June 4, 2023

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Elon Musk is seeking to end a $258 billion lawsuit over Dogecoin

NEW YORK (Reuters) – Elon Musk asked a US judge on Friday to drop a $258 billion extortion lawsuit accusing him of running a pyramid scheme to support the cryptocurrency Dogecoin.

In a lawsuit filed evening in Manhattan federal court, attorneys for Musk and his electric car company Tesla Inc (TSLA.O) called the lawsuit brought by Dogecoin investors a “work of fiction” about Musk’s “harmless and often ridiculous tweets” about Dogecoin.

Attorneys said investors never explained how Musk intended to defraud anyone or the risks he hid, and that his statements like “Dogecoin rulz” and “there are no highs, no lows, just Doge” were too vague to support the fraud claim.

“There is nothing illegal in tweeting words of support or funny pictures about a legitimate cryptocurrency that still carries a market cap of nearly $10 billion,” Musk’s lawyers said. This court must put an end to the illusions of the plaintiffs and dismiss the complaint.”

In a footnote, the lawyers also rejected the investors’ claim that Dogecoin qualifies as collateral.

“We are more confident than ever that our case will succeed,” the investors’ attorney, Evan Spencer, said in an email.

Investors accused Musk, the second richest person in the world according to Forbes, of deliberately raising the price of Dogecoin by more than 36,000% over two years and then letting it crash.

This, they said, netted billions of dollars in profits at the expense of other Dogecoin investors, even when Musk knew the coin lacked intrinsic value.

Investors also pointed to Musk’s appearance on NBC’s “Weekend Update” segment where he described a fictitious Dogecoin financier as a “rant.”

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The damages figure of $258 billion is three times the estimated drop in Dogecoin’s market value in the 13 months before the lawsuit was filed.

The Dogecoin Foundation, a non-profit foundation, is also a defendant and is seeking to have the lawsuit dismissed.

Musk’s Twitter posts, which he owns, have sparked multiple lawsuits.

He won a court victory on Feb. 3 when a San Francisco jury found him not liable for an August 2018 tweet that he had arranged financing to take Tesla private.

The case is Johnson et al. Musk et al, US District Court, Southern District of New York, No. 22-05037.

(Reporting by Jonathan Stempel) in New York. Edited by William Mallard

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