Elon Musk, who was once a Bitcoin enthusiast as his company, Tesla, owns Bitcoin and keeps it on his balance sheet, is now the subject of a class-action lawsuit, along with his companies SpaceX and Tesla Inc. They are all being sued for an astonishing $258 billion in damages for allegedly being, “engaged in a crypto pyramid scheme” involving the leading meme coin in the cryptocurrency market, Dogecoin.
The damages sought are more than 34 times Dogecoin‘s current market cap of $7.5 billion and nearly three times its ATH market cap of $88.68 billion in mid-2021. The amount sought is also more than Elon’s net worth by a little over $42 billion as at the time of this writing.
The lawsuit was filed in the New York District Court by an attorney at Evan Spencer Law on Thursday and the lawsuit alleges that the world‘s richest man, “used his pedestal as world’s richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure, and amusement.”
Why Elon Musk is targeted
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Dogecoin started off as a joke in 2013 and the meme coin, as with meme stocks, took flight in 2021 and this attracted the attention of Elon Musk.
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It is no news that Musk is a big fan of Dogecoin and all that it stood for, especially in 2021. Elon initially made Bitcoin as a means of payment for Tesla cars but went back on this development, citing environmental concerns.
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After, Musk announced on his Twitter that he owned Dogecoin and went further to act and host in a Saturday Night Live (SNL) Mothers Day special show, where he called Dogecoin a “Hustle,” as comedy.
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Afterwards, Musk went on to state that he preferred Dogecoin to Bitcoin because it was more energy-efficient and environmentally friendly. He promised to join the Dogecoin team to help work on making the token even more efficient. Because of this, Musk earned himself the nickname, “Dogefather.”
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The love for Dogecoin led the billionaire to, in January, announce that his electric vehicle company Tesla would accept Dogecoin as payment for the companys merchandise and in May, he announced that Dogecoin payments would also be accepted by his space exploration company SpaceX.
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As Musk was expressing his love and interest in the token, the price of the token continued soaring, with Musk himself predicting that the token would hit $1.
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Although Dogecoin never made it to Musk‘s price target, the token did hit an all-time high of approximately 74 cents, according to data from CoinGecko. Dogecoin rallied a stellar 7,000% to its all-time high from the beginning of January to May, when it hit its all-time high. Just five months. This put Dogecoin among the top 10 cryptocurrencies by market capitalization and many argue that this would not have been possible without Musk’s influence.
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The raise of Dogecoin gave way for other meme coins like Shiba Inu, who posted astronomical returns like Dogecoin and also made it to the top 10 by market capitalization.
Details of the lawsuit
In the filing, plaintiff Keith Johnson, a U.S. citizen, alleges that Musk and his corporations were “unjustly enriched” by $86 billion as a result of wire fraud, gambling enterprise, false advertising, deceptive practices, and other unlawful conduct.
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Johnson claims that he and others in the class-action have lost approximately $86 billion between May 2021 and June 2022 and is demanding that figure in monetary damages along with another $172 billion in damages and fees.
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The lawsuit stated, “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.”
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The lawsuit also demands an order declaring the trading of Dogecoin to be constituted as gambling within New York and federal law, and also alleges that Musk and his companies have violated state and federal gambling laws.
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It reads, “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.”
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It also seeks to order Musk and his companies, and any other unlicensed professionals from advertising, marketing, or promoting Dogecoin in the future.