Twitter pays $7 million to whistleblower in June settlement

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Twitter Inc. agreed, in June, to pay a $7 million settlement to Peiter Zatko, ex-Security Director at Twitter and whistleblower whose charges would be part of the Elon Musk case against the business.

The agreement was reached just days before Zatko filed his case in July where he accused the corporation of failing to secure critical customer data and lying about its security issues in his whistleblower lawsuit.

Zatko accused Twitter of being “grossly negligent in several areas of information security”, also accusing Twitter of lying to Musk about bot accounts, which was one of the main reasons why Musk did not go through with the deal.

Following months of mediation over tens of millions of dollars in potential compensation, the sources claimed that Twitter reached a confidential settlement in June that dealt with Zatko's lost compensation. 

Zatko consented to a nondisclosure agreement as part of the settlement, which bans him from criticizing Twitter or speaking publicly about his time there.

The agreement stipulates that the only places where he is allowed to talk freely are during congressional hearings and government whistleblower complaints and that such exceptions are common in settlements for compensation.

Since his allegations were made public, Zatko became a significant player in Twitter's legal campaign to get Musk to carry out his agreement to purchase the business for $44 billion. One of Musk's attorneys mentioned Twitter paying Zatko $7 million in a hearing, but they did not say that the payment was a part of a settlement.

In his complaint, Zatko said that he had  “uncovered extreme, egregious deficiencies by Twitter in every area of his mandate,” including platform integrity, content moderation, privacy, and digital and physical security.

According to Twitter, Zatko's dismissal was “for ineffective leadership and poor performance," and his whistleblower complaint "is riddled with inconsistencies and inaccuracies and lacks important context."

Zatko had the option of keeping quiet about what he observed on Twitter in order to safeguard his reputation and family, according to one of the executive's attorneys, Katz Banks Kumin's Alexis Ronickher, noting that “Instead, he came forward with his whistleblower disclosures to ensure that the government has the information it needs to protect Twitter’s users, investors, and the country.”

After a prominent breach by a teenager who circumvented the company's security systems, co-founder Jack Dorsey employed Zatko in late 2020.

For many years, Zatko, often known as "Mudge," has been a renowned computer security researcher. He was a part of the Boston cybersecurity collective that gained notoriety in 1998 when it testified before the US Senate and issued concerns regarding the quality of the country's cybersecurity.

The defense team for Musk has asserted that the whistleblower accusations might bolster its assertions that Twitter committed fraud by misrepresenting the state of its company and important information about its users.

The Twitter team responded by characterizing Zatko as a dissatisfied ex-employee with a vendetta and claiming that the Delaware lawsuit shouldn't contain his unfounded allegations following a fruitless stint. Additionally, it stated that Zatko's employment with the business had nothing to do with the purported undercounting of spam and bot accounts highlighted by Musk in his counterclaims.

Twitter's string of scandals

Twitter has come under fire in recent months for its management of sensitive user information. Earlier this month, a former Twitter employee was found guilty of spying on Saudi dissidents and passing their information on to the Saudi government. The US Justice Department says he abused his access to Twitter user data, obtaining personal information from political dissidents and passing it on to Saudi Arabia in exchange for a costly watch and hundreds of thousands of dollars.

Twitter warned as well that municipal, state, and national governments around the world are increasingly requesting that the company erase content and reveal private information from user accounts, with the company stating that it fulfilled roughly 40% of all requests for user data. The company was also fined $150 million by the US federal government for collecting user email addresses and phone numbers for security purposes and then using them for marketing purposes.

In a statement, Twitter has denied Zatko’s accusations and said that he was let go for poor performance and leadership.

The company told CNN in a statement: “What we’ve seen so far is a false narrative about Twitter and our privacy and data security practices that are riddled with inconsistencies and inaccuracies and lack important context... Mr. Zatko’s allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers, and its shareholders. Security and privacy have long been company-wide priorities at Twitter and will continue to be.”

Zatko told the Washington Post that he felt “ethically bound” to report his findings and that it “is not a light step to take.” The complaint comes amid Twitter’s legal battle with Elon Musk after the latter dropped his plans to purchase the company for $44 billion, saying the company has underestimated the prevalence of bots on its platforms. 

Twitter sued Musk for breaching the contract he signed to buy the tech firm, calling his exit strategy "a model of hypocrisy." The suit filed in the US state of Delaware urges the court to order the billionaire to complete his deal to buy Twitter, arguing that no financial penalty could repair the damage he has caused.

Representatives for Zatko told CNN he had not been in contact with Musk. Meanwhile, Musk’s attorney Alex Spiro said that they have issued a subpoena for him and “found his exit and that of other key employees curious in light of what we have been fighting”.

The company is scheduled to go to trial with Musk in Delaware in October.

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