Elon Musk's $20 Million Settlement for Fraud Charges Add to an Increasingly Bizarre Year for the Billionaire Musk has become known for his erratic, off-the-cuff online statements, but he's now paying the price and stepping down as Tesla's chairman.

This story was originally published on Sept. 28 at 2:51 p.m and has been updated.

For Elon Musk, the morning of Aug. 7, 2018, started out like any other. The Tesla CEO woke up, worked out and hopped in the driver's seat of one of his electric cars. But at 9:48 a.m., while en route to the airport, Musk typed out a now-infamous tweet that sent the markets reeling: "Am considering taking Tesla private at $420. Funding secured."

In the seven weeks since that fateful Tuesday, Musk's message has resulted in a company board review, a deluge of online speculation and fraud charges filed by the SEC. On Saturday, Musk agreed to pay a $20 million settlement to the SEC -- and, within 45 days, step down as Tesla's chairman of the board. He is to be replaced by an independent chairman and will be unable to seek re-election for three years, though he plans to stay on as CEO.

Tesla, for its part, agreed to pay another $20 million in fines due to its alleged lack of oversight for Musk's tweets. As part of the settlement, the company will need to instate new procedures for reviewing Musk's communications. The total amount in settlements -- $40 million -- will be distributed to harmed investors in a court-approved process, according to an SEC press release.

Despite the gravity of the charges -- which originally sought to bar Musk from serving as an officer or director of any public company in the U.S. -- the entire scenario seemed to be the natural progression of a series of increasingly erratic actions by Musk over the past year.

Earlier in the summer, a series of tirades by Musk -- both on- and offline -- gave investors and industry experts pause. First, he entered into a public argument with officials investigating a deadly Tesla crash. Then, he alienated Wall Street on Tesla's Q1 earnings call by calling some questions "boring" and "bonehead[ed]" -- an incident that he soon followed up with alerting the public that the "short burn of the century" was coming soon (including a tweet that "flamethrowers should arrive just in time").

Related: We Tried to Calculate How Much an Hour of Elon Musk's Time Is Worth. Here's What We Came Up With.

Musk's next controversy came when he sparred online with famed investor Warren Buffett, dismissing the latter's advice to build a competitive buffer around a company, e.g., a "moat." When Buffett challenged that Musk wouldn't want to take him on in the candy market, Musk responded that he was "super serious" about planning to start a candy company.

And after months of feuding with caver Vernon Unsworth online -- Unsworth had rejected Musk's donation of a child-sized submarine to aid rescue efforts in Thailand for a boys' soccer team trapped in a cave -- Musk wrote a contentious email to BuzzFeed News in September. In it, he alleged -- not for the first time -- that Unsworth was a "child rapist." Musk provided no evidence for his claims, and after writing taunts on Twitter -- "You don't think it's strange he hasn't sued me yet?" -- he was indeed slapped with a lawsuit on Unsworth's behalf.

Musk's year of impromptu online jabs -- especially in the Information Age, when past statements tend to live on forever -- almost cost him his job once. In June, likely as part of a strategic approach to calm investors, Musk seemed apologetic for his online antics. One Tesla shareholder had proposed the company replace Musk with an independent chairman of the board, but at the meeting, voters elected that Musk would retain the chairman spot he's held since 2004.

"This is … the most excruciating, hellish several months I've maybe ever had," Musk said at the time. For much of 2018, the electric car company has been behind schedule on its Model 3 production, its Autopilot mode has come under fire after one user's fatal crash and, during the first three months of the year, the company lost close to $800 million. As a result, Musk said he worked up to 120 hours a week this year. Work-life balance experts call it a stark reminder of humans' limited cognitive capacity, which, when exceeded, can lead to confused behavior, irrationality, irritability and even saying things you wouldn't normally say.

Related: Why Elon Musk Should Take a Vacation

The SEC complaint filed on Thursday also alluded to Musk's erratic turns of phrase. His choice of $420 price per share was rather arbitrary, as he simply looked at the day's closing share price and thought a 20 percent premium was "standard" when taking a company private. Musk rounded up from $419, he told The New York Times, because "it seemed like better karma," referencing the number 420's significance in marijuana culture. According to the suit, Musk also thought his girlfriend "would find it funny, which admittedly is not a great reason to pick a price."

As for Musk's allegation that funding for taking Tesla private was already secured? "Unlike market participants reading his tweets, Musk knew that his ostensibly "secured' funding was based on a 30- to 45-minute conversation regarding a potential investment of an unspecified amount in the context of an undefined transaction structure," wrote the plaintiffs in the SEC suit. Since Musk waited almost a week to update the public with more material information -- he penned a company blog post on Aug. 13 -- the complaint alleges that he harmed investors who purchased Tesla stock in the interim. In the blog post, Musk claimed the Saudi Arabian sovereign wealth fund first approached him in early 2017 about taking Tesla private. "Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction," he wrote.

It came after Musk's last-minute decision to fight the case rather than agree to a settlement and details the "trading frenzy" he set off on Aug. 7. At market close on that day, Tesla stock closed at $379.57 per share, up 6.42 percent from just before his original tweet. Although Tesla wasn't named as a defendant, the SEC seems to be aiming to make an example of Musk himself: "Musk knew or was reckless in not knowing that his August 7 statements were false and misleading," wrote SEC plaintiffs. On Thursday evening, Tesla shares sank to $277.

In an Aug. 7 letter to Tesla employees, Musk wrote: "If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us." Weeks later, he faces the possibility of being forced out of the company -- where he's spent the better part of the last 15 years.

Should Elon Musk resign from Tesla?

— Entrepreneur (@Entrepreneur) September 28, 2018