The case focuses on Dogecoin, a cryptocurrency based on an online joke that Elon Musk promoted, ostensibly humorously.
Bloomberg reports that Elon Musk and his firms SpaceX and Tesla Inc. are being sued for suspected involvement in a “racketeering scheme” meant to defraud investors who had invested in the cryptocurrency Dogecoin.
Keith Johnson filed the lawsuit this morning in the US District Court for the Southern District of New York (Manhattan). According to an unnamed source quoted in a Bloomberg report, Johnson is “an American citizen who was defrauded by the defendants’ Dogecoin Crypto Pyramid Scheme.”
According to reports, Johnson is “looking to represent a class of individuals who have lost money trading in Dogecoin since April 2019” and is asking $258 billion in damages. This is more than double the whole worth of SpaceX in late May. According to Bloomberg, he is also seeking an injunction prohibiting Musk and the corporations from marketing Dogecoin and a declaration that Dogecoin trade constitutes gambling under US and New York law.
Dogecoin is a 2013-launched cryptocurrency. It began as a joke — it’s based on the Shiba Inu internet meme — but its self-deprecating tone resonated with many in the cryptocurrency community, and over time it gained significant momentum, gaining a legion of followers known as the “Dogecoin Army.”
The currency’s worth was further reinforced by Elon Musk’s purportedly humorous Twitter support for the coin. In a February 2021 tweet, he referred to it as “the people’s cryptocurrency.”
Musk also mentioned Dogecoin during his debut as host of “Saturday Night Live” in 2021, giving some Dogecoin devotees optimism that the coin’s value would continue to skyrocket. Those aspirations were crushed when the coin’s value started a protracted slide that continues to this day. Musk’s pronouncements that Tesla and SpaceX will begin taking Dogecoin caused temporary increases in the coin’s value.
It is still unclear whether or not the case will proceed, and more specifics have yet to surface, but it may represent the rising frustration among some crypto investors who have lost money to the unregulated market as a result of celebrity pronouncements.
Dogecoin is not the only cryptocurrency that has lately deflated. The market as a whole has seen a substantial fall, resulting in layoffs at crypto trading businesses such as Coinbase.
Musk is not unfamiliar with litigation. In May, for instance, he was sued by a Twitter investor who argued that his purchase of the firm violated California law.
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