Elon Musk, CEO of Tesla, the world’s largest electric vehicle (EV) manufacturer, and SpaceX, a multi-billion-dollar spacecraft manufacturer, is also known for his avid interest in the memecoin Dogecoin.
The billionaire has consistently shown strong support for the cryptocurrency, hinting at his ownership of the DOGE token since 2019. Several of Musk’s tweets include statements like “I will keep supporting Dogecoin,” “Dogecoin is the people’s crypto,” and “Dogecoin might be my fav cryptocurrency,” among others.
I will keep supporting Dogecoin
— Elon Musk (@elonmusk) June 19, 2022
Dogecoin might be my fav cryptocurrency. It’s pretty cool.
— Elon Musk (@elonmusk) April 2, 2019
Dogecoin is the people’s crypto
— Elon Musk (@elonmusk) February 4, 2021
He became such a prominent figure in the Dogecoin community that his actions, even those unrelated to Dogecoin or the crypto industry in general, began to influence Dogecoin’s price. For example, when Musk completed a $44 billion deal to buy Twitter last October, Dogecoin’s price increased by 70%.
However, Musk’s vocal support has led another group of Dogecoin investors to sue him. The ongoing lawsuit could make him liable for $258 billion in damages.
A verdict against Musk would profoundly affect his personal wealth and business ventures. The case could also set standards for how influencers engage with cryptocurrencies, shaping accountability norms in the evolving crypto regulatory landscape.
This article explores the latest developments in the lawsuit and offers insights into its impact on Musk, Dogecoin, and the broader cryptocurrency market.
READ ALSO: Musk v. Altman: Everything in the Court Record That Nobody Has Put Together in One Place
Why Are Dogecoin Investors Going After Elon Musk?
Some Dogecoin investors have interpreted the billionaire’s actions and involvement so far as a malicious attempt to unfairly influence the memecoin‘s price to his advantage.
In June 2022, fellow Dogecoin investor Keith Johnson sued Elon Musk and his companies, Tesla and SpaceX. Johnson’s attorney, Evan Spencer, alleged that Musk had exploited his influence for a “DOGE pump-and-dump” scheme, artificially inflating the price and then intentionally crashing it. The suit stated that Musk promoted Dogecoin as “a legitimate investment when it has no value at all.“
Johnson’s legal team accused Musk of endorsing Dogecoin through various channels, including tweets suggesting the token’s utility, his appearance on NBC’s Saturday Night Live in 2021, and alleged influencer payments.
The plaintiff represented investors who lost money due to Dogecoin price fluctuations. As the case progressed, other investors joined Johnson as plaintiffs.
Musk and Dogecoin Foundation’s Reactions to the Suit
Musk’s legal team denied that the billionaire was involved in any scheme to manipulate DOGE’s price. They argued it’s baseless to hold him responsible for other investors’ financial losses due to his “silly tweets,” since those tweets didn’t break any laws.
In March 2023, they formally petitioned the judge overseeing the case to dismiss the lawsuit against Musk and his companies.
After several revisions to the initial filing, the Dogecoin Foundation, a non-profit organization dedicated to promoting and supporting Dogecoin, voluntarily joined the lawsuit as a defendant. It also asked the court to dismiss the lawsuit and claimed that the tech billionaire did not manipulate Dogecoin’s price.
Recent Developments: Allegations of Insider Trading
In June 2023, the plaintiff filed a third amended complaint that raised new insider-trading allegations against Elon Musk.
The plaintiffs alleged in the filing that Musk and his companies held crypto wallets linked to insider trading. They claimed that the billionaire capitalized on a brief DOGE rally triggered by the replacement of the Twitter bird logo with the Shiba Inu, widely recognized as the Dogecoin mascot.
According to the plaintiffs, Musk’s subsequent $124 million token sell-off caused a price decline that harmed other investors. They also asked the court to remove the Dogecoin Foundation as a defendant.
Musk’s Response to the Insider Trading Allegations
Elon Musk and his legal team swiftly debunked the insider trading allegations, maintaining that neither Musk nor his team had access to the wallets implicated in Dogecoin’s price manipulation and alleged insider trading.
Musk’s legal team also claimed the plaintiff knew the insider-trading allegations against the billionaire and his companies were false. They pointed out that Spencer, the plaintiff’s attorney, had discovered that one of the wallets incorrectly attributed to Musk in the new filing belongs to Robinhood, a U.S. exchange platform.
As part of their response, they requested a Rule 11 sanction from the court, a penalty imposed on lawyers or parties in a lawsuit who make baseless allegations.
The Potential Impact of the Lawsuit
With Musk’s legal team filing for sanctions and issuing sworn statements disassociating him and his companies from the wallets tied to insider trading and DOGE pump-and-dump schemes, the plaintiff’s pursuit of this case may be risky.
Musk presents a strong argument against the insider trading charges, as much of the plaintiff’s evidence relies on assumptions about his wallet ownership.
Spencer, however, remains optimistic about pressing the lawsuit against Musk and his companies. He could have avoided Musk’s legal team’s sanction motion by heeding their June 9th request to drop the lawsuit due to ‘false details.’ Instead, Spencer asked to remove certain defence attorneys, citing ethical concerns.
Elon Musk isn’t the first public figure to face misleading allegations about cryptocurrency. Celebrities like Kim Kardashian paid a $1.26 million SEC fine for promoting crypto on Instagram, neither admitting nor denying the allegations but returning the payment they received.
Similarly, the SEC charged Jake Paul, Lil Yachty, and others for promoting ‘securities’ due to their association with cryptocurrencies like TRX and BTT, resulting in fines exceeding $400,000.
In Musk’s case, no allegations suggest he received money from Dogecoin or any third party for endorsements. Nevertheless, he has used his Twitter page with 148 million followers to promote DOGE multiple times.
Elon Musk is accustomed to litigation, and allegations of his involvement in unethical Dogecoin conduct are among many that draw attention. Nonetheless, the lawsuit’s outcome carries significant implications for Musk, Dogecoin, and the wider crypto market. The extent of these effects, whether substantial or moderate, will remain uncertain until a final verdict is reached.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
Enjoyed this? Bookmark DeFi Planet, explore related topics, and follow us on Twitter, LinkedIn, Facebook, Instagram, Threads, and CoinMarketCap Community for seamless access to high-quality industry insights.
Take control of your crypto portfolio with DEFI PLANET PRO, DeFi Planet’s suite of analytics tools.
