A tumultuous day has ended in civil war breaking out at gossip website Gawker, after an exposé of a businessman’s private life blew up spectacularly in the website’s face.

First, in a stunning about-face, Gawker Media’s Nick Denton on Friday took down a story about alleged sexual behavior that he and his top editors initially praised and defended, only to provoke a storm of revulsion from both inside and outside his 300-employee company.

“Not only is criticism of yesterday’s piece from readers intense, but much of what they’ve said has resonated,” Denton wrote on his web site, 18 hours and four minutes after Gawker posted a story alleging that David Geithner—a heterosexually married father of three, the younger brother of former treasury secretary Tim Geithner, and the chief financial officer of Condé Nast Publications—had attempted to hire a male prostitute for a tryst during a trip to Chicago on July 11.

“Some of our own writers, proud to work at one of the only independent media companies, are equally appalled” by the story, Denton continued.

But then, on Friday evening, editorial staff, disgusted at Denton’s decision--in which he voted with three of the five other Gawker Media managing partners to kill the story--issued their own statement, saying the story had been taken down against the wishes of the “entire executive editorial staff.”

The statement concluded: “Disagreements about editorial judgment are matters to be resolved by editorial employees. We condemn the takedown in the strongest possible terms.”

Geithner, a press-shy media executive with a low public profile, had disputed Gawker’s account, which shielded the identity of his “gay porn star” accuser—giving him the false name “Ryan”—and offered as evidence a supposed selfie that Geithner allegedly sent to “Ryan,” various real estate property records, a FED EX receipt (pixilated to blur “Ryan”’s true name and address in Texas), and supposed exchanges of text messages between “Ryan” and Geithner.

“I don’t know who this individual is,” Geithner stated in a denial that was included at the end of staff writer Jordan Sargent’s lengthy narrative, almost as an afterthought. “This is a shakedown,” Geithner continued. “I have never had a text exchange with this individual. He clearly has an ulterior motive that has nothing to do with me.”

Yet as the story went up—and went viral—starting at 8:26 p.m. Thursday, Denton and various Gawker staffers were in a celebratory mood during a cocktail party at Denton’s Soho loft, held to schmooze with media reporters who have been covering the $100 million sex video lawsuit filed against Gawker by celebrity wrestler Hulk Hogan.

According to an account by Capital New York media writer Peter Sterne, “all of the Gawker staffers in attendance—from Denton on down—spoke about the post proudly. Many seemed genuinely surprised that so many people objected to it.

“A few of the editors were glued to their phones, checking Twitter and Chartbeat to stay up to date on the angry tweets from other journalists and the number of people currently reading the post.” (Later, a Gawker PR rep clarified that Denton was not among the partygoers talking about the story.)

Among the many critics was Pulitzer Prize-winning investigative reporter Glenn Greenwald. “I’m a fan of Gawker & several of its journalists, but that article is reprehensible beyond belief: it’s deranged to publish that,” Greenwald wrote on Twitter, which has served as a clearing house for public outrage over the story by Gawker staffer Jordan Sargent.

Yet Max Read, Gawker’s editor-in-chief, practically gloated in a tweet of his own: “given the chance gawker will always report on married c-suite executives of major media companies fucking around on their wives.”

Apparently that’s not exactly true. The decision to remove the Geithner exposé came after bitter disagreements among Gawker Media’s senior managers.

John Cook, the website’s executive editor for investigations, vehemently opposed the take-down, revealing on Twitter: “I and a lot of my colleagues argued as strenuously against it as we could, and we lost.”

In his blog post on Friday, Denton conceded: “In light of Gawker’s past rhetoric about our fearlessness and independence, this can be seen as a capitulation. And perhaps, to some extent, it is.

“But it is motivated by a sincere effort to build a strong independent media company, and to evolve with the audience we serve.”

To the contrary, however, the Geithner controversy has potentially created another serious problem for a company whose very existence could already be threatened by an unfavorable verdict from the jury in the Hulk Hogan trial, which was scheduled to start in state court in St. Petersburg, Fla., on July 6 before being postponed till later this year.

Hogan claims Gawker Media and Denton—who owns 68 percent of his privately-held company—violated his rights to privacy and publicity 2½ years ago by posting a video of him having sex; under Florida law, if the jury decides against Gawker with substantial monetary damages, Denton will be required to post the entire amount on bond, pending an appeal—which could be financially catastrophic.

Although Denton insisted in Friday’s blog post that the Geithner story “was true and well-reported,” he added that the decision to publish it in the first place “was an editorial call, a close call around which there were more internal disagreements than usual. And it is a decision I regret.”

Should the basic elements of the story prove inaccurate as Geithner contends, he could have a strong case for a libel action, according to legal experts consulted by The Daily Beast.

