Elon Musk and two of his companies, Tesla and SpaceX, are facing a $258 billion lawsuit after an investor claimed he was “defrauded” by a Dogecoin “pyramid scheme.”
The investor, Keith Johnson, has named the entrepreneur, as well as his companies Tesla and SpaceX, in the lawsuit filed in federal court in Lower Manhattan on Thursday, June 16.
Mr Johnson is demanding $86bn in damages in addition to tripled damages of $172bn for losses incurred from trading the cryptocurrency since 2019, as well as an order blocking Musk and the companies from promoting Dogecoin, and declaring that Dogecoin trading constitutes gambling under US and New York law.
The price of one dogecoin on Thursday was just below six cents, a long way off from its May 2021 high of 74 cents.
“Dogecoin is not a currency, stock, or security. It’s not backed by gold, other precious metal, or anything at all. You can’t eat it, grow it, or wear it,” the lawsuit states.
“It doesn’t pay interest or dividend. It has no unique utility compared to other cryptocurrencies…It’s not secured by a government or private entity.
“It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”
“Since defendant Musk and his corporations Spacex and Tesla Inc. began purchasing, developing, promoting, supporting, and operating dogecoin in 2019, [the] plaintiff and the class have lost approximately $86 billion in this crypto pyramid scheme,” the court document details.
Mr. Johnson wishes to represent other investors who have lost money in Dogecoin since April 2019.
Mr. Musk, who has a personal fortune of $217bn, said in March that he would not sell bitcoin, Ethereum, or Dogecoin, despite billions being wiped off their values in recent months.