Elon Musk’s Dogecoin Market Manipulation Lawsuit in Peril as His Lawyer Leaves
Has Musk's love of Doge been a massive pump and dump? | Credit: Shutterstock
Key Takeaways
- $258 billion lawsuit claims Elon Musk profited from Dogecoin market manipulation.
- Musk is accused of selling $124 million worth of $DOGE when Twitter’s logo was changed to Dogecoin
- Musk has a history backing the infamous memetoken
Legal Team Shake-Up
In the latest developments, Musk and Tesla’s legal team contending the $258 billion Dogecoin lawsuit has been shaken up after recent communications between the contending attorneys of the case.
Late last week, one of Musk’s attorneys motioned for leave to withdraw counsel in the case, meaning that Adam Gabor Mehes will no longer be part of the Tesla CEO’s ongoing court proceedings. Mehes has been involved in ongoing legal proceedings since they were filed midway through 2022.
Tesla’s legal team also added a new member as attorney Allison Huebert came onboard to assist with the ongoing lawsuit
Elon Musk Refutes Claims He’s a Dogecoin Whale Alleged in $258B Lawsuit
Elon Musk’s legal team is contending the merits of allegations in a $258 billion lawsuit aimed at the Tesla CEO and his long-time backing of cryptocurrency memetoken Dogecoin.
Musk, as well as Tesla and SpaceEx, are facing the possibility of a class action lawsuit launched by American investor Keith Johnson who claims the tech mogul and the two companies profited off pumping Dogecoin.
Johnson intends to represent other traders that have been left in the red trading Dogecoin, seeking $86 billion in damages. The lawsuit lists a litany of instances where Musk used his influence on prominent television programs and personal social media channels to allegedly promote Dogecoin.
Musk’s lawyer Alex Shapiro has refuted arguments in a third complaint filed against the Tesla CEO that allege he had sold a significant amount of $DOGE tokens following Twitter changing its logo to the Dogecoin Shiba Inu-inspired insignia.
The Dogefather
Musk has had a long affiliation with Dogecoin, often leaving the cryptocurrency community at odds with Tesla and SpaceX’s CEO influence in the space.
As early as 2019, Musk began tweeting sporadically in support of the cryptocurrency, which was created as a meme token by Billy Marcus and Jackson Palmer in 2013. The cryptocurrency is essentially a fork of Litecoin and operates using proof-of-work consensus.
Musk’s Doge-trolling Twitter shenanigans continued over the past three years, with the Tesla CEO even changing his bio to Dogecoin CEO at one point while posting various comedic, pro-Dogecoin posts:
A 2021 interview with Time magazine saw Musk claim that Dogecoin was superior to Bitcoin in regards to transaction processing potential:
A Year-Long Battle
Musk has been contending with Johnson’s lawsuit since its filing in June 2022. The suit claims that Musk, Tesla and SpaceX have profited from touting Dogecoin which he labels as a pyramid scheme.
The suit also looks to bar Musk and the companies from promoting Dogecoin, while looking to have Dogecoin trading declared as gambling under New York and United States federal laws.
According to the updated complaint filed on June 7, 2023, Dogecoin’s trading volume ‘rarely exceed $20 million per day’ prior to Musk’s involvement with the cryptocurrency. The filing then claims that Dogecoin had a 24-hour trading volume of $52 billion at a ‘post-Musk peak’ in May 2021.
The filing contains a number of instances where Musk tweeted Dogecoin-related memes and comments that led to major upward price movements on the $DOGE token across cryptocurrency markets.
This includes Musk’s appearance on American television show Saturday Night Live (SNL) as well as separate instances where Musk touted Tesla and SpaceX would accept Dogecoin as a method of payment for a variety of merchandise.
Tesla did in fact offer this payment option on its website, but only for three of 170 items listed for sale on its website:
“The truth is that Tesla only ended up accepting Dogecoin as payment for three items out
of approximately 170 offered for sale on its website—a whistle, a belt buckle, and a $1900 miniATV for kids which was quickly recalled for safety issues.”
Honing in on the Details
Musk’s lawyer Shapiro has refuted the specifics of arguments centered around two cryptocurrency wallets that the class actions allege belong to the Tesla CEO.
Following Musk’s high-profile takeover of Twitter, the social media platform saw its logo changed to Dogecoin’s symbolic Shiba Inu dog logo on April 3, 2023. The filing claims that Musk controls a number of wallets that sold Dogecoin at a profit following the token’s appreciation in value following the Twitter logo change.
A lawyer’s letter reportedly obtained by the New York Post outlines Shapiro’s arguments against the filing’s unverified claims that specific wallets belong to Musk.
“The sole basis for your claim is that these wallets sold Dogecoin at a time when, according to the Third Amended Complaint, prices were up.”
The lawsuit also alleges that a specific wallet belonged to Musk, having made multiple purchases of 28.061971 worth of Dogecoin, with the numeric the same as Musk’s birthday. These purchases are corroborated with tweets from Musk about buying Dogecoin within 24 hours of one of the trades.
Another wallet was linked to Musk after he’d tweeted about making a donation in Dogecoin to a GiveDirectly tweet that announced payment support for the memetoken.
Guilty as Charged?
Musk’s fate is set to be decided by the U.S. legal system and the litany of allegations against him in the Dogecoin class action lawsuit.
It’s worth noting that Musk has fallen foul of securities fraud in the past. The Tesla CEO settled a case with the U.S. Securities and Exchange Commission (SEC) centered around Tweets relating to the possible private sale of the electric vehicle manufacturer in 2018.
Musk and Tesla settled with the SEC without admitting or denying the charges and had to pay separate $20 million penalties. Musk also had to step down as Tesla chairman.
