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Elon Musk Faces Lawsuit for Alleged Insider Trading Involving Dogecoin Through “Publicity Stunts”
Tesla CEO Elon Musk is accused of insider trading against his followers involving Dogecoin (DOGE), according to a court filing made by alleged memecoin investors on Wednesday.
The allegations are a continuation of a $258 billion class action lawsuit initiated by the same group in June 2022, claiming that Musk and his companies have led to hundreds of billions in losses for Dogecoin investors.
Elon Musk Dogecoin Agenda
According to the revised filing in a Manhattan federal court on May 31, Elon Musk participated in “a deliberate course of carnival barking market manipulation,” through a “publicity circus” aimed at inflating Dogecoin’s price.
These actions include his public appearances and social media engagement promoting Dogecoin since April 2019. Such activities resulted in a 36,000% increase in Dogecoin’s price to over $0.70 by May 2021. Currently, DOGE is trading 90% lower than that peak.
“Musk’s assertion that the promotion of Dogecoin was merely lighthearted fun—not intended to be taken seriously—is not believable,” stated the filing, describing the billionaire as an “apex predator,” with his millions of Twitter followers as the prey.
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The lawsuit highlighted that various studies have already shown the impact of Elon Musk’s tweets on Dogecoin’s price. Indeed, Musk’s declarations about accepting Dogecoin at SpaceX in 2021, along with his visit to Twitter HQ after acquiring the company last year, have each influenced DOGE’s price fluctuations.
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Musk exerted his influence once more by altering Twitter’s blue bird logo to feature the Doge meme’s Shiba Inu for three days, which helped elevate the coin’s price by 30%.
The filing further claimed that Musk and Tesla traded profitably around the billionaire’s “intended moves,” referencing blockchain records as proof.
Specifically, the lawsuit asserts that it has identified a wallet address – DH5ya – purportedly belonging to Musk, which became the largest single holder of Dogecoin by February 2021. That wallet subsequently sold millions of dollars worth of Dogecoin at various points throughout April 2021.
Securities Fraud?
A central aspect of the lawsuit is the assumption that Dogecoin is an unregistered security under current standards set by the U.S. Securities and Exchange Commission.
Musk was established by Dogecoin creators Billy Markus and Jackson Palmer back in 2013 – however, they have not been involved in the project’s development for many years. Markus frequently jokes with Elon Musk on Twitter, and both often share lighthearted commentary about cryptocurrency on the platform.
When the initial lawsuit was filed last year, Musk’s legal team described the lawsuit as fanciful. “There is nothing unlawful about tweeting supportive words for, or humorous images about, a legitimate cryptocurrency that continues to maintain a market cap of nearly $10 billion,” they stated.
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