Elon Musk seeks to dismiss SEC lawsuit over 2022 Twitter stake

Elon Musk files a motion to dismiss the U.S. Securities and Exchange Commission’s civil lawsuit which alleged that he waited too long before revealing his large purchase of Twitter shares.

Summary

• Elon Musk wants to dismiss the lawsuit filed by the SEC from early January regarding his stake in Twitter.
• X, formerly Twitter, has plans to become a super app that would facilitate financial services like payments and asset trading for its users.

In a recent filing to a federal court judge, Elon Musk’s representatives asked the judge to dismiss the lawsuit, calling it an overreach and accusing the agency of purposely targeting the billionaire.

In a lawsuit that dates back to January 14, just six days as Donald Trump was elected President, the SEC alleged that Musk violated federal securities law when he missed the 10-day window to publicly disclose his intention to purchase 5% of Twitter’s common shares. If approved, the lawsuit would mandate Musk to pay a civil fine and give up profits as a result of the violation.

The rule requires investors to disclose within 10 calendar days when they cross a 5% ownership threshold, which would have been by March 24, 2022 in Musk’s case. Instead, Musk waited 11 days too long to disclose the purchase.

In the Thursday filing, quoted by Reuters, Musk’s lawyers claimed that the billionaire had stopped purchasing additional shares of the then-publicly-listed Twitter and filed his disclosure one business day after his wealth manager consulted securities disclosure counsel about potential filing requirements.

However, the SEC alleged that Musk bought more than $500 million of Twitter shares at low prices before finally revealing his purchases on April 4, 2022, by which time he owned a 9.2% stake.

According to the filing, Musk’s attorney alleged that the SEC’s lawsuit “reveals an agency targeting an individual for his protected criticism of government overreach.” They claimed that there is no ongoing violation because the alleged error was “fully corrected” upon discovery.

Meanwhile, the SEC has yet to respond to a request for comment.

Earlier this month, an Ethereum (ETH)-based gaming network called xAI by Ex Populus also lodged a lawsuit against Elon Musk over trademark infringement. This is due to the name similarity of Musk’s artificial intelligence company dubbed xAI.

Elon Musk potential in cryptocurrency through X

Just days after the SEC filed a lawsuit against Elon Musk for his stake in Twitter, the billionaire announced that he would transform Twitter, rebranded as X since October 2022, into a self-proclaimed “super app” with the addition of in-app investment and trading features.

As previously reported by crypto.news, X chief executive officer Linda Yaccarino said that the team behind the social media platform is preparing to launch financial services through a single app. It would allow users to not just pay for everyday needs, but also make investments and trade assets.

“A whole commerce ecosystem and a financial ecosystem is going to emerge on the platform that does not exist today,” said Yaccarino.

Musk had said earlier on that he wants to launch a a peer-to-peer digital wallet service, dubbed X Money. The integration is expected to come with a collaboration with payments giant Visa. Other possible integrations into the rumored “super app” include Polymarket and Vine.