DOGE Investors Sue Elon Musk Over Alleged Insider Trading in Crypto Market

Updated: 02 June 2023

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DOGE investors have filed a proposed class action lawsuit in Manhattan federal court, accusing Elon Musk of insider trading.

They allege that the Tesla CEO manipulated the cryptocurrency Dogecoin, resulting in losses worth billions of dollars for them.

Investors Accuse Elon Musk of Market Manipulation and Insider Trading in Ongoing Lawsuit

In a filing submitted on Wednesday night, it was stated that Musk utilized various tactics, such as Twitter posts, payments to online influencers, his appearance on NBC’s Saturday Night Live in 2021, and other attention-grabbing activities, to trade lucratively at the expense of the investors. They claim that Musk or Tesla controlled multiple Dogecoin wallets involved in these activities.

#Digecoin investors who have sued @elonmusk are those who lost when the market dumped.

Those who gained are happy with their gains and have no reason to sue @elonmusk .

Imagine suing because you made wrong investment decision.

— CryptoSmind (@SmindCrypto) June 2, 2023

According to the investors, one instance of such manipulation occurred when Musk sold approximately $124 million worth of Dogecoin in April. This sale followed Musk’s replacement of Twitter’s blue bird logo with Dogecoin’s Shiba Inu dog logo, leading to a 30% surge in Dogecoin’s price.

Investors have leveled accusations against Elon Musk, alleging deliberate market manipulation and insider trading. The filing asserts that Musk pursued a calculated course of action to defraud investors and advance his interests and those of his companies. Musk acquired Twitter in October and is actively involved in leading SpaceX and Tesla.

While Musk’s lawyer declined to comment, there has been no response from the investors’ lawyer thus far. The investors claim that Musk intentionally drove up the value of Dogecoin by an astonishing 36,000% and subsequently allowed its value to plummet. These allegations were in a proposed third amended complaint within an ongoing lawsuit.

In March, Musk and Tesla sought to have the second amended complaint dismissed, dismissing it as a work of fiction. Furthermore, on May 26, they contended that another amendment would be unwarranted.

Elon Musk’s Promotion of Dogecoin and Lawsuit Developments

Musk has actively expressed his enthusiasm for Dogecoin over the years, frequently causing notable surges in its price. In 2019, he openly declared Dogecoin as his preferred currency. During his appearance on SNL, he spoke positively about Dogecoin and even mentioned plans to send a satellite called Doge-1 to the moon.

At one point, he also contemplated accepting Dogecoin as payment for Tesla cars, and currently, certain items in Tesla’s online store can be purchased using Dogecoin. While engaging in such actions and statements is one thing, the lawsuit alleges that Musk artificially utilized his substantial online influence to boost the value of Dogecoin and subsequently profited from it. According to the lawsuit, this aspect represents a distinct and concerning matter.

In a Wednesday order, U.S. District Judge Alvin Hellerstein indicated that he is inclined to allow the third amended complaint, which is unlikely to cause prejudice to the defendants. Additionally, Hellerstein granted the investors’ request to dismiss the nonprofit Dogecoin Foundation as a defendant. The foundation’s lawyer, Seth Levine, stated that the dismissal was the appropriate outcome.