Investors have filed a proposed class action accusing Twitter owner Elon Musk of insider trading and manipulating the cryptocurrency Dogecoin, leading to significant financial losses.
The investors claim that Musk utilized various tactics, including Twitter posts, paid online influencers, and his appearance on NBC’s “Saturday Night Live,” to trade profitably at their expense using multiple Dogecoin wallets controlled by him or Tesla.
According to the lawsuit filed on Wednesday night in Manhattan federal court, one specific incident cited involved Musk selling approximately $124 million worth of Dogecoin in April after he replaced Twitter’s blue bird logo with Dogecoin’s Shiba Inu dog logo. This action reportedly caused a 30% surge in Dogecoin’s price. The investors argue that Musk’s alleged “deliberate course of carnival barking, market manipulation, and insider trading” defrauded them while promoting himself and his companies.
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Elon Musk, who also owns SpaceX and runs Tesla, has not yet responded to the allegations. His lawyer, Alex Spiro, declined to comment on the matter. Similarly, the investors’ lawyer has not provided any immediate comments.
The investors have accused Musk of intentionally driving up Dogecoin’s price by more than 36,000% over a two-year period and then allowing it to crash.
This latest accusation was made in a proposed third amended complaint in an ongoing $258 billion lawsuit that began in June last year. Musk and Tesla had previously sought a dismissal of the second amended complaint, dismissing it as a “fanciful work of fiction.” On May 26, they argued against another amendment, claiming it was unwarranted.
U.S. District Judge Alvin Hellerstein, in a Wednesday order, indicated that he would likely allow the third amended complaint, stating that the defendants would not likely be prejudiced. The investors’ request to dismiss the nonprofit Dogecoin Foundation as a defendant was granted by Hellerstein.
Musk, a.k.a. Dogefather, has had a long history as a Dogecoin booster. It’s long been known that he’s able to influence its price with his tweets.
In December 2021, it jumped 20% after he announced that Tesla will begin accepting the coin as payment for certain merchandise. A few months before that, it rallied after Musk agreed with Mark Cuban that it’s the best cryptocurrency as a medium of exchange. And then almost a year ago, it went up 8% after Musk tweeted that he was going to keep buying. He also recently offered a 1 million Dogecoin reward to whoever can prove that his family had an emerald mine.
The cryptocurrency, created by Jackson Palmer and Billy Markus in 2013, was supposed to be a joke, based on the “Doge” meme that featured a Shiba Inu. The creators, who left the project two years after they created it, didn’t expect it to be taken seriously, but here we are 10 years later with a $258 billion lawsuit.
Information for this story was found via Reuters, CNBC, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
