Before backing out, sources say that Systrom verbally agreed to the $525 million deal with Twitter. Systrom said that he wanted to keep his company independent. He did get a term sheet for the deal, which is an outline of a formal deal. He received the term sheet from Twitter, however he did not keep the sheet.

Systrom formally worked in M&A at Google according the Bilton, thus having the knowledge about the ins and outs of buyouts and acquisitions. Systrom also never met at Twitter’offices or Instagrams, instead meeting at other secluded unknown locations such as restaurants according to Bilton. When he was given the term sheet, Systrom looked it over and gave it back to Twitter after reading it over and memorizing what was included on the sheet. According to the report, these talks took place on March 20. Systrom keep these talks quiet because he was in fear of legal repercussions if word were to break about the secret talks between his company and Twitter.

People familiar with the negotiations were in shock that they were not given the chance to counteroffer to Facebook. Twitter was prepared to make higher offers.

If Bilton’s story is true, it remains unclear if Instagram or Facebook would be in trouble for the matter at hand. It will be up to the California Corporations Department to determine that question. At this point no complaints or protests have been received of the original fairness hearing proceedings of Facebook buying Instagram according to Bilton.