Elon Musk, the CEO of Tesla Inc., recently faced a high-profile lawsuit with allegations of price manipulation involving Dogecoin (DOGE), a meme-based cryptocurrency. A group of Dogecoin holders filed the lawsuit in June 2022, accusing Musk and his company of using social media and public statements to inflate the token’s price artificially. The lawsuit claimed that Musk’s actions caused significant financial losses for the investors, as the token’s price surged over 36,000% before crashing.
U.S. District Judge Alvin Hellerstein ruled in favor of Musk and Tesla, dismissing the claims made by the disgruntled investors. Judge Hellerstein described Musk’s statements as “aspirational” and mere “puffery” rather than actionable claims. He also stated that the statements were not factual or capable of being falsified, making them unreliable for making investment decisions. The judge highlighted that the investors failed to provide a clear explanation of how Musk and Tesla engaged in market manipulation with Dogecoin.
The investors referred to several of Musk’s tweets as evidence of material misrepresentations, including his declaration to become the “official CEO of Dogecoin” and his plan to put a “literal Dogecoin” on a SpaceX rocket. However, the judge deemed these statements as too vague to support claims of fraud. Musk’s legal team argued that there was nothing unlawful about tweeting support for a legitimate cryptocurrency with a market cap of nearly $10 billion. They insisted that the court should dismiss the complaint and put an end to the plaintiffs’ fantasies about market manipulation.
Musk’s lawyers had previously sought to dismiss the case by questioning the plaintiffs’ ability to demonstrate intent to defraud or the concealment of risks. They emphasized that Musk’s tweets, even those like “Dogecoin Rulz” and “no highs, no lows, only Doge,” were not specific enough to prove fraud. The legal team maintained that supporting a legitimate cryptocurrency through social media posts did not constitute illegal behavior, especially given the substantial market cap of Dogecoin.
The dismissal of the $258 billion lawsuit against Elon Musk and Tesla highlights the challenges of proving market manipulation based on social media activity. The judge’s ruling emphasized the need for clear evidence and a plausible explanation of wrongdoing in such cases. While investors may scrutinize public statements made by prominent figures like Musk, it is essential to establish a direct link between those statements and actual harm suffered by investors. This case serves as a reminder of the complexities involved in alleging financial misconduct related to cryptocurrency price movements.