Elon Musk Sued for Insider Trading With Dogecoin Using “Publicity Stunts”
In a recent court filing against Tesla CEO Elon Musk, a group of alleged memecoin investors has accused him of engaging in insider trading and market manipulation with Dogecoin (DOGE) through a series of publicity stunts. This lawsuit follows a previous class action suit filed in June 2022, which claimed that Musk and his companies caused significant losses for Dogecoin holders amounting to hundreds of billions of dollars.
The amended filing, presented in a Manhattan federal court on May 31, claims that Elon Musk orchestrated a deliberate course of market manipulation by engaging in what they describe as a “publicity circus.” The accusations center around Musk’s public appearances and social media activity, dating back to April 2019, where he hyped up Dogecoin. These actions allegedly led to a staggering 36,000% increase in Dogecoin’s price, peaking at $0.70+ in May 2021. However, the price has since plummeted by 90% from that high.
The court filing argues that Musk’s claims of promoting Dogecoin as harmless fun are not credible, labeling him an “apex predator” and his millions of Twitter followers as prey. The lawsuit highlights various studies that have demonstrated the impact of Musk’s tweets on Dogecoin’s price. For instance, his announcements of accepting Dogecoin at SpaceX and his visit to Twitter HQ have both contributed to significant price fluctuations. Additionally, the lawsuit alleges that Musk changed Twitter’s logo to the Doge meme’s Shiba Inu image for three days, resulting in a 30% increase in Dogecoin’s price.
The lawsuit further contends that Musk and Tesla traded profitably based on his anticipated moves, citing blockchain records as evidence. It claims to have identified a wallet address allegedly belonging to Musk, named DH5ya, which became the largest single holder of Dogecoin by February 2021. This wallet reportedly sold millions of dollars worth of Dogecoin multiple times throughout April 2021.
Central to the lawsuit is the assertion that Dogecoin should be considered an unregistered security under the U.S. Securities and Exchange Commission’s existing standards. Although Dogecoin was created in 2013 by Billy Markus and Jackson Palmer, both of whom have since distanced themselves from the project, the lawsuit argues that Musk’s involvement and actions should subject it to securities regulations.
When the initial lawsuit was filed, Musk’s lawyers dismissed the claims as fanciful. They argued that there was nothing unlawful about tweeting support or funny pictures about a legitimate cryptocurrency like Dogecoin, which boasts a market cap of nearly $10 billion.