Musk Beats Suit Over Promoting Dogecoin ‘Pyramid Scheme’

Elon Musk and Tesla Inc. won dismissal of a lawsuit claiming they pumped up the price of the cryptocurrency Dogecoin into a $258 billion “pyramid scheme.”

Investors who lost tens of thousands of dollars investing in the cryptocurrency faulted Musk for promoting the token to his millions of Twitter followers with statements like “One word: Doge,” causing its price to increase. Musk further inflated the price by then announcing that Tesla would accept Dogecoin as payment for merchandise, according to the 2022 complaint.

A New York federal judge dismissed the claims on Thursday, finding that Musk’s statements were “aspirational” rather than “factual and susceptible to being falsified” and “no reasonable investor could rely upon them.”

When Musk appeared on Saturday Night Live in May 2021 after touting Dogecoin for months, he played a financial expert in a newscast trying to explain the cryptocurrency. Pressed, his character in the comical exchange finally agrees that Dogecoin is a “hustle.” It lost $20 billion in market value before the show finished airing, according to the complaint.

The investors had also accused Musk and Tesla of participating in a “pump and dump” scheme with Dogecoin, but US District Judge Alvin Hellerstein wrote that it was “not possible to understand” those allegations.

A lawyer for the plaintiffs said his clients are disappointed and plan to appeal.

“Musk’s statements and publications were far more than puffery and a class of millions lost billions of dollars as result,” attorney Evan Spencer said in a statement.

Dogecoin was the original memecoin — a type of cryptocurrency that originated from internet memes or jokes. Its logo is a picture of a Shiba Inu dog.

The case is Johnson v. Musk, 22-cv-05037, US District Court, Southern District of New York (Manhattan).

Photo: A sticker advertising Dogecoin on a cryptocurrency automated teller machine (ATM) at a laundromat in Hong Kong. Photographer: Paul Yeung/Bloomberg