Elon Musk accused of insider trading over his crypto-hype Dogecoin The Register

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A lawsuit filed last year against billionaire Elon Musk on behalf of people who lost money investing in Dogecoin has been widened to include allegations of insider trading.

Initially, the first two complaints filed against the Tesla tycoon describe the dog-themed cryptocurrency as a pyramid scheme and allege that Musk attempted to manipulate the Dogecoin market described by its creators as a joke through public comments on Twitter and during a television appearance. Saturday Night Live. Now, that legal challenge has grown to include new claims.

Essentially, Musk from time to time, even to this day, draws attention to Dogecoin, after which the price jumps. For example, tweeting memes about cryptocurrency and openly supporting its use; let people buy Tesla products using Doge; and announcing the upcoming launch of the DOGE-1 cubesat by SpaceX, a mission that would have been paid for in Dogecoin.

This pretty much helped fuel the coin’s price spike from around $0.003 coin in November 2020 to an all-time high of $0.74 in May 2021 when the markets were going wild during the pandemic. It has since crashed to $0.07 amid a crypto winter and general economic downturn. Those who bought on the rise and didn’t sell at the right time to turn a profit are now facing big losses, and Musk is in their sights.

His legal team in March attempted to have the case dismissed [PDF], arguing that the plaintiffs’ claims are flawed and that “Dogecoin is indeed a legitimate cryptocurrency, one of the largest that is valued at nearly $10 billion.” This figure is indeed correct: its market capitalization is ten billion dollars.

Now the amended complaint [PDF]filed earlier this week in the Southern District of New York, again asserts that Musk’s actions violated the law.

Elon Musk hijacked an emerging pop culture phenomenon to promote himself and his businesses and to flesh out his obscene fortune

“This is a securities fraud class action lawsuit resulting from a deliberate course of carnival barking market manipulation and insider trading by the world’s richest man, Elon Musk, who has hijacked an emerging pop culture phenomenon to promote himself and his businesses, and to flesh out his obscene fortune, preying on the earnest hopes of vulnerable Americans, including veterans, blue-collar workers and the elderly” , begins the last complaint.

He goes on to cite Musk’s decision in April this year to replace the Twitter logo with the Shiba Inu graphic associated with Dogecoin, which coincided with a 30% increase in the price of the cryptocurrency, as an example of Musk manipulating the market then trader. on the results. It is claimed that he offloaded over $100 million in Dogecoin after changing that logo for a few days and raising the price. In fact, the billionaire is said to have traded the coin several times after apparently being involved in moving the price.

He further alleges that Musk, in addition to manipulating the Dogecoin market for himself, benefits from paid influencers, or shills, who post obsequious comments that support Musk and his businesses. He also claims that Tesla traded in the currency and benefited from Musk’s insider knowledge.

“Musk traded Dogecoin profitably through one or more national wallets and exchanges using prior knowledge then unknown and not disclosed to Dogecoin investors generally or publicly, of his own actions intended to manipulate the market,” the amended lawsuit alleges.

“Tesla, Inc. also traded profitably through one or more national wallets and exchanges during the Class Period after being made aware of this information by Defendant Musk.”

Pass

Dogecoin was created in 2013 but didn’t really take off until Musk became interested in the project in 2019. As noted in the various complaints, Dodecoin was trading at $0.002 on April 1, 2019 when a poll in line proposed Musk as “CEO”. of Dogecoin and Musk started tweeting about Dogecoin and advising the project development team. As of April 4, 2019, the value of the token had doubled.

“In subsequent tweets, Musk, who at the time had tens of millions of Twitter followers, dubbed himself ‘the Dogefather’ and has tweeted about Dogecoin more than a hundred times since,” reads the last complaint.

Twitter loses its second trust and safety chief under Musk READ MORE

The lawsuit cites various studies as evidence that Musk’s tweets moved the Dogecoin market. For example, Lennart Ante’s article [PDF]”How Elon Musk’s Twitter Activity Moves Cryptocurrency Markets,” says, “Based on a sample of 47 cryptocurrency-related Twitter events, we identify significant positive abnormal returns and a trading volume as a result of such events. [for Dogecoin].”

Musk’s remarks about Doge haven’t always been positive. When he appeared on Saturday Night Live on May 8, 2021, he called Dogecoin a “hustle,” and a sell-off followed. Two days later, Dogecoin’s market cap had shrunk by $30 billion, and by the end of the year the cryptocurrency had lost 90% of its value. The various plaintiffs in the case thus lost between $17,000 and $150,000.

Alex Spiro, one of the attorneys representing Musk, did not immediately respond to a request for comment. It is likely that Musk’s legal team will try again to have the case described in an earlier motion to dismiss [PDF] as “a whimsical work of fiction” launched.

Incidentally, Musk’s tweets weren’t enough to prop up Twitter’s price tag, which the billionaire acquired for $44 billion and was recently valued at just $15 billion.

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