According to Reuters, Musk warned staff that the company could not survive the upcoming economic downturn without increasing subscriptions and said that, as the company would lose billions next year, bankruptcy was not out of the question.
Recent developments have caught the eye of the Federal Trade Commission, which in May, along with the Department of Justice, ordered Twitter to pay a $150 million fine for violating a 2011 order for misrepresenting its privacy and security practices.
The FTC told the Post that it was "tracking the developments at Twitter with deep concern" and that it was prepared to take action to ensure the company was complying with a settlement known as a consent order.
A former Twitter employee told the Post that three of the resignations were members of a data governance committee established in the FTC deal.
"No CEO or company is above the law, and companies must follow our consent decrees," said Douglas Farrar, the FTC's director of public affairs. "Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them."
Musk has not commented about the FTC on Twitter, but reportedly has sent employees an email addressing the reports about the regulator monitoring the company.
"I cannot emphasize enough that Twitter will do whatever it takes to adhere to both the letter and spirit of the FTC consent decree. Anything you read to the contrary is absolutely false," he wrote to his remaining staff.
Since completing his $44 billion takeover, Musk has sought assuage concerns by large advertisers that his stance on free speech won't harm their brands. Several major advertisers have reportedly suspended advertising on Twitter, including Carlsberg, General Motors, General Mills, Mondelez, United Airlines, and Volkswagen.
Musk however has said that Twitter usage continues to jump. "Hit all-time high of active users today," Musk wrote today.