Dogecoin investor sues Elon Musk, Tesla, SpaceX for $258 billion, claiming ‘ponzi scheme’

A Dogecoin investor is suing Elon Musk and two of his companies, Tesla Inc. and SpaceX, for $258 billion, accusing them of operating a “pyramid scheme” to inflate the cryptocurrency’s price.

The lawsuitFiled Thursday by Keith Johnson in federal court in Manhattan, accusing Musk and his companies of fraud, violations of federal and state extortion and gambling laws, and seeking class-action status on behalf of Dogecoin investors who have lost money since April 2019.

“The defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” the lawsuit reads. “Dogecoin is not a currency, stock or security. … It is not based on or attached to anything of value. … It’s simply a scam to lure ‘greater fools’ into buying the coin at a higher price.”

Johnson’s lawsuit seeks $86 billion in damages. This is the amount he thinks Dogecoin investors have lost since Musk started buying and promoting it in 2019, plus $172 billion in triple damages. It also seeks to block Musk and his companies from promoting Dogecoin and an order equating Dogecoin trading with gambling.

Musk, the richest person in the world, has tweeted about Dogecoin numerous times over the past few years, often resulting in a price rally for the coin. In April 2021, Musk christened himself “The Dog Father” while promoting his upcoming appearance on Saturday Night Live; Dogecoin crashed a day after the show aired after it was dubbed “A Hustle” in a sketch Musk appeared in.

The lawsuit cites dozens of tweets Musk made promoting Dogecoin and claims Musk knew he was artificially inflating the price. Attention is also drawn to Musk’s history of failing to comply with Securities and Exchange Commission regulations.

Dogecoin was created as a hoax, but exploded in popularity in 2021, with Musk as one of its most prominent evangelists. Tesla TSLA,
started accepting Dogecoin for goods purchases earlier this year, and Musk has hinted that SpaceX will soon do the same for its goods.

Neither Tesla nor SpaceX immediately responded to requests for comment Thursday.

Dogecoin DOGEUSD,
was trading at just a fraction of a cent prior to 2021, when it surged to an all-time high of about 68 cents with a market cap of nearly $500 million. It’s currently trading at around 5 cents, according to Kraken data, down 68% year-to-date and down 81% over the trailing 12 months. It was also hit hard by the recent crypto crash, down 35% in the last month.

See also: As the crypto crash deepens, here are 4 signs the worst may be yet to come Dogecoin investor sues Elon Musk, Tesla, SpaceX for $258 billion, claiming ‘ponzi scheme’

Brian Lowry

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