$258bn lawsuit alleges that Elon Musk, SpaceX and Tesla are part of a ‘pyramid scheme’
Elon Musk, along with his companies SpaceX and Tesla Inc, are being sued for their alleged complicity in a “racketeering scheme” designed to dupe investors who had sunk money into the cryptocurrency Dogecoin, per Bloomberg.
The cryptocurrency Dogecoin began as something of a joke – before gaining a serious following / Adobe Stock
The lawsuit was filed this morning in the US District Court, Southern District of New York (Manhattan), by one Keith Johnson, described by an undisclosed source in the Bloomberg report as “an American citizen who was defrauded out of money by the defendants’ Dogecoin Crypto Pyramid Scheme.”
Johnson is reportedly “seeking to represent a class of people who have lost money trading in Dogecoin since April 2019” and is seeking $258bn in damages. That’s more than twice as much as SpaceX’s total valuation in late May. He’s also seeking “an order blocking Musk and the companies from promoting Dogecoin, and declaring that Dogecoin trading constitutes gambling under US and New York law,” according to Bloomberg.
Dogecoin is a cryptocurrency launched in 2013. It started off as a bit of a joke – it’s based on the Shiba Inu internet meme – but its self-effacing vibe resonated among many in the crypto community, and over time it gained considerable momentum, amassing a legion of followers known as the “Dogecoin Army.”
The coin’s value has been further bolstered by support from Elon Musk. In a tweet from February 2021, for example, he dubbed it “the people’s crypto.”
Musk also referenced Dogecoin during his 2021 appearance as the host of Saturday Night Live, inspiring hope among some of the coin’s enthusiasts that its value would begin to soar. Those hopes were dashed when the coin’s value began a long period of decline, which has continued to the present. Musk’s announcements that Tesla and SpaceX would begin accepting Dogecoin sparked upticks in the coin’s value, but those were fleeting.
It’s unclear at this point whether the lawsuit will go anywhere, and more details have yet to emerge, but nevertheless it could reflect the growing sense of anger among some crypto investors who have lost money to the unregulated market as a consequence of public statements from celebrities.
Dogecoin isn’t the only cryptocurrency to deflate recently. The market as a whole has been suffering a significant downturn, prompting some crypto trading companies including Coinbase to lay off employees.
Musk is no stranger to lawsuits. In May, for example, he was sued by a Twitter investor who claimed that he had violated California laws during his takeover of the company.