Twitter retaliated against Elon Musk on Monday, alleging the world’s richest person of “knowingly” breaking an agreement to buy the social media company, just days after the Tesla Inc CEO attempted to back out of the $44 billion transaction.

Twitter stated in a letter to Musk dated Sunday and filed with authorities on Monday that it had not breached its responsibilities under the merger agreement, as Musk indicated on Friday in his decision to terminate the acquisition.

Also read: How is Twitter vs Elon Musk likely to play out?

“Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Agreement,” the letter read.

The firm had prepared to sue Musk to force him to fulfill the purchase, a threat Musk dismissed on Monday in a series of tweets joking about Twitter and its threat to enforce the agreement in court. According to persons familiar with the situation, Twitter plans to launch a lawsuit in Delaware early this week, Reuters reported.

Also read: Elon Musk’s Twitter plan revealed? Court fight may bring bot info to light 

In the letter, Twitter stated that the merger agreement remained in place and that it would take steps to close the deal.

Twitter’s stock closed down 11.3 percent at $32.65, representing a 40% discount to Musk’s $54.20 offer and the largest daily percentage decrease in more than 14 months. In prolonged trading, they recovered by less than 1%.

Tesla’s stock dropped over 7% on the day.

Short-selling traders According to S3 Partners, Twitter’s plunging stock generated $148 million in mark-to-market profits on Monday, while short bets against Tesla generated $1.3 billion in mark-to-market profits.

Also read: Twitter gets top legal team to fight Musk for pulling out of $44 billion deal: Report

According to Benchmark analyst Mark Zgutowicz, “Twitter’s board must contemplate the potential harm to its employee and shareholder base of any additional internal data exposed in litigation.”

If Musk defends against Twitter’s lawsuit by saying the firm exaggerated the number of bogus accounts, Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, believes Musk may place the social media giant’s so-called “bots” front and centre in future litigation.

“I’d be surprised if he’s prohibited from getting that information,” Pileggi stated.

Pileggi believes that if the number of bogus accounts exceeds Twitter’s estimate of 5%, it could lead to pricing negotiations for the social media company.

Also read: Twitter without Musk: Where is the company headed?

According to legal experts, the 16-year-old social network business has a strong legal case against Musk, but it may choose renegotiation or settlement over a lengthy court battle.

Brent Thill, an analyst at Jefferies, wrote in a note, “We believe that Elon Musk’s intentions to terminate the merger are more based on the recent market sell-off than … Twitter’s ‘failure’ to comply with his requests.”

“In the absence of a deal, we would not be surprised to see the stock find a floor at $23.5,” Thill added.