3 min read

In case you have not heard, there’s a lawsuit against Elon Musk because of Dogecoin.

What are the charges? The lawsuit accuses Elon Musk of “running a pyramid scheme” to support and promote Dogecoin. In a filing in Manhattan federal court, lawyers for Musk called the lawsuit by Dogecoin investors a “fanciful work of fiction” over Musk’s “innocuous and often silly tweets” about Dogecoin.

The lawyers for Elon Musk argued the investors never explained how Elon Musk intended to be fraudulent or if he concealed any risks to the purchasing of Dogecoin. The lawyer explained, that his statements such as “Dogecoin Rulz” and “no highs, no lows, only Doge” were too vague to support a fraud claim.

Is it Unlawful?

“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,” Musk’s lawyers said. “This court should put a stop to plaintiffs’ fantasy and dismiss the complaint.”

The plaintiffs’ side argues that Dogecoin is a security, while Elon Musk’s lawyers rejected the claim that Dogecoin qualifies as a security. The lawyers for the plaintiff said in an email, “We are more confident than ever that our case will be successful.”

Is Dogecoin a security?

In an article written by Decrypt, they argued that “DOGE is not a security and wouldn’t fall under the Security and Exchange Commission’s purview. (If anything, it’s a commodity, and Byrne points out that the Commodity Futures Trading Commission, the SEC’s sister agency, has treated it as such.) Read the full article here. Do you think Dogecoin qualifies as a security? Let us know in the comment section, don’t forget to back up your claim!

Let’s continue,

Investors accused Elon Musk of deliberately driving up Dogecoin’s price by over 36,000% over two years and then letting it crash (Pump and Dump).

They argued this generated billions of dollars of profit at other Dogecoin investors’ expense, even though Elon Musk knew the coin lacked any value.

Investors also pointed to Elon Musk’s appearance on a “Weekend Update” segment of NBC’s “Saturday Night Live” where portraying a fictitious financial expert, he called Dogecoin “a hustle” which blew the world and Twitter into a frenzy.

The $258 billion damages figure is triple the estimated decline in Dogecoin’s market value in the 13 months before the lawsuit was filed. Do you think this lawsuit should be thrown out? or should the $258 billion be lower? Let us know in the comment section!

Dogecoin Foundation is also a defendant and seeking the lawsuit’s dismissal.

The case is Johnson et al v. Musk et al, U.S. District Court, Southern District of New York, No. 22-05037.

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