Dogecoin Investors Accuse Elon Musk of Insider Trading in Lawsuit
Investors File Class Action Alleging Elon Musk's Insider Trading and Manipulation of Dogecoin.
Because Bitcoin
June 1, 2023
Reuters reported that investors have filed a proposed class action accusing Tesla CEO Elon Musk of insider trading and manipulating the cryptocurrency Dogecoin, resulting in significant financial losses. According to a filing in Manhattan federal court on Wednesday, investors claim that Musk utilized Twitter posts, paid online influencers, his appearance on "Saturday Night Live," and other publicity tactics to trade Dogecoin for personal gain through various wallets controlled by him or Tesla.
The filing highlights an instance in April when Musk sold approximately $124 million of Dogecoin after changing Twitter's logo to Dogecoin's Shiba Inu dog, which caused a 30% surge in the cryptocurrency's price.
According to the filing, Musk's actions constituted a deliberate strategy involving market manipulation, insider trading, and self-promotion at the expense of investors. The filing also mentions that Musk acquired Twitter in October and oversees SpaceX and Tesla. When approached for comment, Alex Spiro, the lawyer representing Musk and Tesla, declined to respond, while the investors' lawyer has yet to provide a comment.
Investors have accused Musk, who is ranked as the second-richest person by Forbes, of intentionally driving up the price of Dogecoin by over 36,000% within two years, only to subsequently allow its value to plummet. These new allegations have been included in a proposed third amended complaint, in an ongoing lawsuit initiated in June of the previous year.
In March, Musk and Tesla had sought the dismissal of the second amended complaint, dismissing it as a work of fiction. On May 26, they argued against further amendments, claiming that it was unwarranted.
U.S. District Judge Alvin Hellerstein issued an order on Wednesday indicating that he is inclined to allow the third amended complaint, stating that it is unlikely to cause prejudice to the defendants. The judge also approved the investors' request to dismiss the Dogecoin Foundation, a nonprofit, as a defendant. Seth Levine, the foundation's lawyer, expressed that the dismissal was the appropriate outcome.
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