A federal court dismissed the lawsuit against Elon Musk and Tesla, which accused them of using social media influence and insider trading to manipulate Dogecoin’s price.
Musk Evades Lawsuit
Elon Musk and Tesla have successfully secured the dismissal of a federal lawsuit that accused them of manipulating the cryptocurrency Dogecoin, resulting in significant financial losses for investors. The lawsuit, filed in 2022 in the Southern District of New York, claimed that Musk and his electric vehicle company engaged in fraudulent activities by promoting Dogecoin, leading to inflated prices and subsequent investor losses.
Lawsuit Dismissed by Federal Court
On August 29, Judge Alvin Hellerstein dismissed the case, stating that Musk’s statements regarding Dogecoin were not actionable as they were “aspirational and puffery” rather than factual claims. The judge emphasized that any reasonable investors would see through these statements as they were not sufficient grounds for a lawsuit, effectively nullifying the allegations brought against Musk and Tesla.
Allegations of Market Manipulation
The plaintiffs in the case argued that Musk and Tesla were involved in a $258 billion “pyramid scheme” by manipulating the price of Dogecoin using their influence on social media, particularly Musk’s X (formerly Twitter) account. The lawsuit alleged that Musk’s tweets, public appearances, and other promotional activities were part of a deliberate strategy to inflate Dogecoin’s value, allowing Musk and Tesla to profit at the expense of other investors.
Did Musk “Pump and Dump?”
One of the central claims in the lawsuit was that Musk engaged in a “pump and dump” scheme, driving Dogecoin’s price up by more than 36,000% over two years before allowing it to crash. The plaintiffs accused Musk of timing his trades to coincide with his public statements, including his infamous appearance on NBC’s “Saturday Night Live” and his decision to replace Twitter’s logo with Dogecoin’s Shiba Inu dog, which led to a 30% price surge.
Judge’s Rationale and Future Legal Steps
Judge Hellerstein dismissed the case based on the finding that Musk’s statements about Dogecoin, such as claiming it could become the “future currency of Earth” or could be used to purchase Tesla vehicles, were not grounded in fact and could not be reasonably interpreted as such by investors. Despite the dismissal, the plaintiffs’ legal team has expressed their disappointment and indicated plans to appeal the decision. Evan Spencer, the attorney representing the investors, argued that Musk’s actions went beyond mere puffery and resulted in substantial financial harm to a large class of investors.
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Source: https://cryptodaily.co.uk/2024/08/court-dismisses-lawsuit-accusing-elon-musk-of-manipulating-dogecoin