Elon Musk, SpaceX And Tesla Sued For $258 Billion In Alleged Dogecoin ‘Pyramid Scheme’

Topline

Elon Musk, SpaceX and Tesla were sued in federal court Thursday over claims that Musk directly “manipulated” the price of Dogecoin in a deliberate “crypto pyramid scheme” conducted over Twitter.

KATWIJK, NETHERLANDS – JANUARY 29: In this photo illustration visual representations of digital … [+] cryptocurrencies, Dogecoin and Bitcoin, are displayed on January 29, 2021 in Katwijk, Netherlands. (Photo by Yuriko Nakao/Getty Images)

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Key Facts

Plaintiff Keith Johnson – who purchased Dogecoin in 2021 – is seeking a class-action lawsuit in the Southern District of New York against Musk and his companies SpaceX and Tesla, for at least $86 billion in damages.

Johnson argues Musk drove up the price of Dogecoin with his tweets about it, but that the currency lacks “underlying value” and Musk promoted it for his own “profit, exposure, and amusement.”

Johnson is also seeking court orders to prohibit Musk from promoting Dogecoin, and to declare Dogecoin trading a form of gambling, under federal and New York law.

The suit claims Dogecoin is an “illegal wire fraud enterprise” fueled by promotion and manipulation over Twitter.

SpaceX has not responded to a request for comment from Forbes.

Key Background

Dogecoin’s value has been on the decline over the past year, dropping to $.057 per coin Thursday, from a peak of $.64 last May. The cryptocurrency launched in 2013 at $.0002 per coin. Musk started promoting Dogecoin in 2019 with a series of tweets that included “DOGE” and “Tesla merch buyable with Dogecoin,” both of which increased the Dogecoin’s value. In Feb. 2021, Musk walked back on his support, tweeting, “I will literally pay actual $” to people who void their Dogecoin accounts.” The U.S. Securities and Exchange Commission launched an investigation that month into Musk for his tweets related to Dogecoin. Musk then tweeted, “Doge will live forever.” Musk has continued to support, or at least mention, Dogecoin on Twitter, as well as on a May, 2021 episode of Saturday Night Live.

Crucial Quote

The suit says Dogecoin is a “fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”

Further Reading

Elon Musk’s ‘SNL’ Gig Was A Bust For The Billionaire—And Dogecoin—But A Boom For NBC (Forbes)

An Introduction to Dogecoin, The Meme Cryptocurrency (Forbes)

Musk, Tesla, SpaceX Are Sued for Alleged Dogecoin Pyramid Scheme (Bloomberg)

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