Elon Musk Found to Have Fraudulently Misled Twitter Investors – Damages Could Reach Billions
A San Francisco federal court jury on Friday found Elon Musk defrauded investors in Twitter – now known as X – by downplaying the number of bot accounts on the platform in 2022, as he sought to terminate his $44 billion acquisition bid.
Jurors determined that Musk intentionally misled shareholders with public statements, including tweets, regarding the prevalence of spam and fake accounts. While the jury sided with investors on three of four fraud claims, the exact amount of damages Musk will pay remains to be determined. Individual shareholders will submit claims, potentially totaling hundreds of millions, or even billions, of dollars, according to court filings.
The verdict represents a rare legal setback for Musk, who has a reputation for successfully defending himself in high-profile lawsuits. In 2023, he prevailed in a trial concerning allegations from Tesla investors that he misled them with a 2018 tweet claiming he had “funding secured” to take Tesla private. Musk co-founded and leads Tesla.
Mark Molumphy, an attorney representing the investors, stated after the verdict that he anticipates damages will reach $2.6 billion. However, this sum would represent a small fraction of Musk’s current net worth, estimated at $661.1 billion as of Friday by the Bloomberg Billionaires Index. Joseph Cotchett, Molumphy’s partner at Cotchett, Pitre & McCarthy LLP, characterized the case as significant for Wall Street, arguing it demonstrates unacceptable behavior towards average investors.
Musk’s legal team did not offer comment immediately following the verdict, and Musk himself did not respond to a request for comment. An appeal by the losing side is possible.
The trial featured two weeks of testimony, including direct examination of Musk and key former Twitter executives. Testimony centered on the six months following Musk’s initial agreement to purchase the platform, a period marked by his fluctuating commitment to the deal and subsequent litigation with Twitter’s board to compel him to follow through.
Investors argued that Musk’s public statements, including a May 13, 2022, tweet announcing the deal was “temporarily on hold” pending a review of bot accounts, were deliberately intended to depress Twitter’s stock price and create an opportunity to renegotiate the purchase agreement. Molumphy argued to the jury that Musk’s tweets were “intentional, deliberate, and devised to convey to investors that Twitter was overrun with spam.”
During his testimony, Musk maintained that former Twitter executives, including then-CEO Parag Agrawal and CFO Ned Segal, misrepresented the number of bot accounts to him and in public financial disclosures. He acknowledged that renegotiation was discussed after the bot issue surfaced, but his legal team argued this was not a concealed intention.
Twitter’s stock price experienced significant volatility during Musk’s period of uncertainty, ultimately falling to $32.52 in July 2022 – a 40% decrease from Musk’s proposed $54.20 per share buyout price – after Twitter initiated legal action in Delaware to enforce the agreement. Musk testified he agreed to the original price only because he believed the Delaware judge overseeing the lawsuit was biased against him.
Musk conceded under questioning that the “temporarily on hold” tweet was “not my wisest tweet,” and potentially “my stupidest,” particularly if it led to the trial. He insisted, however, that the tweet did not signify an intention to abandon the deal entirely, stating, “I’m not saying I’m not going to do the deal.”
The case is Pampena v. Musk, 22-cv-05937, US District Court, Northern District of California (San Francisco).
As of July 9, 2025, Linda Yaccarino had resigned as CEO of X, according to web search results. The platform, rebranded from Twitter to X on July 23, 2023, now includes features such as long-form texts, account monetization, audio-video calls, and integration with xAI’s Grok chatbot.