The lawsuit claims that Elon Musk artificially inflated the value of Dogecoin by constantly promoting the so-called “meme currency” on social media.
An American man has filed a prospective class action lawsuit against Elon Musk, Tesla, and SpaceX, claiming that the billionaire businessman and his companies misled investors about Dogecoin.
According to Bloomberg.com, the lawsuit claims that Musk was part of a racketeering scheme designed to artificially inflate the value of the Dogecoin, a cryptocurrency named after a once-popular internet meme.
The filing seeks class action certification and an estimated $258 billion in damages.
“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” states the lawsuit, filed on behalf of plaintiff Keith Johnson.
Decrypt notes that Dogecoin was created in 2013.
While Dogecoin was originally designed to mock Bitcoin, it went from being an obscure “meme coin” to one of the most talked-about digital assets of 2021.
Before seeing its value increase, individual Dogecoins were less worth than $1 U.S. dollar.
Dogecoin’s value briefly rose in 2021, with Musk posting pro-Dogecoin messages on his Twitter account.
However, Dogecoin’s meteoric rise was short-lived; on Thursday, it was selling for less than 6 cents.
In his lawsuit, Johnson accuses Musk of increasing the “price, market cap and trading volume of dogecoin [sic]” through his continued promotion of it.
“Defendant Musk is the self-appointed ‘Dogefather,’ ‘former CEO of Dogecoin,’ partner, developer, spokesperson, publicist, salesman, marketer, and promoter of Dogecoin, who assembled the ‘Doge Army’ including his corporations and various billionaires, influencers, and celebrities to increase the price, market cap and trading volume of Dogecoin,” the lawsuit states.
The complaint includes excerpts from Musk’s Twitter feed, with one post promising that SpaceX would “put a literal dogecoin on the literal moon.”
The unusual lawsuit names Tesla as an additional defendant for accepting Dogecoin-based payments for certain products, and SpaceX for naming one of its satellites after the currency.
According to Johnson, Dogecoin is effectively a pyramid scheme, since it is neither a product nor a currency with any intrinsic value.
Unlike competing currencies, like Bitcoin, Dogecoin does not have any in-built currency regulations.
Bitcoin, for instance, is a limited commodity—when the cryptocurrency was first released, interested users could “mine” for Bitcoins. However, the overall supply of Bitcoins was finite and non-replenishable.
Dogecoin, conversely, is “unlimited.”
“Since Plaintiff and the class were not advised that the trading of Dogecoin was nothing more than a gambling enterprise, Plaintiff and the class demand the return of all wagers lost trading Dogecoin,” the lawsuit says.
Alongside steep punitive damages, the lawsuit also seeks a court order preventing Musk and any of his companies from continuing to promote Dogecoin.