Elon Musk and Tesla defend against $258 billion Dogecoin manipulation claim

Musk clears charge: Elon Musk and his company, Tesla, have defended themselves against a federal lawsuit that accused them of defrauding investors through manipulation of the cryptocurrency Dogecoin and insider trading. The US District Judge Alvin Hellerstein, based in Manhattan, delivered the ruling on Thursday night.

The lawsuit, filed by investors, alleged that Musk, the world's richest individual, used his Twitter account, a 2021 appearance on NBC's "Saturday Night Live," and other public appearances to artificially inflate Dogecoin’s value, ultimately causing significant financial losses for investors. 

Dogecoin surge allegations

The plaintiffs claimed Musk drove up the cryptocurrency's price by over 36,000% within two years, only to let it crash, timing trades to coincide with his public statements and activities related to Dogecoin.

A specific instance highlighted was Musk’s sale of Dogecoin in April 2023 after he changed Twitter's logo to the Dogecoin Shiba Inu image, which led to a 30% spike in the coin’s value.

Judge Hellerstein ruled that Musk's comments about Dogecoin being the future currency of Earth and the possibility of using it to purchase Teslas or being launched to the moon by SpaceX were deemed "aspirational" rather than factual claims. As such, they did not meet the criteria for securities fraud. The judge also found the investors’ claims of market manipulation and insider trading to be unclear and unsubstantiated.

Case dismissed permanently

The lawsuit was dismissed with prejudice, meaning it cannot be refiled. Investors had originally sought $258 billion in damages and had revised their complaint multiple times over the past two years.

Musk's lawyer, Alex Spiro, described the ruling as a positive outcome for Dogecoin. He emphasized that Musk's tweets were harmless and often humorous, with no evidence showing that Musk controlled suspicious trading wallets or that Tesla had engaged in the sale of Dogecoin.

During his "Saturday Night Live" appearance, Musk had referred to Dogecoin as a "hustle" in a comedic skit. Since purchasing Twitter in October 2022 and rebranding it as X, Musk has maintained a high profile, with his net worth estimated at $239.3 billion by Forbes.

(With Reuters Inputs)