Twitter chairman Bret Taylor quickly responded, saying the board was “committed to closing the transaction based on the price and terms agreed with Mr. Musk” and that he would pursue legal action to enforce the deal. “We are confident that we will prevail in the Delaware Court of First Instance,” he added. In a filing Friday, attorneys for the billionaire Tesla CEO claimed that Twitter is “in material violation of multiple provisions” of the sale agreement and “appears[ed] to have made false and misleading statements”. The number of spam and fake accounts on the platform was “wildly higher” than the 5 percent Twitter estimates, according to a preliminary analysis by Musk’s advisers, the filing said. Separately, according to the filing, Musk is considering whether Twitter’s “diminishing business prospects” and financial prospects violate the deal. The filing also accused Twitter of failing to comply with its obligation to “conduct business in the ordinary course” after CEO Parag Agrawal imposed a hiring freeze, fired two senior executives and this week announced the company was laying off a third of the team her talent acquisition. Twitter shares fell 8 percent in after-hours trading. Musk previously said Twitter’s failure to provide information about fake accounts would make it problematic to secure financing from banks that agreed to lend him the cash to complete the transaction. He had repeatedly said he was considering pulling out of the deal agreed in April.

Under the terms of the deal, Musk can terminate the deal by paying $1 billion if he doesn’t secure financing for the transaction. However, US courts they have historically sided with sellers in legal battles when buyers try to terminate deals to discourage buyers from walking out on false grounds. Since Musk agreed to buy Twitter in April, the tech companies’ market capitalizations have fallen sharply, making the agreed valuation expensive compared to rivals. The stock price of Snap, one of Twitter’s closest competitors, has fallen more than 65 percent this year. Musk secured financing from several prominent investors for the acquisition, including Oracle co-founder Larry Ellison and Sequoia Capital, the venture capital group. Tesla’s CEO shocked Wall Street when he announced his bid to take over Twitter in an effort to restore free speech on the platform. In a recent interview with the Financial Times, he said he would overturn the “morally wrong” ban on former President Donald Trump, which was imposed after the deadly attack on January 6, 2021 at the US Capitol.