Elon Musk has asked a judge to toss out a $258 billion racketeering lawsuit stemming from his support for the meme cryptocurrency dogecoin.
The suit was filed by a group of investors who accused Musk of intentionally driving up the price of Dogecoin by more than 36,000 percent across a period of two years before letting it crash, something that resulted in billions of dollars in profit at the expense of other dogecoin investors.
The investors also identified Musk's appearance on Saturday Night Live in which he referred to dogecoin as “a hustle” while portraying a fictional financial expert known as "The Dogefather" in their suit. The filing claims Musk “used his pedestal as World’s richest man to operate and manipulate the Dogecoin Pyramid Scheme.”
The suit is seeking $258 billion in damages, which is triple the amount of the cryptocurrency's estimated market value decline during the 13 months leading up to the filing of the lawsuit.
Musk's lawyers called the investors' lawsuit a “fanciful work of fiction” in their dismissal filing. They maintain that the investors have not demonstrated any intent on Musk's part to defraud individuals, nor have they identified any risks of investing in the cryptocurrency that he concealed. In addition, they claim statements by Musk such as “no highs, no lows, only Doge” and “Dogecoin Rulz” are simply too vague to support claims of fraud.
They note: “There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion."
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Dogecoin is currently worth $0.07, a drop of almost 90 percent from its all-time high, which it reached in May 2021. Nevertheless, it has managed to retain a market cap of more than $10 billion despite these losses, allowing it to rank within the top 10 most valuable cryptocurrencies. It has also been following broader market trends, with other coins also noting prolonged losses after hitting record peaks in 2021.
Musk has expressed support for Dogecoin on multiple occasions
Musk has previously admitted that Dogecoin is one of just three cryptocurrencies he owns, in addition to Ethereum and Bitcoin.
In an interview with Time magazine in 2021, Musk spoke highly of the meme-inspired coin, saying: “Even though it was created as a silly joke, dogecoin is actually better suited for transactions [than bitcoin].”
He added: “It is slightly inflationary... but that’s actually good as it encourages people to spend rather than to hoard it as a store of value.”
Past market studies have suggested that tweets by Musk about Dogecoin tend to push its price faster.
Musk changes Twitter logo from blue bird to Dogecoin Shiba Inu
Two days after asking a judge to dismiss the suit, social media giant Twitter, which is now owned by Musk, changed its icon from its traditional blue bird to the Shiba Inu dog that is featured on the meme token. This caused its price to surge by more than 22 percent in just an hour. The change of icon was implemented across the platform and was directly visible to its estimated 360 million monthly active users as well as visitors. It remains in place for now.
When asked for a comment by the media, the communications department of Twitter sent an auto-response email featuring a “smiling poop” emoji.
Dogecoin was created in late 2013 as a joke by a pair of software engineers, who named it as a nod to the popular “doge meme” featuring a Shiba Inu dog surrounded by text that is meant to be the dog’s thoughts in broken English.
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