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On Wednesday, the Manhattan federal court in New York received a third added complaint in a proposed class action first filed on June 16, 2022. The complaint accuses Elon Musk of insider trading, compiling a wide range of activities under one legal umbrella to bolster the case. For instance, Musk’s appearance on Saturday Night Live (S46E18, May 8, 2021) was allegedly one of several publicity stunts to affect the Dogecoin price.
Likewise, Musk supposedly paid social media influencers as proxies to accomplish the same goal alongside his tweets. Based on these activities, Elon Musk drove Dogecoin (DOGE) price to extract profits from his or Tesla-controlled wallets.
The filing further described Musk’s actions as a “deliberate course of carnival barking, market manipulation and insider trading” for self-promotion (by extension, his businesses) while defrauding investors.
Musk’s legal team, headed by Alex Spiro, filed a motion to dismiss the second amended complaint, framing it as a “fanciful work of fiction” on March 31, 2023. The prior iterations accuse Musk of running a $258 billion pyramid scheme centered around Dogecoin (DOGE) price manipulation.
Musk’s lawyers pointed out that the lawsuit doesn’t explain the defrauding mechanism. Instead, it vaguely implies intent based on tweets such as “Dogecoin rulz.”
Or “No highs, no lows, only Doge”.
During the dismissal motion, the lawyers concluded there was no legal foundation for pursuing such vague claims.
“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,”
The presiding judge, Alvin Hellerstein, noted that the third would likely stand, as defendants do not appear prejudiced. This was likely a reference to one of the added defendants, Dogecoin co-creator Jackson Palmer, last September.
Previously, in an interview with Australian news outlet Crikey, he called Elon Musk a “grifter.”
“He’s a grifter. He sells a vision in hopes that he can one day deliver what he’s promising, but he doesn’t know that. He’s just really good at pretending he knows. That’s very evident with the Tesla full-self-driving promise.”
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After buying Twitter in October 2022 for $44 billion, Elon Musk’s first direct move related to Dogecoin was changing Twitter’s official blue bird logo to the iconic Shiba Inu image. This happened on April 3, 2023, as a sharp price spike added ~$4 billion to DOGE’s market cap.
The third amended complaint alleges that Musk sold approximately $124 million worth of DOGE following the price boost. On its face, Elon Musk framed the move as a promise fulfilled to a popular Twitter user @WSBChairman. However, this happened seven months before the Twitter acquisition, on March 26, 2022.
From this, logically, the class action alleges that Musk keeps meticulous track of his every tweet, which he could then use as a justification later on.
On its own, Dogecoin (DOGE) is an inflationary coin without a maximum supply. This means it is a poor substitute for a store of value, forever reliant on sporadic media boosts to gain traction against new DOGE issuance.
This creates a dynamic in which people seek such boosts, as is evident whenever Elon Musk tweets something. Naturally, as with all memecoins, many bagholders bought in at the top, only for the coin to bottom.
According to the Dogecoin Rich List, the token allocation is highly concentrated, with 144 addresses holding 70% of existing DOGE circulation. However, Elon Musk holding one of those addresses remains in the realm of speculation.
What is not in the realm of speculation is that memecoin holders in highly centralized markets remain at the whim of whales. Perhaps, this is all that the lawsuit is about, lashing out at whales with Elon Musk as the most obvious target. After all, Musk is not only publicly exposed, but he is the second richest man, according to Forbes.
Do you think Elon Musk, amid supervising Twitter, Tesla, SpaceX, Neuralink, and The Boring Company, would have sufficient energy to erect a years-long memecoin pyramid scheme? Let us know in the comments below.