“It’s looking more and more like it isn’t true,” said prominent media lawyer Kevin W. Goering, who argued that Geithner could conceivably claim “intentional infliction of emotional distress” under the usually-press friendly New York laws regarding libel actions.

“If somebody finds that Gawker is so callously and intentionally doing this just to hurt the guy, as opposed to fulfilling any kind of public interest, then it ought to be actionable,” Goering told The Daily Beast. “It’s fairly outrageous, I think you would agree.”

While taking the story down “lessens the damages,” Goering added, “believe me, the damage has been done.”

Sargent’s story claimed that the Condé Nast CFO, who supposedly introduced himself as “David” but withheld his surname from “Ryan,” arranged to pay the escort $2,500 for sex during a July 11 trip to Chicago, but canceled the tryst after “Ryan” revealed he had figured out Geithner’s real identity and that of his famous older brother, and asked for his help in a housing dispute, sending him documents regarding an eviction from a luxury apartment in Texas.

When Geithner allegedly didn’t provide the requested assistance, “Ryan” spilled his allegations to Gawker as a confidential source.

On Friday, the Daily Caller, a right-leaning Washington-based news site, identified “Ryan” as 33-year-old Leif Derek Truitt from Austin, Texas, a male escort and porn star who appears on camera under the name Brodie Sinclair.

In an interview with the Daily Caller, Truitt—who has posted videos claiming that Barack Obama is “the son of the Devil” and the 9/11 attacks were carried out by the Russians—spouted a variety of conspiracy theories concerning the well-connected Geithner family.

While he did not directly confirm that he was Gawker’s confidential source, the Daily Caller provided ample evidence that it’s the very same guy; meanwhile, here’s how Truitt answered the question, Why did he go to Gawker with the information about Geithner?

“It’s a long story,” the Daily Caller quoted Truitt as replying. “Gawker—I feel they’re brave,” he said. “They have their own reasons to be brave. They go against anybody. As long as it’s the truth, they’ll get it out. Doesn’t matter what it is.”

Journalism professor Jane Kirtley, who lectures on media ethics and the law at the University of Minnesota, told The Daily Beast that the story seems to have had no legitimate journalistic purpose.

“What’s the public interest in this story?” she asked. “I can imagine they could make the case that there’s a public interest if he were an elected official running on a motherhood-and-apple-pie platform, and then it would be a story about hypocrisy, or if he were a CIA or an FBI agent, and then it would be a legitimate story about how vulnerable our agents are to blackmail because they’re doing stupid things, or if there is some argument that this guy gives preferential treatment to people in the hiring process and there’s sexual harassment—then there might be a public interest there.

“But absent all those things, I’m really hard-pressed to see what the public interest is.”

The near-unanimity of condemnation, especially on Twitter, clearly rocked Gawker and Nick Denton back on their heels.

Some representative tweets:

• “I literally don’t know how anyone at @gawker could read that story on David Geithner and feel good about that piece. What the hell?”

• “Gawker is trash, but helping blackmail David Geithner really makes you want Hulk Hogan to bankrupt them.”

• ”David Geithner, wherever you are: Please sue the pants off @Gawker. You’ll be doing the world a public service. Thank you.”

• ”Despicable. @Gawker’s staff and @jordansargent should be ashamed for outing & gay-shaming Tim Geithner’s brother.”

Media columnist Michael Wolff tweeted: “@gawker malevolence takes big leap w/David Geithner story. Assume someone has personal issue with him and this is payback. no other logic to story. Sex life of a CFO? Or ok because its the relative of a public figure? Evil thugs, getting eviler, at @Gawker.”

And Capital New York’s Joe Pompeo asked: “Can someone call David Geithner to let him know that basically everyone is on his side?”

Change.org, meanwhile, launched an online petition to “Terminate Jordan Sargent as an employee immediately, formally apologize to David Geithner and his Family, and pull the hit piece on Mr. Geithner.”

“The decision to run an article publicly outing a private citizen’s sexuality, especially when this citizen is the CFO of a competing organization, not only is unacceptable and immoral, it smears on the name of real journalists and journalism publications across the United States,” the non-profit online petition site editorialized.

Even some staffers of Denton’s notoriously merciless gossip blog—one of nine operated by Gawker Media—recoiled from the story. Former Gawker senior writer Adam Weinstein tweeted Thursday night: “I had no part in this. I would not have chosen to run it as is.”

Neither Denton nor the company’s president and general counsel, Heather Dietrick, made themselves available for comment at the time of this writing. Sargent said in an email: “I’m not going to talk about the story right now. thanks for reaching out.”

Editor's note: This story was updated at 7.45pm on Friday, with a fresh comment from Gawker. More updates may follow.