The plaintiff, Keith Johnson, accuses Musk of running a pyramid scheme. Musk is said to have bought Dogecoin at a low price, and then use his public platform to promote the digital currency and drive up the price. After some negative statements from Musk about the currency, the price fell quickly and investors were left with large losses. In addition to Musk, his companies Tesla and SpaceX have also been sued.
“The defendants knew since 2019 that Dogecoin had no value, but were promoting Dogecoin to profit from the trade in it,” the subpoena, filed in New York Federal Court, reads. “Musk used his stage as the world’s richest man to lead and manipulate the Dogecoin pyramid scheme for gain, attention and entertainment.” According to Johnson’s lawyers, there is a “fraud involving ‘bigger fools’ being tricked into buying the currency at a higher price.”
The explosive price growth of Dogecoin and Musk’s involvement in it has already raised eyebrows. The cryptocurrency was conceived in 2013 as a joke: the logo is a Shiba Inu dog that has been circulating as a meme on the internet for much longer. For years the price remained stable low, but when Musk started tweeting about it regularly in December 2020, the price went from 0.0027 euros to 0.5238 euros in five months, an increase of almost 20 thousand percent.
Musk, who calls himself the ‘Dogefather’, regularly claimed that Dogecoin would go ‘to the moon’ and soon become a major currency. But during an appearance on the American comedy show Saturday Night Live in May 2021, he couldn’t explain exactly what the coin entailed, calling it a “hustle,” a shadowy way to make money. Since then, the cryptocurrency has lost nearly 90 percent of its value and many Dogecoin adepts have been left with huge losses.
Johnson wants Musk to repay the value of Dogecoin since May last year, totaling $86 billion, to those investors three times, a total cost of $258 billion (more than 245 billion euros). That’s more than Musk’s total wealth, which Bloomberg currently estimates at $203 billion. The claim comes on top of financial concerns for Musk over his takeover of Twitter. Tens of billions of his assets went up in smoke after the deal was announced as the value of his shares in Tesla fell.
Both Tesla and SpaceX recently started accepting payments in Dogecoin for their merchandise. But if Johnson has his way, those companies, like their owner Musk, must stop promoting the digital currency. Musk must already submit all his tweets to lawyers because after he previously used them to influence Tesla’s share price, those lawyers may soon have to weed the Shiba Inu images from his Twitter feed.
The mass claim is not Musk’s only concern when it comes to Dogecoin, by the way. His great teaser, the US regulator SEC, is also investigating whether his tweets about Dogecoin have broken any rules. The SEC, which required him to submit his tweets to lawyers, is also investigating his actions in acquiring Twitter shares.