There’s just too much to talk about when it comes to Elon Musk, but the latest Twitter news is that he is under federal investigation related to his potential purchase of the social media platform.
Twitter itself revealed the news in a court filing which comes as part of its legal stoush with the billionaire, who has been playing a very public game of will he, wont he, buy the social media platform.
It said Musk was being investigated by federal authorities over his conduct in his US$44 billion takeover deal for Twitter.
We don’t have a lot more detail than that, but Musk has form in drawing the authorities’ attention to his business dealings, and Twitter usually has a starring role.
In 2018, Musk reached a settlement with the Securities and Exchange Commission (SEC), the market enforcer, over a tweet in which he said was considering taking his electric vehicle firm Tesla off the stock market and into private ownership, and had “funding secured” for the proposal.
In April of this year the SEC asked Musk whether the disclosure of his 9% Twitter stake was late, and why it indicated that he intended to be a passive shareholder.
In June, it asked Musk in another letter whether he should have amended his public filing to reflect his intention to suspend or abandon the deal.
Musk later refiled a disclosure to indicate he was an active investor in Twitter, after all. The US financial watchdog had asked Musk 10 days before he announced his takeover bid why he had not disclosed his stake sooner.
According to Musk’s own market filing, he passed the 5% ownership level of Twitter on March 14, and should have filed the form by March 24.
Musk, who is CEO of SpaceX and Tesla, had attempted to wiggle out of buying Twitter, claiming Twitter failed to disclose information it should have, and sacked staff without his approval.
But Twitter has said it has complied with the terms of the agreement and said Musk was trying to back out because market conditions had changed.
To force the deal, Twitter sued Musk in Delaware Chancery Court in July to hold him to the original agreement, which led to the recent disclosure of the alleged investigation into Musk. Early in October, Musk said he would go ahead with the purchase after all, which analysts have speculated is because Musk realised he wasn’t going to win against Twitter by going to trial.
Investors had also filed a lawsuit against Musk, in which they claimed Musk saved himself US$156m by failing to disclose he had bought more than 5% of Twitter in a timely manner, but much of this case has been chucked out by US courts.
But there is more that should concern us with the Twitter deal.
“Not only was he late in filing while he was buying more shares, but his various tweets hinted market-moving news and may have manipulated the market,” John Coffee, a professor of law at Columbia University told The Guardian, which included an April 20 tweet when Musk hinted at a tender offer for Twitter.
Why is Musk keen on Twitter? Musk has said he wants to promote free and open speech on Twitter, and that he basically wants to copy the Chinese app for everything, Wechat.
What can consumers do on Wechat? You can use it to message friends, buy groceries, hail a ride, book a doctor’s appointment, and its payment system is used by vending machines, shops, street vendors and local transit systems.
Wechat is also beginning to be used as a virtual identification for social security by the Chinese government, to the South China Morning Post has reported.
Having that kind of information, and power, controlled under Musk’s tutelage doesn’t fill one with confidence.
Musk loves to use Twitter to make a statement, and has a track record of legal scrutiny for his tweets outside of his acquisition.
In June of this year Musk was sued for US$258 billion by a Dogecoin investor who accused him of running a pyramid scheme to support the cryptocurrency.
Plaintiff Keith Johnson has accused Musk, SpaceX and Tesla of “racketeering” for hyping up Dogecoin and driving up its price.
“Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading,” the complaint says.
“Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement.”
They say Musk – who has called himself the “Dogefather” – pumped up the coin for two years, and then let it crash.
By doing so, he and his companies “profited tens of billions of dollars” at other Dogecoin investors’ expense, while knowing all along that the currency lacked intrinsic value and that its value “depended solely on marketing”, the complaint said.
In September 8 the case widened, adding seven new investor plaintiffs and six new defendants including his tunnel construction business Boring Co, Reuters reported.
Here’s some examples of Musk’s Doge tweets. Musk tweeted in May of this year that SpaceX merchandise would be able to be bought with dogecoin. The price of dogecoin rose as much as 10% after the tweet.
Tesla already accepts dogecoin for its merchandise, and an earlier Musk announcement about this saw doge prices rise by as much as 33%.
Other Musk tweets are less Musk-company specific, but still endorsed doge. It all started with a Musk tweet in April 2019: “Dogecoin might be my fav cryptocurrency. It’s pretty cool.”
It was reported by industry news site Decrypt that searches for Dogecoin spiked between 2019 and 2020 around times that Musk tweeted about it.
What is doge? Dogecoin was a joke meme coin, but it has gained in popularity over the years, in no small way because of Musk mentioning it on his platform of choice, Twitter. A doge itself is a shiba inu dog, a breed of Japanese hunting dog, and the meme featured an image of a Shiba Inu dog with Comic Sans lettering thought bubbles across the image.
Other Musk actions of late on Twitter also include interfering in global politics; Musk suggested a special administrative zone for Taiwan, and he has been beefing with war-torn Ukraine and playing games with Starlink satellite internet in that country.
Industry watchers noted that closely following Musk pontificating on Taiwan, China’s Ministry of Industry and Information Technology (MIIT) released an electric vehicle update which included new Model S and Model X Tesla variants, which means there is a nice little tax break for Teslas coming.
Musk is also a union-busting boss, and has fallen foul of the National Labor Relations Board, the workforce regulator. And it includes a tweet.
The NLRB found Musk broke the law when he tweeted 2018: “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?”
The NLRB found that Musk’s tweet went “above a typical statement that the company wants to stay union-free and was seen as threatening”.
“This was exacerbated by the fact that Tesla considers communications from Musk, who founded the company, as official company communications.”
It is illegal in the US to threaten to take away pay or benefits from workers if they are found to be organising a union.
And Musk did that. Publicly. On Twitter of course.
What Musk might do with Twitter once he owns it is anyone’s guess, but there’s no doubt Musk already knows how to use the power of a social media platform in a number of worrying, self-serving ways.
