A lawsuit seeks a total of $258 billion in damages because Musk allegedly promoted the cryptocurrency.
6/16/2022
If you’re heavily invested in dogecoin, it’s likely for one of two reasons: You’re either a very-online crypto day trader who is willing to spend money on fun, speculative investments, or you’re a die-hard fan of Elon Musk. Now, an investor is suing Musk and his companies Tesla and SpaceX for claims that he was part of a scheme to pump the value of dogecoin.
The investor, Keith Johnson, is representing a class of people he says were duped into buying the currency after Musk made claims it had legitimate value. The suit seeks a total of $258 billion in damages and would force Musk, Tesla and SpaceX to stop promoting the token.
Dogecoin’s online brand is closely tied to a brand of absurdist, insidery internet culture that thrives on Twitter and Reddit. The same goes for “Technoking” Musk. So when Musk began tweeting about dogecoin, it came as no surprise. DOGE started as a utility-free memecoin, and Musk is often referred to by his online supporters as the “meme king.” Dogecoin's value peaked at nearly $89 billion last May, shortly before Musk hosted "Saturday Night Live" and joked about the cryptocurrency.
When Musk invested, many of his fans followed suit. When the self-described “dogecoin millionaire” Glauber Contessoto told the Daily how he came to hold over $1 million in DOGE — an investment which has subsequently shrunk to such a low value that he now says he “regrets everything” — he said it was largely because he was inspired by Musk. “Elon does a blast of eight or nine or 10 tweets, back to back to back to back, and … I’m like, this is it. This is the blast-off,” he told the New York Times podcast.
Those tweets weren’t just jokes, the lawsuit alleges, but risky advice to investors. Musk said that dogecoin was more useful for the actual purchasing of goods than bitcoin, and that he was investing in the coin on behalf of his son X Æ A-Xii. He allowed customers to start purchasing some Tesla and SpaceX merchandise with DOGE.
And according to the lawsuit’s plaintiff, these behaviors, combined with tweets and interviews reasserting his confidence in the token, all went too far. “Defendants falsely and deceptively claim that dogecoin is a legitimate investment when it has no value at all,” Johnson said in the complaint.
The case could set a precedent that might have other high-profile figures shaking in their boots. Influential people from Kim Kardashian to Larry David have promoted cryptocurrencies in the last year, and much of the market has tanked.
At noon PT Thursday, dogecoin traded at just over $0.05. At its peak last year, it was worth about $0.69.
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