In the lawsuit filed in a New York court on Thursday (local time), Keith Johnson accuses Musk and his companies of being part of an illegal Ponzi scheme that drove the Dogecoin price up and then crashed. Johnson is seeking a class action lawsuit for anyone who gambled money off Dogecoins.
The plaintiff accused Musk of presenting Dogecoin as a legitimate investment when it had no value. He wants Musk and his companies to pay for three times all the alleged losses in value Dogecoin holders have suffered since 2019, putting the total at $258 billion. In addition, the accused should bear the legal and procedural costs. Whether and to what extent the lawsuit will be admitted remains to be seen. Musk and his company initially did not comment on the allegations.
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Dogecoin is a digital currency that has existed since 2013 and is based on the Internet phenomenon-turned-funny image of a species of Japanese dog, which was supposed to be a joke. Driven by celebrities like Musk, who is followed by a good 98 million user accounts on Twitter, it temporarily developed into one of the hottest speculative objects on the financial market in 2021 and reached a record high of 74 cents in May. Most recently it was only worth around 5 cents. Musk is the richest person in the world, according to Forbes, with an estimated net worth of around $200 billion.
In the general sell-off on the stock exchanges, the crypto market has recently collapsed due to fears of inflation and recession. Not only Dogecoin, but also more established and larger cyber assets such as Bitcoin or Ether have lost massively in value. Dogecoin’s critics have long warned of tendencies towards a Ponzi scheme, in which profits are only possible through fresh funds from new investors. Even well-known crypto fans had their doubts. Bitcoin billionaire Mike Novogratz said in 2021: “It’s dangerous
– if the enthusiasm wanes, it could go downhill steeply”.
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NEW YORK (dpa-AFX)
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