Musk Says Twitter Committed Fraud in Dispute Over Fake Accounts

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, Mr. Musk says it was Twitter that torpedoed the $44 billion acquisition.

Mr. Musk argues that Twitter concealed the true number of inauthentic accounts on its platform, accusing the company of fraud. Such accounts made up at least 10 percent of Twitter’s daily active users who see ads, Mr. 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 percent.

“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 Mr. 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 confidential filing last Friday, parts of which were disclosed on Thursday by Twitter in a response that denied many of Mr. Musk’s claims, was his first extensive response in what is expected to be a prolonged legal battle between the social media company and one of the richest people in the world. A trial is set for October.

“His claims are factually inaccurate, legally insufficient and commercially irrelevant,” Bret Taylor, the chairman of Twitter’s board, said in a statement on Thursday.

Mr. Musk began snapping up shares of Twitter early this year and by April had accumulated a majority stake in the company. He rejected Twitter’s offer to join its board, instead launching a swift and aggressive takeover attempt. But once Twitter agreed to the acquisition, Mr. Musk began to express doubts. In July, he indicated that he no longer wanted to buy the company.

Twitter sued him in Delaware Chancery Court in an attempt to force the acquisition through. Twitter has claimed he lost interest in the deal as the market slumped and shares in Twitter and the electric carmaker Tesla, which is the primary source of Mr. Musk’s wealth, declined.

“Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” Twitter said in its lawsuit.

Over the last few days, the company peppered Mr. Musk’s banks, financial partners and associates with subpoenas, demanding communications about the deal that could shed light on why Mr. Musk decided to walk away.

The deal includes a “specific performance” clause that allows Twitter to sue to force the deal through so long as the debt that the billionaire has corralled for the acquisition is in place. But Mr. Musk may pay a $1 billion fee to exit the deal if his funding falls through.

Mr. Musk has maintained that Twitter is flooded with fake accounts and that the company has misled him about the true number of impostors on its platform. Fake accounts are used to spread spam or manipulate Twitter’s service by falsely amplifying trends, and are often automated rather than run by real people.

This is a developing story. Check back for updates.