Court Dismisses Dogecoin Manipulation Claims Against Elon Musk and Tesla

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated:

August 30, 2024 00:08 EDT

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Elon Musk, along with Tesla, his EV company, successfully dismissed a federal lawsuit that accused them of manipulating Dogecoin, resulting in considerable financial losses for investors.

US District Judge Alvin Hellerstein in Manhattan made the ruling on Aug. 29, a court filing shows.

Investors sued Musk and Tesla in June 2022. At the time, Musk faced accusations of manipulating Dogecoin’s price by using his influence through Twitter posts, appearances on “Saturday Night Live,” and other publicity stunts.

Allegedly, he sold Dogecoin during times when his actions, such as changing Twitter’s logo to the Dogecoin Shiba Inu dog, were expected to increase its value. This strategy allegedly allowed him to profit from insider trading.

Further, the lawsuit claimed Musk deliberately manipulated the market through public endorsements and statements about Dogecoin, which misled investors. Also, the suit labeled these actions as “puffery” rather than based on facts.

Elon Musk Calls Dogecoin Lawsuit ‘Fanciful Work of Fiction’

As a result, the plaintiffs demanded $258b in damages, citing an alleged drop in Dogecoin’s value due to Musk’s influence.

But on March 31, 2023, Musk moved to dismiss the lawsuit. In his defense, Musk’s legal team described the claims and the $258b damage request as a “fanciful work of fiction.” As a result, they argued for the case to be thrown out.

Judge Rules Musk’s Dogecoin Tweets Were ‘Puffery,’ Dismisses Fraud Allegations

The judge pointed out that the defendants misinterpreted several of Musk’s tweets about Dogecoin. For example, they misrepresented his claim of becoming Dogecoin’s official CEO and his plan to send a physical Dogecoin to the moon on a SpaceX vehicle.

Hellerstein added that Musk’s tweets were “aspirational and puffery, not factual and susceptible to being falsified.”

Further, the judge ruled that no reasonable investor could base a securities fraud claim on Musk’s tweets. In his view, it was “not possible to understand” how these tweets supported the investors’ market manipulation and insider trading claims. Therefore, the court dismissed the allegations.

Dogecoin was last down 0.3% on the day, trading around $0.10.