Amended Class-Action Lawsuit Alleges Elon Musk Insider Trading in Dogecoin
The plaintiff in the case of Musk’s insider trading requested leave to amend a class-action with the intention of adding new allegations.
The Dogecoin investors who are suing Musk allege that he manipulated the price of the cryptocurrency to benefit from its short term price changes.
Musk and his legal team have not commented on the action of the Dogecoin investors who requested to amend a class-action.
Keywords: Twitter CEO, Elon Musk, crypto lawsuit, Doge crypto, Dogecoin, Doge trading, Twitter log changed, Dogecoin investors
Introduction
During the early days of cryptocurrencies there were hardly any legal action on individuals and crypto institutions like exchanges. Right now, however, individuals and government agencies in the United States and a few other countries are taking action against would-be offenders. In this article, we will discuss a lawsuit against Elon Musk.
Amended Class Action against Elon Musk
A group of Dogecoin investors who sued Elon Musk, the former CEO of Twitter, have requested leave to amend a class-action lawsuit against him on the allegation that he manipulated the price of Dogecoin for his personal benefit and that of his company Tesla Inc.
Initially the investors filed a legal case against Musk in June 2022 after Musk’s infamous Saturday Night Live appearance which he attended before he took over Twitter. Nonetheless, he had already shown much interest in promoting Dogecoin, one of the leading memecoins, on social platforms especially Twitter. So far, the plaintiffs have amended the lawsuit two times as a result of Musk’s actions and emerging details.
Elon Musk- NYtimes
On 31 May this year, the referred group of investors filed their case against Musk in the United States District Court for the Southern District of New York where they alleged that Musk used his large following on Twitter and other public media to profit from the trades of Dogecoin through what they called cryptocurrency market manipulation.
Read also: Dogecoin (DOGE) Price Prediction 2023-2030
They stated that if it was not for Musk’s “material misstatements and omissions, Plaintiffs and the Class would not have purchased Dogecoin. ”They suggested that Tesla and Musk were “unjustly enriched by billions of dollars” as a result of “undisclosed sales of Dogecoin based on insider information.”
In addition, the plaintiff said that Musk “took extensive responsibility for the Dogecoin enterprise as a whole, thus giving rise to the fiduciary relationship required to state a claim for insider trading.’
Read also: Doge, Floki Soar after Musk Tweets Photo of his dog on Twitter CEO Chair
Also, they asserted that Musk misrepresented information when he stated that his company, SpaceX, would send the price of Dogecoin to the moon, something which did not occur.
Next, the investors claimed that Elon Musk started using Twitter to influence the prices of several cryptocurrencies which include Bitcoin and Dogecoin in 2019. Apart from the allegation that Musk was involved in insider trading of Doge crypto they also allege that Doge is a security, based on the Howey Test.
As a result, the amended lawsuit stated, “This is a securities fraud class action arising from a deliberate course of carnival barking market manipulation and insider trading by the world’s richest man Elon Musk, who hijacked an emergent pop-culture phenomenon to cross-promote himself and his companies, and to pad his obscene fortune, preying on the earnest hopes of vulnerable Americans, including war veterans, blue collar workers, and the elderly.”
Nevertheless, the SEC has not confirmed that Dogecoin is a crypto security. As such, it is not among the 68 cryptocurrencies which the SEC listed as cryptocurrency securities.
At the time of writing, Musk, one of the world’s richest people, has not yet responded to the latest allegations. The other complaint, however, is that Twitter replaced its iconic blue bird logo with the image of Shiba Inu dog, which represents Dogecoin, which led to a 30% increase in the value of the cryptocurrency.
In a similar way, the Dogecoin investors have also alleged that Musk manipulated the price of Bitcoin through his social media activities at a time when his company, Tesla, was trading it. Nevertheless, in their recent amendment they only listed Musk and Tesla as the defendants as they dropped the Dogecoin Foundation.
The plaintiff argued that “Musk traded Dogecoin profitably through one or more wallets and domestic exchanges using foreknowledge then unknown and undisclosed to Dogecoin investors generally or publicly, of his own intended moves to manipulate the market.”
Accordingly, the defendants have the right to respond to the amended complaints before 14 June 2023. As things stand, the court is likely to grant the requested leave to amend a class-action. This is because in a separate document Judge Alvin Hellerstein stated that “the Plaintiffs motion for leave to file that complaint is likely to be granted, since there is not likely to be any prejudice against the Tesla Defendants, and leave to file an amended complaint is freely granted.”
Musk’s legal Team Response
In the meantime, Musk’s legal team has refuted that Elon Musk committed any fraudulent activity or carried out insider trading. The lawyers have claimed that their client did not violate any laws by posting some memes and pictures.
According to them “they were just funny pictures about a legitimate cryptocurrency.” They added, “ It is a legitimate cryptocurrency – indeed, one of the largest – which is valued at nearly $10 billion.” Their argument here is that Dogecoin is not a ponzi crypto scheme as the plaintiff alleges.
Furthermore, on 3 May they asked the court to dismiss the second amended complaint against Musk. However, they have not yet stated their position on the latest requested leave to amend the class-action lawsuit.
Performance of Dogecoin amid the on-going lawsuit
Basically, the price of Dogecoin has been flat during the greater part of 2023, a period when the case between Musk and Dogecoin investors has been dragging on. Its value has been ranging between $0.07 and $0.09 as indicated on the following diagram.
Dogecoin Price Performance in 2023 - Statista
As you see on the above graph, Doge was trading below $0.09 for the greater part of 2023. At the time of writing it is trading at $0.621 about 91.51% less than its all-time-high of $0.731 attained on 8 May 2021.
Conclusion
Some Dogecoin investors continue with their crypto lawsuit against Musk for allegedly manipulating the price of Doge through his activities on Twitter and other public media channels. Nevertheless, Musk and his legal team maintain that he did nothing illegal as he posted a few pictures and comments about a legitimate cryptocurrency, Dogecoin, ranked number 9 by market capitalization, with a market cap of $10 billion.
