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Twitter subpoenas Binance and a dozen more firms over $44B Musk deal

·Reporter
·3 min read

Bankers and advisers that backed Tesla (TSLA) CEO Elon Musk’s $44 billion bid for Twitter (TWTR) have been hit with a flood of new subpoenas from the social media site's lawyers. Those lawyers want to know what happened in Musk’s private negotiations leading up to the now-disputed deal.

On Tuesday, Twitter filed more than a dozen subpoenas in its fast-tracked lawsuit to force Musk to go through with the deal. The filings directed to Musk’s advisers and would-be lenders — including Binance, Factorial Funds, Benefit Street, Bandera Partners, Founders Fund Growth II Management — add to several others issued to Musk’s bankers, investors, and associates on Monday. Later on Tuesday, Twitter's lawyers filed subpoena requests directed to Citadel founder and CEO Ken Griffin. Tesla (TSLA) and SpaceX were also served with similar demands.

Notably, the subpoenas demand that Musk’s advisers and backers hand over documents and communications that either support or refute Musk’s suggestion that Twitter has under-reported the number of fake or “spam” accounts on the social media site.

Musk contends he's backing out of the deal because Twitter isn't providing him with data regarding the number of fake accounts, known as bots, that operate on its platform — and in some cases, spread disinformation. According to Musk, Twitter’s public representations about bot prevalence are misleading, and in excess of its estimated less than 5% of mDAUs, or monetizable daily active users.

Twitter, on the other hand, says it has long represented that its estimate could be wrong, and that Musk’s bot issue is a pretext for backing out of the agreement. Twitter adds that Musk also deliberately tried to tank the deal with a series of disparaging tweets.

ANKARA, TURKIYE - APRIL 18: In this photo illustration Tesla and SpaceX CEO Elon Musk's twitter profile is displayed on a mobile phone screen in Ankara, Turkiye on April 18, 2022. Twitter announced it has accepted Elon Musk's offer to be purchased for $44 billion. (Photo by Celal Gunes/Anadolu Agency via Getty Images)
In this photo illustration Tesla and SpaceX CEO Elon Musk's Twitter profile is displayed on a mobile phone screen in Ankara, Turkiye on April 18, 2022. Twitter announced it has accepted Elon Musk's offer to be purchased for $44 billion. (Photo by Celal Gunes/Anadolu Agency via Getty Images)

In separate subpoenas directed to Binance and others, Twitter asks the companies to turn over any documents and communications related to Musk’s May 15 Tweet alleging “some chance” that Twitter’s percentage of bots and/or false or spam accounts “might be over 90% of daily active users.”

Twitter post from accounts of @elonmusk and @BLKMDL3 on May 15, 2022
Twitter post from accounts of @elonmusk and @BLKMDL3 on May 15, 2022

The request goes on to demand any documents concerning another Musk Tweet on May 17 that reads “20% fake/spam accounts, while 4 times what Twitter claims, could be much higher.”

Twitter post from account of @elonmusk on May 17, 2022
Twitter post from account of @elonmusk on May 17, 2022

The subpoenas further seek from the companies “drafts or iterations of any plans” relating to Twitter’s false or spam accounts, along with any media communications concerning spam accounts, and documents addressing Twitter’s SEC disclosures about spam.

While Twitter’s lawyers maintain that, under the merger agreement, the company didn't have to hand over the bot data he requested, his lawyers wrote in a July 8 letter to terminate the deal that Musk needed the fake account information for his financing.

The bot information, Musk’s lawyers wrote, is needed to “facilitate Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business…”

For Musk’s part, his lawyers also issued subpoenas seeking information related to Twitter’s end of the transaction. His lawyers issued subpoenas to Goldman Sachs and JPMorgan, as well as boutique investment bank Allen & Co.

Twitter’s subpoena requests on Monday sought documents and communications from Musk’s associates and investors, including Silicon Valley investors Chamath Palihapitiya, David Sacks, Joe Lonsdale, Steve Jurvetson, Marc Andreessen, Jason Calacanis, Keith Rabois; and from financial advisors Credit Suisse and Morgan Stanley.

A Delaware Chancery Court judge granted Twitter a five-day trial in the case, which is slated to begin Oct. 17.

This story was updated to reflect that Twitter also served Citadel's Ken Griffin with a subpoena in its case against Musk.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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