Investors have indicted Musk for driving up the price of Dogecoin by more than 36,000% over two years.
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The CEO of Tesla Inc., Elon Musk, is facing accusations of insider trading from investors who filed a class action lawsuit against the company, claiming that he manipulated the cryptocurrency Dogecoin and cost them billions of dollars.
The case, which was initially filed in June 2022 and requested class-action status, has undergone three amendments since then.
Image Source: The Economist
Latest Accusations on Elon Musk
Investors testified before a federal court in Manhattan that Elon Musk used Twitter posts, paid online influencers, and purposefully engaged in “publicity stunts” like his appearance on “Saturday Night Live” in 2021 to trade profitably at the expense of the investors through various Dogecoin wallets that he or Tesla controls.
The lawsuit also draws reference from a tweet with the title “Dogecoin Rulz,” which featured a picture of a dog smoking.
The allegations lodged in Manhattan federal court are the most recent in a case that revolves around Musk’s decision to sell $124 million in Dogecoin in April, shortly after he altered the Twitter logo to the cryptocurrency’s symbol and drove its price up by as much as 30%. The case is still active and centers on Elon Musk’s decision.
The lawsuit claims that Elon Musk intentionally misled investors and promoted himself and his companies by engaging in “carnival barking, market manipulation, and insider trading.”
Last October, Musk purchased Twitter. Along with Tesla, he also owns SpaceX, a company that builds rockets and spacecraft.
Musk and Tesla’s attorney, Alex Spiro, refused to speak on Thursday. Also, the investors’ lawyer didn’t respond to the requests immediately.
Investors allege that Elon Musk, the world’s richest man, deliberately raised the price of Dogecoin for two years before allowing it to collapse. In a third suggested amended complaint in a case that was started in June, they submitted their most recent allegations.
The plaintiffs are requesting $258 billion in damages, but Elon Musk and his legal counsel have argued that the claim has no foundation.
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The Second Amendment
In March, Elon Musk and Tesla requested that the second modified complaint be dismissed because it was a “fanciful work of fiction,” and on May 26, they claimed that a subsequent amendment was unjustified.
Musk’s lawyers reportedly stated at the time, “There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion.”
US District Judge Alvin Hellerstein stated in a ruling on Wednesday that he would “likely” allow the third amended lawsuit and that the defendants would not likely experience any negative consequences. In addition, Hellerstein granted the investors’ request to have the Dogecoin Foundation dismissed as a defendant.
The dismissal was deemed “the appropriate result” by Seth Levine, the company’s lawyer.
Other Lawsuits
Since 2010, when the company went public, at least 38 securities actions have been brought against Tesla or Elon Musk (or both), according to an analysis by the legal research firm Plainsite. In contrast, Greenspan asserts that he only discovered four securities lawsuits against Ford Motor Company filed since 1996 and one since 2016, even though this does not include all Ford companies.
Numerous lawsuits have been filed against Tesla about particular car-related issues, such as claims that Bluetooth doesn’t function and that Autopilot has caused Tesla vehicles to veer into the wrong lanes. The Model X is the subject of the majority of Tesla-related lawsuits.
