Judge Clears Elon Musk of $258 Billion Dogecoin Manipulation Lawsuit
On August 29, 2024, U.S. District Judge Alvin Hellerstein dismissed a significant lawsuit against Elon Musk and his company, Tesla, which alleged market manipulation of Dogecoin (DOGE). The lawsuit, initiated by a group of disgruntled investors in June 2022, claimed that Musk and Tesla artificially inflated the cryptocurrency’s price, resulting in a staggering $258 billion in damages. The court ruling dismissed these claims, stating they were based on non-factual statements.
Court’s Decision
Judge Hellerstein’s ruling characterised Musk’s statements about Dogecoin as “aspirational and puffery” rather than actionable claims. In his decision, Hellerstein emphasised that “no reasonable investor could rely upon” Musk’s social media posts or public declarations as a basis for making investment decisions. The judge specifically cited Musk’s assertions about becoming the “official CEO of Dogecoin” and placing a “literal Dogecoin” on a SpaceX rocket as examples of statements not meant to be taken literally.
The plaintiffs alleged that Musk, leveraging his social media influence and public appearances, manipulated Dogecoin’s price by promoting it and then letting it crash. They claimed that Musk’s tweets, including a promise to make Dogecoin the “standard for the global financial system,” were instrumental in driving the token’s price up by over 36,000% over two years before it fell dramatically. Additionally, the investors accused Musk and Tesla of engaging in a “pump and dump” scheme.
Defence Argument
Musk’s legal team argued that the lawsuit was baseless, describing the claims and the demand for $258 billion in damages as “fanciful” and unsupported. They contended that Musk’s tweets, such as “Dogecoin Rulz” and “no highs, no lows, only Doge,” were too vague to substantiate allegations of fraud. The defence further stated that there was no unlawful conduct in Musk’s public support or humorous commentary about Dogecoin.
Following the court’s decision, the price of Dogecoin remained relatively stable, showing a slight increase of 0.1% over the last 24 hours. At the time of the ruling, Dogecoin was trading at $0.10, having recently experienced a 20% drop over the past month. The stability of Dogecoin’s price post-ruling suggests minimal immediate impact from the lawsuit’s dismissal.
Conclusion
The dismissal of the $258 billion lawsuit marks a significant victory for Elon Musk and Tesla, reaffirming that statements made by the tech billionaire about Dogecoin were considered promotional rather than fraudulent. The court’s ruling highlights the legal limits of attributing market manipulation to public statements, especially those deemed aspirational.
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