Elon Musk, the renowned entrepreneur, is once again under scrutiny as he faces fresh accusations of insider trading in a lawsuit filed by cryptocurrency investors. The investors allege that Musk, the CEO of Tesla and owner of Twitter, leveraged his immense influence to manipulate the price of Dogecoin (DOGE), a popular meme cryptocurrency.
The lawsuit, filed in Manhattan federal court, is an extension of an ongoing legal battle that surfaced in 2022 and seeks class-action status. Its focus centers on Musk’s decision to sell $124 million worth of Dogecoin in April, which coincided with his change of the Twitter logo to the symbol of the memecoin. This move caused Dogecoin’s price to surge by as much as 30%.
Dogecoin Investors Accuse Elon Musk of Using Influence to Inflate Prices
At the core of the lawsuit is the allegation that Musk orchestrated a deliberate course of carnival barking, market manipulation, and insider trading to artificially inflate the price of Dogecoin by over 36,000%. The lawsuit highlights various instances, including a tweet featuring a picture of a dog smoking a cigarette with the caption “Dogecoin Rulz.”
Dogecoin rulz pic.twitter.com/flWWUgAgLU
— Elon Musk (@elonmusk) April 2, 2019
In response to earlier versions of the lawsuit, Musk’s legal team argued that his statements were too vague to be considered fraudulent and quashed the entire case as a “fantasy.“ According to a Reuters report, they stated that there was nothing unlawful about expressing support for a legitimate cryptocurrency with a market cap of nearly $10 billion.
However, in the May 31 filing with the United States District Court for the Southern District of New York, the investors claim that Musk utilized his extensive social media following on Twitter and media appearances to profit from Dogecoin trades. They allege that Musk engaged in an undisguised course of cryptocurrency market manipulation, causing the price of Dogecoin to spike through several actions.
The investors originally filed their complaint in June 2022, before Musk took over Twitter but after he had shown initial interest in promoting Dogecoin on the platform. Since then, they have amended the lawsuit multiple times to incorporate Musk’s subsequent actions. The amended complaint not only alleges insider trading by Musk but also asserts that Dogecoin qualifies as a security under the standards of the U.S. Securities and Exchange Commission.
