What just happened? Elon Musk and his companies are doubtlessly used to being hit with lawsuits, but this one is probably the largest and perhaps most unusual they've had to deal with. Musk, Tesla, and SpaceX are all being sued for $258 billion—not million—over claims they ran a pyramid scheme to support Dogecoin, a cryptocurrency Musk has often praised on Twitter.
As per Reuters, plaintiff Keith Johnson filed his complaint in federal court in Manhattan, accusing Musk, the EV maker, and the space tourism company of racketeering for promoting Dogecoin to push up its price, only to then let it crash.
"Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading," the complaint said. "Musk used his pedestal as World's Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement."
"Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all," the complaint added.
Johnson wants to represent a class of people who have lost money trading in Dogecoin since April 2019.
The Dogefather— Elon Musk (@elonmusk) April 28, 2021
SNL May 8
Johnson is asking for $86 billion in damages, which represents the decline in Dogecoin's market value since May 2021, plus triple damages of $172 billion. He also wants to block Musk and the companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law.
Musk, who has long been accused of indirectly affecting the price of cryptos through his tweets, sent Doge skyrocketing in December 2020 with his "One Word: Doge" tweet. Musk pushed it higher in April last year when he called himself "The Dogefather," making Dogecoin the fourth largest crypto by market cap. It's not all been praise, though: he said Doge was a "hustle" on his Saturday Night Live appearance—Johnson claims this was the start of the crypto's fall—and he recently slammed its co-creator for calling the billionaire a "grifter."
Like other cryptos, Dogecoin is currently at its lowest price in years: $0.0571, a level it hasn't seen since April 2020. Its market cap is now $7.6 billion, and while that's no small figure, it's far from the $88 billion Doge reached at its peak.