Billionaire Elon Musk, his electric car firm Tesla and space company SpaceX are being sued for $258 billion by a cryptocurrency investor who claims that the CEO ran a pyramid scheme to support the price of Dogecoin.
Plaintiff Keith Johnson accuses Musk “of racketeering for touting” Dogecoin, once an unknown cryptocurrency, and blames him for inflating its price up exponentially, before allowing it to decline, and causing investors billions of dollars in losses during the process.
“Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement,” said the complaint that was filed in a federal court in Manhattan on Thursday. “Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading.
“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all. Since Defendant Musk and his corporations SpaceX and Tesla, Inc began purchasing, developing, promoting, supporting and operating Dogecoin in 2019, Plaintiff and the class have lost approximately $86 billion in this Crypto Pyramid Scheme,” it added.
The complaint noted that Dogecoin’s price began to plummet around the day Musk hosted the popular NBC show Saturday Night Live on May 8, 2021.
Johnson is asking triple the damages of $86 billion stemming from Dogecoin’s price decline since that day — an amount he argues that has been lost by Dogecoin investors since Musk first began promoting it.
He also requests the judge to prevent Musk and his firms from promoting Dogecoin, and asks the court that Dogecoin trading to be declared as gambling under federal and New York state law.
Musk started promoting Dogecoin on his personal Twitter account in December 2020 through many “dog-themed memes,” which paved the way for its price skyrocket by 4,000% to its all-time high of $0.74 in May that year, making it a top-10 cryptocurrency.
The plaintiff uses Musk’s memes and tweets, in which he refers to himself as “Dogefather”, as evidence, and argues that the CEO has been controlling the price of the cryptocurrency.
With the recent price collapse in Bitcoin and other cryptos, Dogecoin’s price plummeted to $0.05 this week — a 93% decline from its record high level.
Musk also announced earlier this year that Tesla would accept Dogecoin as a means of payment for customers who wish to buy the company’s merchandise.
Dogecoin is considered by many as the first “meme coin” and its name stem from the face of the Shiba Inu dog it features as a logo.
It was created by two software engineers in 2013 as a joke in order to make fun of Bitcoin and the widespread speculation surrounding cryptocurrencies during that time.