Gazetteer SF, Musk also shared shortly afterwards that he believed roughly 20 percent (or more) of Twitter's userbase was made up of bots or fake accounts, accusing the leadership at the time of understating the number.
This prompted Twitter's stock price to fall considerably at the time, shocking investors and prompting many to sell under the impression that a deal with Musk was either off or on the way to being scrapped, yet later that year it was propped up again by Musk's eventual purchase at the original price.
Now, shareholders of Twitter have launched a lawsuit against Musk, claiming that he manipulated the company's share value with his tweets, seeking signifcant compensation as a result of the accused fraud.
Musk himself has denied these charges wholeheartedly, professing himself guilty only of making 'stupid tweets' in the past, yet he could be forced to pay upwards of $1 billion if the jury doesn't side in his favor.
The compensation figure is currently unknown and could range anywhere from the hundreds of millions to several billion dollars, and it depends entirely on how much the court estimates the stock price to be artificially lowered, how many shares were affected overall, and whether Musk deliberately misled investors.
Key to the case is the last factor, as to emerge victorious the shareholders must prove that Musk deliberately misled through his tweets and that this had a direct impact on the share price — something that could prove difficult.
Musk will not face any jail time regardless of whether the result goes against him, but he could be on the receiving end of a significant financial penalty — although with his current record-breaking net worth, that's unlikely to make that much of a dent.
