Tesla CEO Elon Musk has recently been slammed with a $258bn lawsuit for promoting Dogecoin. He was sued by Keith Johnson, who labeled dogecoin a fraudulent scheme that was aimed at promoting the cryptocurrency as incredibly secure crypto to the public.
Keith disclosed that he and other investors lost about $86 billion to the cryptocurrency, which slumped to -91.8% last month. Keith in the lawsuit is seeking damages in two forms, first is to be compensated with $86 billion, as well as $172 billion due to losses incurred on the investment of dogecoin by him and fellow investors.
He further disclosed that Dogecoin is a pyramid scheme run by Elon Musk which shouldn’t be promoted as an investment asset, stating that the cryptocurrency doesn’t pay interest or dividends. He revealed that the crypto asset is neither backed by gold nor any valuable metal.
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Meanwhile, amid the lawsuit, Elon Musk recently broke silence on Twitter, with a tweet where he stated that he will continue to support the dog-themed cryptocurrency which was initially created as a joke in 2013. He had earlier issued a disclaimer in 2021 where he revealed that the dogecoin has no formal organization, where no one officially reports to him, which means that his ability to take any action was limited.
Today, more than 7,000 digital currencies exist in the crypto world, with new coins being created almost all the time. The rapid growth in the creation of these coins has also increased the problem of fake cryptocurrencies.
Over the years, billions of dollars have been reportedly lost in fake cryptocurrency scams, as some investors continue to create fraudulent coins. A case study is the OneCoin crypto Ponzi scheme. The coin was said to be brought in by investors who claimed the assurances and the profitability of the coin, but unknown to crypto traders, the coin was created for a fraudulent purpose.
The coin was reported to have no blockchain or network associated with it. Soon after a lot of people had massively invested in the coin, OneCoin issued a notice to investors that its trading will be paused for two weeks, before it was finally shut down a few moments later.
Due to the high rate of fake coins being promoted in the crypto market lately, seasoned investors have remained on guard, doing diligently their research before investing in a new coin.
Most of these new altcoins tend to be cheaper, which makes them look more of a lucrative investment opportunity to most new investors. The selling idea behind these new currencies is that it’s already too late to invest in bitcoin and one must seize the opportunity to invest in one of the new and upcoming ones to make more money.
Well, this is not always true, because most times, as soon as the new investors begin investing in these new coins and the prices shoot up, these fraudulent investors will then sell their share of coins for a higher price. Pumping and dumping have become common in the crypto market.
One of the most effective ways to avoid falling for these scam coins is to avoid pump and dump schemes by choosing more popular and stable crypto options like Bitcoin, Ethereum, and the likes.