Tesla, SpaceX and owner/CEO Elon Musk are being sued over their part in last year’s Dogecoin success and subsequent crash. The meme-fuelled cryptocurrency, which was publicly supported by Musk, was once soaring “to the Moon”; now it’s limping to be put down.
Why was Elon Musk sued for Dogecoin?
Filed by Keith Johnson, the latest of a large pile of lawsuits for Elon Musk accuses the billionaire of illegal racketeering. The $258 billion Dogecoin lawsuit claims that Musk, Tesla and SpaceX’s backing of the cryptocurrency led to citizens being defrauded out of money.
Johnson is not the focus of the lawsuit. Instead, Johnson is representing all citizens who invested into the cryptocurrency after its public promotion by Elon Musk on Twitter, an account with almost 100 million followers.
The lawsuit is looking to claim $86 million in damages, $172 billion in triple damages and an order blocking Musk and his companies from backing Dogecoin again. Furthermore, the suit is pushing to have Dogecoin trading classed as gambling under US law.
“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” Johnson’s complaint reads. “Musk used his pedestal as World's Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement."
There is precedent
Johnson’s lawsuit may be able to succeed in one thing: blocking Elon Musk from talking about Dogecoin. Due to Musk’s massive influence, the billionaire has already been found guilty of manipulating the market.
In 2018, an SEC settlement ruled that all Elon Musk tweets about Tesla must be pre-approved before being posted. The restrictions came after Musk tweeted about taking Tesla private, causing wild fluctuations in stock prices.
Elon Musk, an avid Twitter user, has attempted to fight this restriction. However, the SEC isn’t giving in.
"[Musk] cannot now complain that this provision violates his First Amendment rights," U.S. District Judge Lewis Liman wrote on the subject. "Musk's argument that the SEC has used the consent decree to harass him and to launch investigations of his speech is likewise meritless and, in this case, particularly ironic."
As for Dogecoin, Elon Musk and the cryptocurrency are irrefutably connected. Multiple falls for the currency can be directly related to the billionaire. For example, after the billionaire called the cryptocurrency a “hustle” on SNL, prices dropped by 36%.
Of course, this will have to be proven in court, and the intensely litigious Musk is known for having an expert legal team. So, perhaps in this case, it’s less of if Musk is at fault and more if people will back him.