Elon Musk, the renowned entrepreneur and CEO of Tesla, is currently facing a proposed class action lawsuit from investors, accusing him of insider trading involving the popular cryptocurrency Dogecoin. The lawsuit claims that Musk manipulated the price of Dogecoin, leading to substantial financial losses for the investors involved. The allegations include the use of tactics such as Twitter posts, paid online influencers, his appearance on NBC’s Saturday Night Live, and other attention-grabbing strategies to trade profitably at the expense of investors.
The investors filed the lawsuit in Manhattan federal court, alleging that Musk employed various tactics, including social media posts, paid influencers, and his appearance on Saturday Night Live in 2021, to manipulate Dogecoin’s price and profit at their expense. They also claim that Musk controlled several Dogecoin wallets either personally or through Tesla.
One specific incident highlighted in the lawsuit involves Musk’s sale of around $124 million worth of Dogecoin in April. The investors argue that Musk’s decision to replace Twitter’s blue bird logo with Dogecoin’s shiba inu dog logo caused a 30% surge in Dogecoin’s price, allowing him to profit from the subsequent increase.
According to the investors, Musk engaged in a deliberate strategy of market manipulation and insider trading to deceive investors and promote himself and his companies.
Musk, who acquired Twitter in October last year, holds influential positions as the CEO of Tesla and the head of SpaceX, a prominent rocket and spacecraft manufacturer. The investors claim that Musk leveraged his substantial social media following and public persona to manipulate the price of Dogecoin.
While Musk’s tweets have previously had a significant impact on cryptocurrency markets, investors argue that his actions went beyond expressing opinions and constituted intentional market manipulation for his benefit. They allege that Musk’s involvement in paid promotions with online influencers and his appearance on Saturday Night Live were part of a calculated plan to artificially drive up Dogecoin’s price, resulting in substantial financial losses for the investors when Dogecoin’s value subsequently crashed.
In response to the allegations, Alex Spiro, the lawyer representing Musk and Tesla, declined to comment. The lawyer representing the investors did not immediately respond to requests for comment.
Musk and Tesla have previously sought the dismissal of the second amended complaint, dismissing it as a “fanciful work of fiction.” They also argued against another amendment to the lawsuit. However, US District Judge Alvin Hellerstein indicated in a recent order that he would likely allow the proposed third amended complaint, suggesting that the defendants would not likely be prejudiced.
This ongoing lawsuit, initiated in June of the previous year, highlights the increasing scrutiny surrounding the influence of high-profile individuals like Musk in the cryptocurrency market. As one of the wealthiest individuals globally, Musk’s actions and statements continue to attract significant attention and raise important questions about their potential impact on investors and the overall integrity of the market.
As the legal proceedings unfold, it remains to be seen how this case will affect Musk’s reputation and the broader discussion concerning the regulation of cryptocurrency markets.
