Elon Musk lost a courtroom fight in California after a jury said he defrauded Twitter shareholders during the messy run-up to his $44 billion takeover of the company.
The verdict came on Friday and handed a win to investors who said his public comments hurt them while the deal was still playing out.
Lawyers for the plaintiffs said the damages could reach $2.6 billion, a huge number in a case tied to one of the most chaotic tech acquisitions in recent years.
The lawsuit is called Pampena v. Musk.It was filed in October 2022, after Elon finished buying Twitter for $54.20 per share.After closing the deal, he changed Twitter’s name to X.
He later combined it with xAI, his artificial intelligence company, and then with SpaceX, his rocket business. Outside the courthouse in San Francisco, lawyer Joseph Cotchett said:-
“This is a great example of what you cannot do to the average investor — people that have 401ks, kids, pension funds, teachers, firemen, nurses. That’s what this case was all about. This was not about Musk. It was about the whole operation.”
<h3 id="musk-s-tweets-rattled-investors-during-the-twitter-buyout">Musk’s tweets rattled investors during the Twitter buyout</h3>
The fight centered on what Elon said after he made his bid for Twitter in April 2022. Soon after offering to buy the company, he started questioning Twitter’s numbers on bots, spam, and fake accounts.
In May 2022, <a href="https://www.cryptopolitan.com/elon-musk-will-keep-buying-nvidia-chips/" rel="noopener noreferrer nofollow">Elon</a> posted that the takeover was “temporarily on hold” until Twitter’s chief executive could show that fake and spam accounts were close to the roughly 5% level listed in the company’s SEC filings.
That post, along with other public remarks from Elon, hit Twitter shares hard. The stock fell almost 10% in a single trading session.
Jurors spent four days reviewing the evidence. They then unanimously found that Elon’s tweets from May 13 and May 17 were materially false or misleading.
Former Twitter shareholders said those posts were not random. The group included small investors and options traders who argued that Elon was trying to pressure Twitter’s board into accepting a lower price than the one he had already agreed to pay.
They said he had a financial reason to do that because Tesla stock had dropped, and that meant he may have needed to sell more Tesla shares than he first expected in order to fund the buyout.
The plaintiffs said they sold their Twitter shares for less than $54.20 after reading Elon’s posts and hearing his comments in press interviews. Their lawyers said the damages estimate came from expert work on how much his changing public stance pushed the stock price down during the class period.
Elon’s lawyers at Quinn Emanuel pushed back in an emailed statement. They said, “We view today’s verdict, where the jury found both for and against the plaintiffs and found no fraud scheme, as a bump in the road. And we look forward to vindication on appeal.”
<h3 id="teenagers-accuse-xai-tools-of-helping-create-explicit-fake-images">Teenagers accuse xAI tools of helping create explicit fake images</h3>
The investor verdict landed in the same week that another lawsuit hit one of Elon’s companies. Three teenagers in Tennessee sued xAI in California, where the company is based. The high school students said xAI’s image tools were used to turn real photos of them into sexually explicit fake images.
They <a href="https://fortune.com/2026/03/20/three-tennessee-teenagers-suing-elon-musks-xai-creating-sexually-explicit-images/" rel="noopener noreferrer nofollow">reportedly</a> want to proceed under pseudonyms. They are also asking for class-action status so they can represent what the complaint describes as thousands of victims who are minors, or who were minors, when those fake images were made.
The lawsuit says Jane Doe 1 got an anonymous warning in December that someone was sharing sexual images of her on a social media site. The complaint said:-
“At least five of these files, one video and four images, depicted her actual face and body in settings with which she was familiar, but morphed into sexually explicit poses.”
The filing says the person spreading the files knew her and used <a href="https://www.cryptopolitan.com/only-2-of-xai-co-founders-remain-with-elon/" rel="noopener noreferrer nofollow">xAI</a> image tools to turn normal photos into abusive fake content. One image came from a homecoming photo. Another came from a high school yearbook.
The same person also created explicit fake images of at least 18 other girls, including the two other plaintiffs in the case. In late December, local police arrested the alleged perpetrator and took his phone.
Investigators found that he had uploaded the images to several platforms and traded them for sexual images of other minors. The new case added more legal pressure around Elon and xAI just as the Twitter investor verdict put another major ruling next to his name.
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Court rules against Elon Musk in investor lawsuit over Twitter deal comments

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