Is Elon Musk’s promotion of Dogecoin coming back to bite him? The billionaire and his companies are now being sued for $258 billion for engaging in a so-called “crypto pyramid scheme” by way of the meme coin.
Sued for Memes?
As reported by the New York Post, the federal lawsuit was filed in Lower Manhattan by plaintiff Keith Johnson. He named Musk, his car company, and space exploration firm in the lawsuit’s papers.
Johnson is requesting $86 billion in damages from the CEO, alongside $172 billion for losses incurred on Dogecoin trades since 2019. He intends to represent those who lost money trading the meme-coin following Musk’s promotion of it – something he also demands that Musk cease doing.
Dogecoin was developed within just a few hours by co-creators Billy Markus and Jackson Palmer in late 2013. Neither being much interested in blockchain technology, the partners only launched the cryptocurrency as a satire on the various other useless cryptos emerging at the time.
“Dogecoin is not a currency, stock, or security,” reads the court filing. “It’s not backed by gold, other precious metal, or anything at all. You can’t eat it, grow it, or wear it.”
Ironically, Dogecoin is one of the only few coins to survive since then, supported by the strength of its meme. A Grayscale report from last year found that it’s actually a more recognized crypto than Ethereum.
Its popularity was especially boosted by Elon Musk in early 2021 when he began tweeting about it repeatedly to his millions of followers. The event made Dogecoin the first major altcoin to ever surpass its all-time high in BTC terms following more than one bull market.
It’s lost virtually all of its value since then, however, declining over 90% from $0.73 at the top to just $0.05 today. As the lawsuit explains, Doge has “no unique utility,” compared to other cryptos, nor any precious metal or interest payments backing its value.
“It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price,” it reads.
Elon Musk’s influence on Dogecoin’s price is still prevalent. The coin pumped when he announced that SpaceX would accept it for merch payments last month, as when he began finalizing his bid to buy Twitter.
The billionaire announced in March that he had no plans to sell any of his Bitcoin, Ethereum, or Dogecoin holdings, despite the bear market.