Tesla CEO Elon Musk has been sued for $258 billion for allegedly running a pyramid scheme to support Dogecoin, a cryptocurrency that has recently gained popularity among investors. The lawsuit was filed by a Dogecoin investor who also sued Musk’s companies Tesla and SpaceX. Musk is also the CEO of SpaceX. This comes as Dogecoin last year gained immense popularity suddenly when Elon Musk said he would accept the cryptocurrency as payments for Tesla cars.
In a complaint filed in federal court in Manhattan, plaintiff Keith Johnson accused Musk, electric car company Tesla Inc and space tourism company SpaceX of racketeering for touting Dogecoin and driving up its price, only to then let the price tumble, as per reports.
Keith Johnson, who said he lost his money after having invested in Dogecoin, called himself as an “American citizen who was defrauded” by in what he referred to as a “Dogecoin Crypto Pyramid Scheme.”
“Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading,” the complaint said. “Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement,” it added.
Johnson, who has in his complaint referred to comments from Warren Buffett, Bill Gates and others questioning the value of cryptocurrency, has asked for his motion to be classified as a class action suit. He said that the lawsuit is being filed on behalf of those who have suffered losses by investing in Dogecoin since 2019.
The plaintiff mentioned in his complaint that the selloff for Dogecoin started around the time Elon Musk came as a host for “Saturday Night Live and, playing a fictitious financial expert on a Weekend Update segment, called Dogecoin “a hustle”. Dogecoin, which was originally created as a fun crypto coin meant only for light-hearted investors and classified under memecoins, gained huge popularity after Musk’s backing.
A lawyer for Johnson did not immediately respond to requests for comment on what specific evidence his client has or expects to have that proves Dogecoin is worthless and the defendants ran a pyramid scheme.
Since Musk began promoting the virtual currency, investors have lost around $86 billion, Johnson estimates. He would like Musk to reimburse investors this sum, plus pay double that in damages — an additional $172 billion. He also wants to block Musk and his companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law.
Johnson likened dogecoin to a pyramid scheme since the virtual currency has no intrinsic value nor is it a product. Additionally it is not backed by a tangible asset and the number of “coins” is unlimited.
Johnson said he believes Musk increased “the price, market cap and trading volume of Dogecoin” through his promotion of it. He included tweets from Musk, the world’s richest man who has more than 98 million followers on Twitter, including one promising that SpaceX would “put a literal Dogecoin on the literal moon.”
Dogecoin prices were trading at $0.05606 on Friday, June 17, at 0944 IST, down by over 7 per cent over the last 24 hours, as per data from CoinMarketCap.
(With Reuters and AFP inputs)