Elon Musk and Tesla Prevail in $258 Billion Dogecoin Lawsuit Dismissal
A federal judge has dismissed a high-profile lawsuit against Elon Musk and Tesla, which alleged the billionaire entrepreneur and his electric vehicle company manipulated the cryptocurrency market through promotion of Dogecoin. The $258 billion class-action suit, filed by disgruntled investors in June 2022, claimed Musk’s social media activity and public statements artificially inflated Dogecoin’s price, resulting in significant financial losses.
U.S. District Judge Alvin Hellerstein of the Southern District of New York ruled on Thursday that Musk’s statements about Dogecoin were “aspirational and puffery, not factual and susceptible to being falsified.” The judge emphasized that “no reasonable investor could rely upon them” for investment decisions.
The lawsuit centered on Musk’s various public statements, including tweets where he claimed he would become Dogecoin’s CEO and suggested putting a “literal Dogecoin” on a SpaceX vehicle bound for the moon. Investors argued these comments, along with Musk’s appearance on Saturday Night Live in May 2021, where he referred to Dogecoin as a “hustle,” led to market manipulation and a “pump and dump” scheme.
However, Judge Hellerstein found the plaintiffs’ allegations of market manipulation, breach of fiduciary duty, and insider trading to be unclear and insufficiently substantiated. The dismissal was made with prejudice, meaning the case cannot be refiled.
Dogecoin, which began as a lighthearted parody of cryptocurrency in 2013, saw its value skyrocket in 2021, partly due to Musk’s endorsements. Despite the recent legal victory, the meme-inspired cryptocurrency has experienced significant volatility, currently trading at around $0.10 with a market capitalization of $14.5 billion.
The dismissal marks a significant win for Musk and Tesla, who have faced scrutiny over their involvement with cryptocurrencies. Musk’s lawyer, Alex Spiro, succinctly commented on the ruling, stating, “It’s a very good day for Dogecoin.”
While this decision closes a chapter in the ongoing saga of Musk’s cryptocurrency influence, it raises questions about the intersection of social media, celebrity endorsements, and financial markets. The case highlights the challenges investors face in proving market manipulation in the largely unregulated cryptocurrency space.
