Investors have filed a proposed class action lawsuit against Elon Musk, CEO of Tesla, Inc. (NASDAQ: TSLA), accusing him of insider trading and manipulating the cryptocurrency Dogecoin (DOGE). The lawsuit alleges that Musk’s actions have cost investors billions of dollars.
The investors filed a complaint in Manhattan federal court on Wednesday night, alleging that Musk employed various tactics, including Twitter posts, paid online influencers, his appearance on NBC’s “Saturday Night Live” in 2021, and other publicity stunts to trade Dogecoin profitably at their expense. It is claimed that Musk or Tesla, Inc. controlled several Dogecoin wallets used in these transactions.
One notable instance mentioned in the filing is when Musk sold approximately $124 million worth of Dogecoin in April. This sale coincided with his replacement of Twitter’s blue bird logo with Dogecoin’s Shiba Inu dog logo, leading to a significant 30% surge in Dogecoin’s price.
The investors’ filing describes Musk’s actions as a “deliberate course of carnival barking, market manipulation, and insider trading.” They claim that Musk defrauded investors while promoting himself and his companies.
Elon Musk, who also owns SpaceX and Tesla, bought Twitter in October last year. However, neither Musk nor Tesla’s lawyer, Alex Spiro, commented on the allegations. The investors’ lawyer has yet to respond to requests for comment.
Forbes magazine currently ranks Musk as the world’s second-richest person. Investors claim that he intentionally drove up the price of Dogecoin by over 36,000% within two years and then allowed it to crash, causing substantial losses for investors.
These latest accusations are part of a lawsuit that began in June last year. Musk and Tesla Inc. sought to dismiss the second amended complaint in March, referring to it as a “fanciful work of fiction.” On May 26, they argued against another amendment, considering it unjustified.
However, in a recent order, U.S. District Judge Alvin Hellerstein indicated that he would likely allow the proposed third amended complaint, stating that it would not likely prejudice the defendants.
In addition, Judge Hellerstein granted the investors’ request to dismiss the nonprofit Dogecoin Foundation as a defendant. The foundation’s lawyer, Seth Levine, welcomed the dismissal as the appropriate outcome.
The lawsuit, titled Johnson et al v. Musk et al, is currently ongoing in the U.S. District Court for the Southern District of New York under case number 22-05037.