NEW YORK – Elon Musk and his electric vehicle company Tesla (NASDAQ: TSLA) won the dismissal of a federal lawsuit accusing them of defrauding investors by hyping the cryptocurrency dogecoin and conducting insider trading, causing billions of dollars of losses.
U.S. District Judge Alvin Hellerstein in Manhattan issued the decision on Thursday night.
Investors accused the world’s richest person of using Twitter posts, a 2021 appearance on NBC’s “Saturday Night Live” and other publicity stunts to trade profitably at their expense through several dogecoin wallets that he or Tesla controlled.
They also said Musk deliberately drove up dogecoin’s price by more than 36,000% over two years and then let it crash, with he and Tesla (NASDAQ: TSLA) often timing trades to Musk’s public statements and activities concerning dogecoin.
Investors said this included when Musk sold dogecoin in April 2023 after replacing Twitter’s blue bird logo with the dogecoin Shiba Inu dog logo, causing dogecoin’s price to rise 30%.
However, Hellerstein said Musk’s tweets that dogecoin was the future currency of Earth, and could be used to buy Teslas or literally flown to the moon by his company SpaceX were “aspirational and puffery, not factual and susceptible to being falsified.”
The judge said that meant no reasonable investor could rely on the tweets to pursue a securities fraud claim. He also said it was “not possible to understand” the investors’ market manipulation and insider trading claims.
Hellerstein dismissed the lawsuit with prejudice, meaning it cannot be brought again. Investors originally sought $258 billion and had amended their complaint four times in two years.
Lawyers for the investors did not immediately respond to requests for comment.
Musk’s lawyer Alex Spiro said in an emailed statement: “It’s a very good day for dogecoin.”
In seeking a dismissal, Musk’s lawyers said there was nothing wrong with his “innocuous and often silly tweets.”
They also said there was no proof Musk owned two wallets for conducting suspicious trading, or that he or Tesla ever sold dogecoin.
On “Saturday Night Live,” Musk called dogecoin a “hustle” while playing a fictitious financial expert on a segment of “Weekend Update.”
According to Forbes magazine, Musk bought Twitter in October 2022 and rebranded it X. He is worth $239.3 billion.
The case is Gorog et al v. Musk et al, U.S. District Court, Southern District of New York, No. 22-05037.
(Source: Reuters)
