Musk’s legal team says they are preparing to file an appeal to seek vindication in the case.
A U.S. federal jury in San Francisco has found Elon Musk liable for defrauding Twitter shareholders by allegedly attempting to push down the company’s stock price so he could renegotiate or withdraw from his $44 billion takeover deal in 2022.
The verdict came after a closely watched civil trial, during which Musk was accused of making misleading statements on social media about Twitter’s number of fake and spam accounts, commonly referred to as bots.
Damages have not yet been determined, but shareholders’ lawyer Francis Bottini estimated they could reach around $2.5 billion. He argued that Musk’s influence in the market comes with responsibility for any harm caused to investors.
In response, Musk’s legal team described the verdict as a minor setback and said they intend to seek vindication through an appeal.
The trial began on March 2, with jury deliberations starting on Tuesday. Musk has a history of contesting shareholder lawsuits in court rather than settling, including past cases involving Tesla, where he successfully defended himself in similar disputes.
Musk eventually completed the acquisition of Twitter in October 2022 and later renamed it X.
In the case, shareholders challenged three statements Musk made after agreeing to purchase Twitter in April 2022, in which he raised concerns about the platform being overrun with bots.
Jurors found Musk liable for two of those statements. One stated the deal was “temporarily on hold” pending confirmation that bots accounted for less than 5% of users. Another suggested the percentage of bots could be much higher than 20%, with the takeover contingent on verification that the figure was below 5%.
Jurors also concluded that the shareholders did not prove a separate allegation that Elon Musk engaged in a broader scheme to defraud them.
Michael Lifrak, a lawyer representing Musk, argued that the billionaire’s concerns about bots were genuine and that raising the issue publicly did not amount to fraud or an intent to deceive investors.
The lawsuit covers investors who say they sold Twitter shares at prices they claim were artificially lowered by Musk between May 13 and October 4, 2022.
Musk is also in discussions to settle a separate civil case brought by the U.S. Securities and Exchange Commission, which accuses him of delaying disclosure of his initial Twitter stock purchases in 2022 so he could acquire more shares at lower prices before the information became public.
In February, SpaceX acquired Musk’s artificial intelligence company xAI, bringing it under the same umbrella as X. The deal reportedly created the world’s most valuable private company, valued at around $1.25 trillion at the time.
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