Elon Musk was sued for $258 billion on Thursday by a Dogecoin investor who accused him of setting up a pyramid scheme to back the cryptocurrency. A complaint against the CEO of Tesla has therefore been filed in the United States for “price manipulation and Ponzi pyramid”, with a record claim for compensation.
The collapse of cryptos is likely to spark a flurry of legal proceedings.
A few details about the case…
In a lawsuit filed in Manhattan federal court, plaintiff Keith Johnson accuses Musk, electric car company Tesla and space tourism company SpaceX of racketeering for touting Dogecoin and raises its price, only to let it fall.
Recall that, as everyone knows, Musk is the CEO of Tesla and SpaceX.
“Defendants knew since 2019 that Dogecoin had no value and yet they promoted it to profit from its trade,” the complaint states. “Musk used his pedestal as the richest man in the world to operate and manipulate the Dogecoin pyramid scheme for profit, exposure and amusement. »
The complaint also includes comments from Warren Buffett, Bill Gates and other people questioning the value of cryptocurrencies. Tesla, SpaceX and an attorney for Musk did not immediately respond to requests for comment. But the boss of Tesla disputed any bad intentions.
How far can she go?
Johnson is seeking $86 billion in damages, representing the decline in market value of Dogecoin since May 2021, and wants let it be tripled.
He also wants to stop Musk and his companies from promoting Dogecoin and have a judge rule that the Dogecoin business is gambling under federal and New York law.
The lawsuit says Dogecoin’s downfall began around the time Musk hosted NBC’s “Saturday Night Live” and, playing a fictional financial pundit in a “Weekend Update” segment, called Dogecoin a “scam”.
A lawyer for Johnson did not immediately respond to requests for comment on the specific evidence his client has or plans to have to prove that Dogecoin has no value and that the defendants have set up a pyramid scheme.
What follow-up to consider?
The collapse of cryptos is likely to lead to a wave of lawsuits from ruined investors. First to open hostilities, the American Keith Johnson attacks Elon Musk. He believes that the boss of Tesla has manipulated the price of the dogecoin crypto and is demanding from him and his companies, Tesla and SpaceX, the modest sum of 258 billion dollars, more than the fortune of Elon Musk (215 billion ).
According to the complaint, Elon Musk misleadingly implied that this crypto “was a legitimate investment”. In reality, it would be close to a “Ponzi scheme”, popularized by Bernard Madoff. In this scam, it is necessary to always attract more new investors to avoid a collapse of the course.
In the past one of Elon Musk’s tweets could make the price of dogecoin jump by 25% to 250% in a few sessions.
$4 million to $88 billion
At its peak, the capitalization of dogecoin reached $88 billion from $3.8 million in its early days. Despite its dip, it is still the tenth largest crypto in the world ($7.7 billion). It is worth to Elon Musk this request for phenomenal damages, revealed the “New York Post”.
On Twitter, the billionaire has expressed his enthusiasm for dogecoin many times in 2021 with more or less mysterious formulas. Of 47 tweets posted about cryptos between April 2019 and July 2021, two-thirds were about dogecoin, 30% about bitcoin and just 1.5% about ether. His posts on dogecoin were almost all positive unlike those on bitcoin.
Conclusion and useful figures:
Elon Musk wasn’t the only celebrity to sing the praises. The rapper Snoop Dogg has been very enthusiastic about dogecoin and remains a fan of NFTs (non-fungible tokens) from CryptoPunks. In the same style, a complaint was filed at the beginning of the year against Kim Kardashian, accused of recklessly promoting an obscure crypto – EthereumMax (EMAX) – which then collapsed, ruining many individuals.
- In February 2021, Tesla said it purchased $1.5 billion worth of bitcoins and accepted them for a short time for vehicle payment.
- Dogecoin traded at around 5.8 cents on Thursday, down from its May 2021 peak of around 74 cents.