Tesla CEO Elon Musk has been accused of insider trading against his supporters by using Dogecoin (DOGE), according to a court filing by alleged memecoin investors on Wednesday. These accusations come after the same group filed a $258 billion class action lawsuit in June 2022, accusing Musk and his companies of causing massive losses for Dogecoin holders.
Elon Musk’s Dogecoin Machinations
As per an amended filing in a Manhattan federal court on May 31, Elon Musk engaged in “a deliberate course of carnival barking market manipulation” using a “publicity circus” to increase Dogecoin’s price. These circus-like performances include Musk’s public appearances and social media activity hyping up Dogecoin dating back to April 2019. These stunts caused Dogecoin’s price to rise by 36,000% to $0.70+ by May 2021. Currently, DOGE is trading at 90% lower than that high.
The lawsuit states that Musk’s claims that the promotion of Dogecoin was just for fun and wasn’t meant to be taken seriously are not credible, and labels him as an “apex predator,” with his millions of Twitter followers as prey.
The filing notes that numerous studies have already shown the impact of Elon Musk’s tweets on Dogecoin’s price. Musk’s announcements that he would begin accepting Dogecoin at SpaceX in 2021 and his visit to Twitter HQ after taking over the company last year have both affected DOGE’s price.
Musk used his influence again by changing Twitter’s blue bird logo to a picture of the Doge meme’s Shiba Inu for three days, which helped pump the coin’s price by 30%.
The filing alleges that Musk and Tesla traded profitably around the billionaire’s “intended moves,” citing blockchain records as evidence. Specifically, the lawsuit claims that a wallet address – DH5ya – allegedly belonging to Musk became the largest single holder of Dogecoin by February 2021 and sold millions of dollars worth of Dogecoin several times throughout April 2021.
A crucial part of the lawsuit presupposes that Dogecoin is an unregistered security based on current U.S. Securities and Exchange Commission standards. Musk was founded by Dogecoin creators Billy Markus and Jackson Palmer in 2013 but they have been uninvolved in the project’s development for years. Markus often jokes with Elon Musk on Twitter, and both of them often provide lighthearted commentary about crypto over Twitter.
When the original lawsuit was filed last year, Musk’s lawyers dismissed it as fanciful, stating that “there is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion.”