(Bloomberg) - Elon Musk and Tesla Inc. won dismissal of a lawsuit claiming they pumped up the price of the cryptocurrency Dogecoin into a $258 billion “pyramid scheme.”
Investors who lost tens of thousands of dollars investing in the token faulted Musk for promoting it to his millions of followers on Twitter (now X) with statements like “One word: Doge,” causing it to rise. Musk further inflated the price by announcing that Tesla would accept Dogecoin as payment for merchandise, according to the 2022 complaint.
A New York federal judge dismissed the claims on Thursday, finding that Musk’s statements were “aspirational” rather than “factual and susceptible to being falsified” and that “no reasonable investor could rely upon them.”
When Musk appeared on Saturday Night Live in May 2021 after touting Dogecoin for months, he played a financial expert in a newscast trying to explain the cryptocurrency. Pressed, his character in the comical exchange finally agrees that Dogecoin is a “hustle.” It lost $20 billion in market value before the show finished airing, according to the complaint.
The investors also accused Musk and Tesla of participating in a “pump and dump” scheme with Dogecoin, but US District Judge Alvin Hellerstein wrote that it was “not possible to understand” those allegations.
A lawyer for the plaintiffs said his clients are disappointed and plan to appeal.
“Musk’s statements and publications were far more than puffery and a class of millions lost billions of dollars” as a result, attorney Evan Spencer said in a statement.
Dogecoin, with its Shiba Inu image, was the original memecoin, a type of cryptocurrency that originated from internet memes, or jokes. Since Musk’s early tweets about the token, it has had sharp ups and downs, hitting a peak in March from which it has dropped about 54%.
The case is Johnson v. Musk, 22-cv-05037, US District Court, Southern District of New York (Manhattan).
By Rachel Graf
