‘Dogecoin pyramid scheme’ promotion lands Elon Musk in $258B lawsuit

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Elon Musk’s tweets promoting Dogecoin could land him in trouble, with the Tesla boss now facing a class-action lawsuit for allegedly participating in and promoting a pyramid scheme. A U.S. investor claims that Musk was instrumental in attracting investors to Dogecoin, which later tanked and investors lost billions of dollars.

Musk has been a digital asset fan for several years now. Initially, he was a BTC maxi, but as many usually do, he discovered that BTC couldn’t be used as a currency due to its high fees, slow transactions, and carbon footprint.

It was then when he jumped ship and started promoting Dogecoin. The DOGE community was elated to have the world’s richest man backing their project, so much so that Musk, at one point, appointed himself the CEO of Dogecoin (although the title didn’t mean much as the project is decentralized).

Musk’s support for DOGE saw him try to push the digital currency as a payment method for Tesla merchandise in 2021; this year, the electric vehicle maker even tried integrating DOGE payments for its cars.

All these antics may finally catch up with Musk. Keith Johnson, a U.S. investor who filed the lawsuit on his behalf and that of other DOGE investors, accuses Musk of being a key reason why millions of investors bought Dogecoin. In his lawsuit, filed in the Southern District of New York, Johnson argued that Musk’s actions amount to a pump-and-dump scheme.

“Every statement and endorsement from Defendants on social media regarding Dogecoin has knowingly caused millions of people to spend billions of dollars buying into the Dogecoin Crypto Pyramid Scheme,” the complaint says.

“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all…Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement,” it added.

The class-action lawsuit seeks to include everyone who had lost money on Dogecoin since 2019, when Musk first started promoting the project. 

Johnson is asking for $86 billion in damages, and $172 billion more in treble damages. In addition, he wants to block Musk and his firms from promoting Dogecoin ever again and wants the court to declare that trading DOGE is gambling under the federal and New York state law.

Despite being a meme coin that was created to poke fun at Bitcoin almost a decade ago, Dogecoin shot up in value following the endorsement of Musk and several other celebrities in 2021. At one point, the meme coin shot up to a market cap of $89 billion, making it one of the top five most valuable digital assets. This was despite no use case in the real world, no projects or applications built on it, and no discernible developments.

Watch: The BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investment

https://www.youtube.com/watch?v=RzJsCRb6zt8&t=24446s