Just a few weeks after attempting to pad out his legal team on Twitter, Tesla boss Elon Musk is facing an eye-watering $258 billion lawsuit, accusing him of operating a pyramid scheme by manipulating investors in the popular cryptocurrency, Dogecoin.
Dogecoin (DOGE) was created in 2013 as a lighthearted alternative to traditional cryptocurrencies like Bitcoin. The name and Shiba Inu logo are based on a meme. Unlike Bitcoin, which is designed to be scarce, Dogecoin is intentionally abundant — 10,000 new coins are mined every minute and there is no maximum supply.
With a fun and friendly aesthetic, there doesn’t seem to be too much Dogecoin dirty laundry out in the open for such a massive lawsuit. Until then, let’s revisit Musk’s history with the cryptocurrency.
In a complaint filed in federal court in Manhattan, plaintiff Keith Johnson accused Musk and his companies SpaceX and Tesla with racketeering, alleging that the company drove up Dogecoin’s price and let it flounder – resulting in great personal loss to Johnson.
“Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading,” said Johnson. “Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement,” the lawsuit stated. It went on to refer to comments from the likes of Warren Buffet, Bill Gates, and more business personalities who have been critical of cryptocurrency – before claiming that the lawsuit was filed on behalf of those who have suffered losses by investing in Dogecoin since 2019.
In the years that followed Elon’s rise to public fame, he had gone about on several platforms touting the ‘bright future’ of cryptocurrency, often resulting in valuation bumps tied to his endorsements — casual or otherwise.
This reached a fever pitch in 2021, when Musk appeared on popular comedy skit show Saturday Night Live (on which he has multiple appearances), as a ‘crypto expert’ named Lloyd Ostertag.
According to Johnson, all of these very public endorsements led to $86 billion in losses for investors. His aim with the lawsuit is an additional $172 billion. He believes Musk increased “the price, market cap and trading volume of Dogecoin” through his promotion of it. He included tweets from Musk, the world’s richest man who has more than 98 million followers on Twitter, including one promising that SpaceX would “put a literal Dogecoin on the literal moon.”
He also wants to block Musk and his companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law, stating that the currency fits the definition of a pyramid scheme as it has no intrinsic value, no upper cap, and is not backed by a tangible asset.
Dogecoin prices were trading at $0.05606 on Friday, June 17th, at 0944 IST, down by over 7 percent over the last 24 hours, as per data from CoinMarketCap.
(Featured Image Credits: TED)