Musk beats suit 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 cryptocurrency blamed Musk for promoting the token to his millions of Twitter followers with statements like “One word: Doge,” which sent its price soaring. Musk further inflated the price by then 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 “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 newscast 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 was “not possible to countenance” 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 as a result,” attorney Evan Spencer said in a statement.

Dogecoin was the original memecoin – a type of cryptocurrency that originated from internet memes or jokes. Its logo is a picture of a Shiba Inu dog.

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

Photo: A sticker advertising Dogecoin on a cryptocurrency teller machine (ATM) at a laundromat in Hong Kong. Photographer: Paul Yeung/Bloomberg

Copyright 2024 Bloomberg.

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