Elon Musk & Tesla Dismissed From $258B Dogecoin Lawsuit

Elon Musk and Tesla Inc. have won a significant legal victory, with a New York federal judge dismissing a lawsuit accusing them of orchestrating a $258 billion “pyramid scheme” involving the cryptocurrency Dogecoin. The lawsuit was brought by investors who claimed to have lost substantial amounts of money due to Musk’s promotion of the token. 

They argued that Musk’s social media activity, particularly his tweets like “One word: Doge,” artificially inflated the price of Dogecoin, leading to their financial losses. The complaint also highlighted Tesla’s announcement to accept Dogecoin as payment for merchandise, further elevating the token’s value.

How did Musk Get Out of the Lawsuit?

US District Judge Alvin Hellerstein ruled on Thursday, finding that Musk’s remarks were more aspirational than realistic and that no sane investor could have based investment decisions on them. 

The allegations of a “pump and dump” strategy made by the investors, which implied that Tesla and Musk had manipulated the market for their own benefit, were also rejected. The judge concluded that these claims were too ambiguous to interpret.

The plaintiffs are not giving up in the face of the decision. Evan Spencer, their lawyer, expressed dismay with the ruling, claiming that Musk’s activities cost a class of millions of investors billions of dollars and went beyond simple puffery. He affirmed that his clients intend to file an appeal of the ruling.

The case stemmed from the erratic behaviour of Dogecoin, a cryptocurrency that originated from a Shiba Inu dog-related internet meme. Though it was first intended to be a joke, Dogecoin became known as the “original memecoin.” The token’s value increased as a result of Musk’s light-hearted interaction with it on Twitter since his followers took his remarks seriously.

Musk’s defence team contended that there was no malevolent intent behind his tweets, and they were generally light-hearted. Additionally, they refuted claims that Musk or Tesla ever made a profit from the sale of Dogecoin or that he possessed two wallets used for questionable transactions.

The Influence of Musk Over the Crypto Space

The court’s decision gives Musk and Tesla a legal victory, but it also sheds light on the intricacies of the cryptocurrency space and the sway that prominent figures like Musk have over digital assets. It is up to investors to weigh the dangers associated with these markets, where a celebrity’s tweet can have a big impact on price swings.

The lawsuit’s dismissal also calls into question public figures’ legal obligations when endorsing digital assets or financial products. Since cryptocurrencies are currently primarily unregulated, decisions in the future on the extent to which well-known individuals can promote these assets without incurring legal repercussions may be influenced by cases such as this one.