Insider trading is illegal. Tax fraud is illegal. There's lots of things in the business world that have been deemed illegal including the theft of ideas that are trademarked, copyrighted or patented and businessmen steal those all the time and spend a lot of time looking for loopholes. The bottom line is that I can't say with 100% certainty that this is exactly what's going on but I can point to articles with analysis of the entire thing and see some distinct possibilities, and you can't say for certain that that's not what's going on, unless you happen to work in the field and have information that I don't.

The other parts of the acquisition are covered by his own companies and the sale of his own stock. With the right insurance (the right contracts) he'd get a golden parachute that would make him whole without having to pay those back either. Golden parachutes are not only legal but also quite normal for CEOs. If Twitter were to end up bankrupt, he may not have to pay back the money he borrowed from Tesla or his other companies, and that leaves him having to pay back just the private parties. Depending on their agreement, that may be in stock options for all we know. Further allowing him to dump Tesla stock without selling it (which won't effect Teslas valuation in a negative way).

A house of cards is a house of cards. Things being illegal have never stopped this man before.