A federal judge says the latest amended version of the insider trading lawsuit against Elon Musk for publicizing and then profiting off the sale of the pop phenomena Dogecoin cryptocurrency can likely proceed.
Investors filed a third version of the class action suit in Manhattan federal court Wednesday night under charges of racketeering and corrupt organization.
The 26-page complaint, originally filed last June, says that Musk, SpaceX, and his Tesla corporations were used to engage in a “Crypto Pyramid Scheme” by manipulating the market value of Dogecoin cryptocurrency, costing investors roughly $86 billion in losses.
The suit accuses Elon Musk of generating false publicity for the cryptocurrency platform known as Dogecoin, and then selling his stake in the pop coin, netting exactly $124million in profits.
"Dogecoin…. is not anything at all…. You can't eat it, grow it, or wear it…. It's not based upon or tied to anything of value…. It's simply a fraud whereby "greater fools" are deceived into buying the coin at a higher price," the complaint said.
The Judge overseeing the amended request for a jury trial on Wednesday said he would "likely" allow the case to move forward.
Musk, along with his corporations, allegedly began purchasing, developing, promoting, supporting, and operating Dogecoin in 2019 – turning the crypto coin into a pop culture and social media phenomenon to this day, said court documents.
The suit, which Musk tried to have thrown out last summer, claims the “self-proclaimed godfather of Dogecoin,” created his own “Doge Army” made up of various billionaires, influencers, and celebrities to increase the price, market cap, and trading volume of the meme-based coin.
The suit specifically mentions Musk’s 2021 appearance on NBC's "Saturday Night Live," and dozens of other publicity stunts and Twitter antics, including multiple tweets that SpaceX would “literally” hoist a Dogecoin flag “on the actual moon.”
Even ChatGPT-like automated bots on Twitter seem to have gotten the Dogecoin memo.
While the public may have joined in on the laughs, investors argue the "deliberate course of carnival barking, market manipulation and insider trading" enabled Musk to "defraud investors, promote himself and his companies."
This past April, Musk sold roughly $124 million of Dogecoin, touting the sale by replacing the Twitter blue bird logo with the Dogecoin Shiba Inu dog logo at the time.
The PR stunt led to a 30% jump in Dogecoin's price.
Investors say the stunt is just another example of how Musk has deliberately driven up the price of Dogecoin over the past several years and then allowed its market value to plummet.
Musk had publicly chided the US Securities and Exchange Commission when news of the possible lawsuit broke, tweeting he would welcome an SEC investigation over his Dogecoin tweets.
“I hope they do! It would be awesome 🤣🤣,” Musk said.
Musk, who has just reclaimed his spot as the world's richest man with a net worth of $192 billion, has not commented on the new filing so far.
Dogecoin co-founders Billy Markus and Jackson Palmer were also named in the lawsuit, as well as the Dogecoin Foundation, and Musk's The Boring Company.
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