A former Twitter security chief may be Elon Musk’s white knight in the billionaire’s effort to get out of his contract to purchase Twitter for $54.20 per share ($44 billion). Peiter Zatko filed a whistleblower disclosure to Congress and federal agencies claiming Twitter not only deceived shareholders and the public by misrepresenting its bot count and security measures, but also alleging “that one or more current employees may be working for a foreign intelligence service,” according to CNN. If true, the allegations would violate a 2011 agreement between Twitter and the Federal Trade Commission.

It would also support Musk’s legal wranglings with Twitter, set to be heard in Delaware Chancery Court for five days beginning October 17, although Zatko’s inflammatory accusations could make Musk the least of Twitter’s headaches.

“Twitter’s whistleblower problem is way bigger than Elon Musk’s bot complaints,” writes Vox, noting “Zatko is accusing the company of lying to just about everyone.” Twitter says Zatko is a disgruntled former employee who was relieved of his position in January for reasons including “poor performance.”

Last month, Zatko (known as “Mudge”) circulated his whistleblower complaint, which CNN says characterizes Twitter as having “major security problems that pose a threat to its own users’ personal information, to company shareholders, to national security, and to democracy.”

Describing Zatko’s document as “explosive,” CNN reports it “paints a picture of a chaotic and reckless environment at a mismanaged company that allows too many of its staff access to the platform’s central controls and most sensitive information without adequate oversight. It also alleges that some of the company’s senior-most executives have been trying to cover up Twitter’s serious vulnerabilities.”

The New York Times says Zatko “also sent the complaint and supporting documents to the Justice Department and the FTC,” noting Musk’s lawyers say they have subpoenaed Zatko.

“The whistleblower complaint is another strange twist for Twitter as it tries to ensure its corporate survival,” writes NYT, detailing how the San Francisco-based company “has been embroiled for months in a struggle with Mr. Musk, the world’s richest man, as he has blown hot and cold over owning the social media service, raising questions about its future as an independent entity.”

“There’s a near certainty that this will provoke a careful review by the Federal Trade Commission, maybe other public agencies, of the operation and management of the company, and that is at a moment where they are buffeted by so many other unwelcome forces — you don’t need another shock of this kind,” Bill Kovacic, a former FTC chair, told NYT regarding the effect on Twitter of Zatko’s allegations.

“Any regulatory response from Washington would take time to develop,” reports The Wall Street Journal, adding that “the SEC in particular takes years to investigate and bring securities-fraud cases, and it isn’t clear whether Mr. Zatko’s claims would rise to that level.”

Twitter has called Zatko’s timing “opportunistic.” WSJ writes that “whistleblowers are eligible to receive payments equal to 10 percent to 30 percent of the fines collected if their information is original and helpful to an enforcement action.” CNN describes him as “a well-known ‘ethical hacker,’” and says he “also previously held senior roles at Google, Stripe and the U.S. Department of Defense.”

Related:
Twitter Whistleblower Will Be Star Witness in Congress, Bloomberg, 8/24/22
Twitter Executives Push Back Against Whistleblower Complaint, The New York Times, 8/24/22
Elon Musk-Twitter Legal Fight Complicated by Whistleblower Complaint, The Wall Street Journal, 8/24/22
SEC Asked Twitter About Its Spam Account Claims in June, CNBC, 8/24/22
How Much Trouble Is Twitter in with Regulators?, CNN, 8/25/22
Dorsey Has Been Pulled Back into the Escalating Twitter Drama, Bloomberg, 8/25/22