Tesla CEO Elon Musk has been sued for $258 billion for allegedly conducting a pyramid scheme in support of Dogecoin, a cryptocurrency that has recently gained popularity among investors. The lawsuit was filed by a Dogecoin investor who has also sued Musk’s companies Tesla and SpaceX. Musk is also the CEO of SpaceX. This is because Dogecoin became very popular last year when Elon Musk said he would accept the cryptocurrency as payments for Tesla cars.
In a complaint filed in federal court in Manhattan, plaintiff Keith Johnson accused Musk, electric car company Tesla Inc and space tourism company SpaceX of extortion for touting Dogecoin and inflating its price, then drive the price down, according to reports.
Keith Johnson, who said he lost his money after investing in Dogecoin, referred to himself as a “U.S. citizen who was scammed” by being involved in what he called a “Dogecoin Crypto Pyramid Scheme”.
“Defendants knew since 2019 that Dogecoin had no value, but promoted Dogecoin to profit from its trading,” the indictment said. “Musk used his pedestal as the world’s richest man to operate and manipulate the Dogecoin pyramid scheme for profit, fame and entertainment,” it added.
Johnson, who has referred in his complaint to comments by Warren Buffett, Bill Gates and others questioning the value of cryptocurrency, has asked for his motion to be classified as a class action suit. He said the lawsuit is being filed on behalf of those who have suffered losses from investing in Dogecoin since 2019.
The plaintiff stated in its complaint that the sell-off for Dogecoin began around the time Elon Musk hosted “Saturday Night Live” and, as a fictitious financial expert on a Weekend Update segment, called Dogecoin “a hustle.” Dogecoin, originally created as a fun cryptocurrency, intended only for light-hearted investors and classified under memecoins, became hugely popular after Musk’s backing.
A Johnson attorney did not immediately respond to requests for comment about what specific evidence his client has or expects to have showing Dogecoin is worthless and the defendants had a pyramid scheme.
Since Musk started promoting the virtual currency, investors have lost about $86 billion, Johnson estimates. He would like Musk to pay investors back this amount, plus double that amount — another $172 billion. He also wants to prevent Musk and his companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law.
Johnson compared dogecoin to a pyramid scheme, because the virtual currency has no intrinsic value, nor is it a product. In addition, it is not supported by any tangible asset and the number of “coins” is unlimited.
Johnson said he believes Musk “increased the price, market cap and trading volume of Dogecoin” through his promotion. He added tweets from Musk, the world’s richest man with more than 98 million followers on Twitter, including one promising that SpaceX would “put a literal Dogecoin on the literal moon”.
Dogecoin prices traded at $0.05606 on Friday, June 17 at 0944 IST, down more than 7 percent in the past 24 hours, according to data from CoinMarketCap.
(With Reuters and AFP inputs)
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