Billionaire tech investor Elon Musk and two of his companies, Tesla and SpaceX, have been sued for allegedly promoting Dogecoin, a popular cryptocurrency that spurred the creation of other memecoins, the New York Post reported Thursday.
Elon Musk Sued for Promoting Dogecoin
In a Manhattan federal court filing on Thursday, the plaintiff, Keith Johnson, a U.S. citizen, alleged that Musk and his companies promoted DOGE as a legitimate investment even though the cryptocurrency had no value.
Dogecoin is a cryptocurrency launched in 2013 as a joke (popularly called memecoin) to poke fun at Bitcoin. The digital currency garnered attention shortly after Elon Musk started talking about it on Twitter and other social media networks.
The Doge Father
DOGE became a hot topic in the 2021 crypto market boom, and Musk’s tweets about the memecoin influenced the price of the cryptocurrency. At one point, the billionaire described himself as the Doge Father.
Musk’s endorsement helped Dogecoin to grow from a little-known digital currency with no real value to the 11th largest cryptocurrency in the world, with a market cap of nearly $88 billion before recent market turbulence.
Aside from regularly tweeting, Musk announced that its electric car company Tesla would accept the cryptocurrency as a payment method for some of its merchandise. As usual, DOGE reacted positively, gaining more than 24% minutes after the announcement. Last month, the billionaire revealed that users can start purchasing Tesla’s merch with Dogecoin, with SpaceX to follow soon.
The “Doge Father” also plans to launch the Doge-1 satellite into space later this year. To make this happen, he partnered with Unizen, a crypto exchange and Geometric Energy Consumption (GEC), to fund the mission to space with Dogecoin.
Plaintiff Seeks $258 Billion in Damages
Johnson claims that Elon Musk is fueling the adoption of the cryptocurrency thereby directly manipulating its prices.
The court filing noted that Dogecoin is a risky investment with no potential like other cryptocurrencies. It also stated that the memecoin cannot be classified as securities, commodities, or reserve assets.
“It doesn’t pay interest or dividends. It has no unique utility compared to other cryptocurrencies… It’s not secured by a government or private entity. It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price,” the plaintiff alleged.
Johnson’s lawsuit seeks to represent other victims who were deceived into investing in Dogecoin. He also requested $86 billion in damages and $172 billion for tripled damages incurred from trading the memecoin since 2019.
The plaintiff also demands that Elon Musk and his companies desist from promoting the cryptocurrency.
