A group of Dogecoin investors amended their lawsuit against Twitter and Tesla CEO Elon Musk, accusing him of insider trading and market manipulation of the popular meme cryptocurrency.
The plaintiffs accuse Musk of utilizing his social media and large following to initiate a "publicity circus" that "wildly manipulated the market for the Dogecoin cryptocurrency," according to the May 31 amended filing in the U.S. Southern District Court of New York.
The lawsuit claims Musk promoted Dogecoin through Twitter posts and public comments, including his appearance on NBC's "Saturday Night Live" and other "publicity stunts." The suit says he profited off price swings while retail investors suffered losses.
Furthermore, the suit alleges Musk misled investors about the nature of Dogecoin, its risks and potential rewards, as well as omitted facts about his personal business interest when promoting it. The investors also claim Musk encouraged fans to hold their Dogecoin investments after mass crypto liquidations by "more sophisticated investors."
Elon Musk, The Dogefather
Musk first broke into the crypto community in 2019 as the self-proclaimed "Dogefather" and fan-chosen "CEO" of Dogecoin. Prior to Musk's involvement, Dogecoin trading volume rarely exceeded $20 million per day. It hit a pre-Musk peak of $0.017 per coin on Jan. 7, 2018, before falling 80% by the end of the year.
However, the Tesla and SpaceX CEO repeatedly promoted DOGE through memes online. His posts allegedly implied the price would rocket "to the moon" or eventually reach widespread adoption and utilization. Price surges tended to follow each Dogecoin-related post or comment. Musk appears to recognize the impact of his comments on the price swings. He followed a meme-related price jump with a Feb. 4, 2021, Twitter post that said "ur [sic] welcome."
Profiting From Price Swings
Dogecoin's price bolted 36,000% to 73 cents between April 1, 2019, when Musk first interacted with the cryptocurrency, and May 7, 2021, the eve of his SNL appearance. But Musk called Dogecoin a "hustle" during one sketch, causing the price to halve within two days. DOGE since plummeted near 7 cents per coin.
Per the filing, Dogecoin's price spiked 30% after Musk changed Twitter's bird logo to an icon of a Shiba Inu, the mascot for Dogecoin. The investors allege Musk sold $124 million worth of Dogecoin in April following the surge.
The lawsuit cites three Dogecoin wallets belonging to Musk, one of which profited $10.2 billion by Oct. 29, 2021, after its inception in February 2019. A separate wallet sold $230 million worth of DOGE between Oct. 25 and Nov. 1, 2022, while Musk was finalizing his Twitter takeover. Since 2019, Musk repeatedly encouraged investors to hold onto their Dogecoin savings, the plaintiffs argue.
"A deliberate course of carnival barking, market manipulation and insider trading" enabled Musk to defraud investors and promote himself and his companies, the lawsuit alleges.
The plaintiffs originally filed their $258 billion racketeering lawsuit in June 2022.
Dogecoin Price
Dogecoin (DOGE) was created on a lark and launched in late 2013, without any serious intent behind the project. However, it gained popularity through its community's widespread memes online. The price skyrocketed along with the craze of meme stock investments during the summer of 2021 but inevitably crashed because of its little utility.
DOGE fell to 6.67 cents per coin Monday, down 8.6% over the past 24 hours, as cryptocurrency prices retreated.
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