Elon Musk is once again in the limelight as he is sued for a whopping $258 billion by a Dogecoin investor on 16th June accusing him of defrauding investors by a pyramid scheme to promote the Dogecoin cryptocurrency.
The complaint was filed in federal court in Manhattan by Keith Johnson who described himself as an “American citizen who was defrauded” by the “Dogecoin Crypto Pyramid Scheme.”
Accusation against Musk
He accused the world’s richest person Elon Musk and his companies Tesla Inc (electric car company) and SpaceX (space tourism company) of jacking up the prices of the cryptocurrency and later leading to its drastic fall.
Keith Johnson further said that he lost a huge amount of money after he made investments in Dogecoin as the prices fell from a record high of 74 cents in May 2021 to less than 6 cents at the time of writing this article.
The complaint said, “Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading. Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure, and amusement.”
>90% fall in Dogecoin price
Ever since the celebrity CEO of Tesla Inc started promoting the advantages of investing in virtual currency, investors have collectively lost an estimated amount of mind-boggling $86 billion.
Johnson now wants Musk to reimburse all the Dogecoin investors this amount and also pay double that in damages which turns out to be around $172 billion.
Johnson compared the Dogecoin investment to a pyramid scheme as the cryptocurrency neither possesses any intrinsic value nor is backed by a tangible asset as there is no upper cap on the number of “coins” that can be mined.
He urged the judicial authorities to block Musk and his companies to stop encouraging users to invest in Dogecoin and also declare the digital currency as gambling under federal and New York law.
Elon Musk, the world’s richest man who is actively pursuing to buy microblogging social media giant Twitter, has tweeted earlier promising that his company SpaceX would “put a literal Dogecoin on the literal moon”. He is super active on Twitter where he is followed by who has more than 98.4 million followers.
Last year in February, Tesla disclosed that it purchased $1.5 billion of bitcoin and also will accept the currency as a mode of payment for its vehicles.
Market Mayhem in Cryptocurrencies and other asset classes
Dogecoin was founded in the year 2013 by its creators to take on bitcoin, and a meme image of a Shiba Inu dog. In the past 12 months, there has been a steep decline across all asset classes like equities, commodities (except oil), and cryptocurrencies.
All cryptocurrencies have cumulatively lost more than $2 trillion dollars from their peak valuation. Investors are filing class-action suits in the United States as they feel cheated by the advantages and potential upside of virtual currency.
The case title is Johnson v. Musk et al, lodged at U.S. District Court, Southern District of New York bearing No. 22-05037.
Elon Musk’s net worth is eroded by more than $100 billion this year due to the crash in the stock price of his flagship company Tesla Inc which fell from $1243 per share to $639 as of 16th June 2022.
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