As the cryptocurrency market takes further pounding, resulting in heavy losses that have seen its capitalization dwindle from $3 trillion to $1 trillion, investors caught in the turmoil are regretting betting their money on the asset. Seeking reprieve, one is taking a legal step against Elon Musk, SpaceX and Tesla for fraudulently promoting Dogecoin.
Keith Johnson is suing Musk and his companies for $258 billion over claims they are part of a racketeering scheme to back the cryptocurrency Dogecoin. Musk had last year, touted Dogecoin, repeatedly referencing the coin on Twitter, shooting its price up as investors poured their money into it.
Dogecoin rose nearly to $0.74, and Musk referred to himself as the Dogefather. Now, the crypto market downturn has erased the gains and calmed the frenzy. Dogecoin has dropped 67% this year to about $0.5, and investors who were motivated by Musk’s tweets to buy the coin are looking for something to hold on to.
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The lawsuit claims Musk and co. constituted an illegal racketeering enterprise to inflate Dogecoin’s price, and defrauded Johnson and others through their “Dogecoin Crypto Pyramid Scheme.”
“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” Johnson said in his complaint, filed Thursday in federal court in Manhattan.
“Since Defendant Musk and his corporations SpaceX and Tesla, Inc began purchasing, developing, promoting, supporting and operating Dogecoin in 2019, Plaintiff and the class have lost approximately $86 billion in this Crypto Pyramid Scheme,” the complaint added.
The case is Johnson v. Musk, 22-cv-05037, US District Court, Southern District of New York (Manhattan).
Johnson, seeking to represent a class of people who have lost money trading in Dogecoin since April 2019, is asking for triple damages of $86 billion, in addition to triple damages of $172 billion, as well as an order blocking Musk and the companies from promoting Dogecoin, and declaring that Dogecoin trading constitutes gambling under US and New York law. The plaintiff alleges that the said amount is how much that has been lost by Dogecoin investors since Musk first started tweeting about it.
Crypto investors have watched billions of dollars of their investment evaporate as mass selloff triggered by the market’s accelerating downturn plummets assets. The lawsuit is believed to signal desperation by investors to hold on to something as consolation, even if it means scapegoating someone.
