Cryptocurrency enthusiasts have been following the legal saga of Elon Musk, the billionaire CEO of Tesla and SpaceX, who is facing a $258 billion lawsuit over his alleged involvement in a pyramid scheme to manipulate the price of Dogecoin, a popular meme-inspired digital coin.
Group of Crypto Investors Claim Musk Abused His Public Influence
The lawsuit, filed by a group of Dogecoin investors in New York, claims that Musk used his social media influence, his appearance on Saturday Night Live, and his control over Tesla and SpaceX to artificially inflate the demand and value of Dogecoin, and then sell his holdings at a huge profit, causing massive losses for other investors.
In 2020, Dogecoin caught the attention of Musk, who started tweeting about it frequently, sometimes with humorous or cryptic messages, such as “Dogecoin Rulz” or “no highs, no lows, only Doge”. His tweets often triggered spikes in Dogecoin’s price, as many of his followers rushed to buy the coin.
The lawsuit alleges that Musk was not just a fan of Dogecoin, but a mastermind of a sophisticated scheme to manipulate its market. According to the plaintiffs, Musk used his Twitter account, which has over 60 million followers, to create hype and FOMO (fear of missing out) around Dogecoin.
One of the most controversial events cited by the lawsuit is Musk’s appearance on Saturday Night Live in May 2021, where he played a financial expert who called Dogecoin “a hustle”. The plaintiffs argue that this was a deliberate attempt to lower the expectations of the market and create a sell-off opportunity for himself and his associates.
They also point out that Musk sold about $124 million worth of Dogecoin in April 2021, after he changed his Twitter profile picture to a Dogecoin logo, causing a 30% increase in the coin’s price.
Plaintiffs Seek Justice in Case Against Musk
The lawsuit claims that Dogecoin’s market value dropped by $86 billion in the period from May 2022 to June 2023, and the plaintiffs want to recover three times that amount as compensation. They accuse Musk of violating several federal laws, including the Racketeer Influenced and Corrupt Organizations Act (RICO), the Securities Exchange Act of 1934, and the Commodity Exchange Act.
Musk has denied any wrongdoing and asked the judge to dismiss the lawsuit. He and his lawyers have argued that the lawsuit is a “fanciful work of fiction” based on “innocuous and often silly tweets” about a legitimate cryptocurrency. They have also challenged the legal basis and the factual evidence of the plaintiffs’ claims.
