A dogecoin investor is suing Elon Musk and two of his companies, Tesla Inc. and SpaceX, for $258 billion, accusing them of operating a “pyramid scheme” to inflate the price of the cryptocurrency.
The lawsuit, filed Thursday by Keith Johnson in Manhattan federal court, accuses Musk and his companies of committing fraud, as well as violating federal and state racketeering and gambling laws, and seeks class-action status on behalf of dogecoin investors who have lost money since April 2019.
“Defendants falsely and deceptively claim that dogecoin is a legitimate investment when it has no value at all,” the lawsuit says. “Dogecoin is not a currency, stock or security. … It is not based upon or tied to anything of value. … It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”
Johnson’s suit seeks $86 billion in damages, which is the amount he claims dogecoin investors have lost since Musk started purchasing and promoting it in 2019, plus triple damages of $172 billion. It also seeks to block Musk and his companies from promoting dogecoin, and an order equating dogecoin trading to gambling.
Musk, the world’s richest individual, has tweeted about dogecoin numerous times over the past few years, often sparking a rally in the coin’s price. In April 2021, Musk dubbed himself “The Dogefather” while promoting his upcoming appearance on “Saturday Night Live”; dogecoin tumbled a day after the show aired after it was called “a hustle” in a sketch Musk appeared in.
The lawsuit cites dozens of tweets Musk has made promoting dogecoin, and claims Musk knew he was artificially pumping its price. It also notes Musk’s history of noncompliance with the Securities and Exchange Commission.
Dogecoin was created as a joke, but exploded in popularity in 2021, with Musk as one of its most prominent evangelists. Tesla TSLA, -8.54% started accepting dogecoin for merchandise purchases earlier this year, and Musk has indicated SpaceX will soon do the same for its merchandise.
Neither Tesla nor SpaceX immediately replied to requests for comment Thursday.
Dogecoin DOGEUSD, -1.27% traded at just fractions of a cent prior to 2021, when it spiked to an all-time high of about 68 cents with a market cap of nearly $500 million. It’s currently trading at about 5 cents, according to Kraken data, down 68% year to date and off 81% over the past 12 months. It’s also been hit hard by the recent crypto crash, plunging 35% over the past month.