Elon Musk and his company Tesla have successfully won the dismissal of a lawsuit alleging that they artificially inflated the price of Dogecoin, creating a $258 billion “pyramid scheme.” A federal judge in the United States determined that Musk’s statements regarding the popular meme cryptocurrency were “aspirational” rather than “factual” and could not reasonably be relied upon by investors.
The lawsuit, which was initially filed in 2022, accused Musk and Tesla of misleading social media followers and promoting Dogecoin in a way that drove up its price, only for it to eventually collapse. The plaintiffs claimed that Musk’s frequent tweets and public statements about Dogecoin led them to invest substantial amounts of money, which resulted in significant financial losses.
Among the accusations were that Musk’s tweets, such as “One word: Doge,” and Tesla’s decision to accept Dogecoin as payment for merchandise, contributed to a false impression of the cryptocurrency’s value. The lawsuit suggested that these actions were part of a broader “pump and dump” strategy designed to profit from inflated prices.
However, on August 29, New York District Federal Judge Alvin Hellerstein dismissed the claims, stating that Musk’s comments on social media were more promotional and enthusiastic in nature rather than concrete investment advice. “Musk’s statements were aspirational, not factual, and no reasonable investor could rely upon them,” the judge stated.
The case, known as Johnson v. Musk, 22-cv-05037, was heard in the US District Court for the Southern District of New York. The court found no substantial evidence to support the pyramid scheme allegations or claims of a “pump and dump” strategy.
Despite the dismissal, the plaintiffs’ attorney, Evan Spencer, expressed disappointment with the court’s decision and indicated plans to appeal. “Musk’s statements and publications were far more than puffery, and a class of millions lost billions of dollars as a result,” Spencer argued, suggesting that Musk’s influence over Dogecoin investors was more significant than the court acknowledged.
Dogecoin, known as the original meme coin, was created as a joke based on an internet meme featuring a Shiba Inu dog. Despite its humorous origins, Dogecoin gained massive popularity and significant market value, especially following Musk’s frequent endorsements on social media.