Brazilian authorities have confiscated $3.3 million from Elon Musk’s companies, X and Starlink, under a Supreme Court order that has led to an intense legal dispute.
At a Glance
- Brazilian Supreme Court justice Alexandre de Moraes seized about $3 million from bank accounts of X and Starlink.
- Legal analysts questioned the decision as the companies are separate entities.
- Judge de Moraes ordered the transfer of fines totaling 18.35 million Brazilian reais.
- X has been criticized in Brazil for not removing court-flagged illegal content.
- Bank accounts were unfrozen after the payment was made.
Supreme Court Takes Action
Brazil’s Supreme Court Justice Alexandre de Moraes ordered the seizure of $3.3 million from bank accounts linked to Elon Musk’s X and Starlink. The fine was implemented due to X’s failure to comply with judicial orders related to content removal and appointing a local legal representative.
Judge de Moraes ordered the transfer of over 7.2 million Brazilian reais from X and about 11 million Brazilian reais from Starlink. This significant move resulted in the operational ban of X in Brazil and the freezing of Starlink’s assets. The fine aimed to collect dues owed by X to Brazil.
This move has sparked widespread debate among legal analysts about the validity of freezing Starlink’s accounts for X’s obligations, as these entities have separate operations and stakeholders. Legal experts argue that Starlink was unjustly penalized since it did not have a chance to defend itself in this matter.
"Update: Brazil's top court has unfrozen bank accounts of X and Starlink following a $3m transfer. Billionaire Elon Musk speaks out against the ban on X in Brazil, citing non-compliance with court orders. #Brazil #SocialMedia #ElonMusk #XCompany #Starlink" pic.twitter.com/SXjkcW1wY3
— TOP X News (@TOPXNews) September 13, 2024
Compliance and Controversy
Elon Musk has openly condemned the seizure, describing it as “absolutely illegal.” He pointed out that X and Starlink have distinct shareholder configurations, challenging the legal basis of bundling their financial liabilities. Musk has also labeled de Moraes as a “dictator” due to his authoritative enforcement measures.
For context, X’s reluctance to comply with orders to remove content deemed misleading or harmful, and its failure to appoint a local representative, led to this punitive measure. X had about 22 million users in Brazil before its nationwide ban on August 31. The Supreme Court mandated this ban and imposed additional fines for users circumventing the suspension with VPNs.
“The social media company was sanctioned for not removing content after an order of the Supreme Court amid ongoing investigations. It is totally understandable that the judge requests that the fines be paid,” Machado said. “The ruling is legitimate in imposing the transfer of the amounts in compulsorily fashion.”
Despite the fines being paid and the bank accounts subsequently unfrozen, the contentious issue of content censorship remains in focus. Musk has repeatedly challenged de Moraes’ actions and the Supreme Court’s insistence on strict compliance by calling it “censorship.”
Unfreezing and Future Implications
After transferring 18.35 million Brazilian reais to the national coffers, the justice system lifted the freeze on the accounts of X and Starlink. This amount somberly covered the fines owed by X amid the dispute between Musk and the Brazilian judiciary. However, the action drew a division among juridical scholars, some of whom defend it as a legitimate enforcement tool while others see it as cross-corporate overreach.
“After the payment of the full amount that was owed, the justice (de Moraes) considered there was no need to keep the bank accounts frozen and ordered the immediate unfreezing of bank accounts/financial assets,” the Brazilian Supreme Court said.
The broader implication for X remains unresolved as the legal battle continues, with the Supreme Court’s decision to block access still in place. This incident has brought international attention to Brazilian judiciary practices and Elon Musk’s firms, starkly illustrating the friction between national regulatory frameworks and transnational corporate governance.
