Court drops $258b Dogecoin manipulation case against Elon Musk

A US court has dismissed a $258 billion class-action lawsuit alleging that Elon Musk and his companies SpaceX and Tesla operated a “crypto pyramid scheme.”

Nearly two years after the lawsuit was filed, U.S. District Court for the Southern District of New York Judge Alvin Hellerstein decided to drop the lawsuit, which was seeking $258 billion in damages.

The lawsuit alleged that Musk abused his position as the world’s richest man to inflate the price of Dogecoin by over “36,000%” and then allow the price to fall, causing losses to investors. The plaintiffs argued that Musk’s actions could be justified as a “Dogecoin Pyramid Scheme,” in which he allegedly promoted the cryptocurrency to profit from the volatility it created.

Furthermore, the lawsuit highlighted Musk’s appearance on Saturday Night Live in 2021, where he played a financial expert in a skit and called Dogecoin (DOGE) “a scam.” Moments later, the price of DOGE hit an all-time high of $0.73 before falling by more than 25% and never reaching those price levels again.

In his August 29 ruling, Judge Hellerstein said Musk’s statements about Dogecoin were “untrue, pretentious and exaggerated” and “vulnerable to falsification.” He added that “no reasonable investor could rely on them when making investment decisions.”

The judge also found that there was no evidence to support the plaintiffs’ allegations of a “pump and dump” scheme, market manipulation and insider trading, stressing that “it was impossible to understand the allegations underlying” those claims.

Musk’s legal team had previously called on the court to dismiss the lawsuit, arguing that the Tesla CEO’s social media support for dogecoin was too vague to qualify as a fraud claim.

Dogecoin’s price did not react to this rejection at the time of publication, with the token missing 86.4% from its all-time high price.

Musk has distanced himself from the crypto space over the years. Tesla, the electric vehicle company that once embraced Bitcoin as a form of payment, reversed its decision shortly after Musk’s SNL appearance. The company still reportedly holds Bitcoin (BTC) holdings, as reported in its Q1 2024 earnings results.