Elon Musk and Tesla Inc. have successfully secured the dismissal of a lawsuit that accused them of inflating the price of the cryptocurrency Dogecoin through what was claimed to be a $258 billion “pyramid scheme.”
Investors Accuse Musk of Manipulation
Investors, who reportedly lost significant sums—some tens of thousands of dollars—had blamed Musk for using his vast influence on social media to promote Dogecoin. In particular, they pointed to tweets from Musk, such as the now-infamous “One word: Doge,” which they argued led to a substantial rise in the cryptocurrency’s value. The investors also highlighted Musk’s announcement that Tesla would accept Dogecoin as payment for its merchandise as another move that artificially inflated the token’s price.
Judge Dismisses Claims as Aspirational
On Thursday, a New York federal judge dismissed these claims. The judge determined that Musk’s statements were more aspirational in nature rather than factual. The court found that no reasonable investor could have relied on such statements, as they were not presented as factual nor could they be verified as false.
‘Pump and Dump’ Allegations Deemed Incomprehensible
The lawsuit also included accusations that Musk and Tesla were involved in a “pump and dump” scheme with Dogecoin. However, US District Judge Alvin Hellerstein found these allegations difficult to interpret, stating that it was “not possible to understand” the claims as presented.
Plaintiffs Plan to Appeal the Decision
Despite the dismissal, the plaintiffs’ legal team expressed their disappointment with the ruling and indicated their intent to appeal. Attorney Evan Spencer, representing the investors, argued that Musk’s statements were far more impactful than mere puffery. According to Spencer, the consequences of Musk’s actions were significant, leading to substantial financial losses for millions of investors.
Dogecoin: The Original Memecoin
Dogecoin, the cryptocurrency at the center of the lawsuit, originated as a “memecoin,” a type of cryptocurrency that is inspired by internet memes or jokes. Its logo, featuring a Shiba Inu dog, has become widely recognized in the world of digital currencies.
Case Background
The case in question is Johnson v. Musk, 22-cv-05037, and was heard in the US District Court, Southern District of New York (Manhattan).
