Musk and Tesla Sue for Promoting Dogecoin ‘Pyramid Scheme’

Elon Musk and Tesla Inc. won the dismissal of a lawsuit alleging they inflated the price of the Dogecoin cryptocurrency in a $258 billion “pyramid scheme.”

Investors who lost tens of thousands of dollars investing in the token blamed Musk for promoting it to his millions of Twitter followers (now X) with statements like “One word: Doge,” driving it up. Musk further inflated the price by announcing that Tesla would accept Dogecoin as payment for merchandise, according to the 2022 complaint.

A federal judge in New York dismissed the claims on Thursday, finding that Musk’s statements were “aspirational” rather than “factual and susceptible to falsification” and that “no reasonable investor could rely on them.”

When Musk appeared on Saturday Night Live in May 2021, after promoting Dogecoin for months, he played a financial expert in a news story trying to explain the cryptocurrency. Pressed, his comic exchange character finally agrees that Dogecoin is a “fork”. According to the complaint, it lost $20 billion in market value before the show ended its run.

Investors also accused Musk and Tesla of participating in a “pump and dump” scheme with Dogecoin, but U.S. District Judge Alvin Hellerstein wrote that it is “not possible to understand” those allegations.

A lawyer for the plaintiffs said his clients were disappointed and planned to appeal.

“Musk’s statements and publications were far more than inflated and a class of millions lost billions of dollars,” attorney Evan Spencer said in a statement.

Bitcoin ATM in Hong Kong

A sticker advertising Dogecoin on a cryptocurrency ATM at a laundromat in Hong Kong, China, Thursday, June 9, 2022. Tesla Inc. CEO Elon Musk expressed his interest in Bitcoin and Dogecoin early last year and Tesla allowed customers to buy electric cars with Bitcoin, helping send the crypto market to record highs. Photographer: Paul Yeung/Bloomberg

Dogecoin, with its Shiba Inu image, was the original memecoin, a type of cryptocurrency that originated from internet memes or jokes. Since Musk’s first tweets about the token, it has seen sharp ups and downs, reaching a peak in March, from which it has fallen about 54%.

The case is Johnson v. Musk, 22-cv-05037, U.S. District Court, Southern District of New York (Manhattan).

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