Elon Musk faces fresh allegations he engaged in illegal insider trading of Dogecoin by manipulating its price for personal gain.
In a third motion to amend their June 2022 lawsuit, plaintiffs accuse the Twitter owner and prolific social media poster of luring in willing buyers in order to unload $124 million worth of the canine-themed crypto into a bull market.
In doing so, the centibillionaire committed fraud by employing “a deliberate course of carnival barking” in order to “pad his obscene fortune” at the expense of unwitting retail investors.
“Musk knows that the bulk of his followers are not sophisticated in business or investment, and Musk uses this knowledge to manipulate them,” the claim said, arguing he helped juice the token’s price by 36,000% at one point through his deliberate use of Twitter.
The latest evidence provided to substantiate the claim was the temporary change of Twitter’s logo between April 3 and April 6, replacing the familiar blue bird with the Shiba Inu from Dogecoin.
Some took this as a sign that Musk, a crypto fan looking to incorporate payments into his Twitter app, would likely choose to support Dogecoin over rival tokens. This would drive up demand since it would create actual utility in a token that to date is primarily a memecoin for speculators.
Only a relatively small number of establishments accept payment in Doge.
As a result, the price surged as much as 30% during the period. Subsequently, two wallets the complaint alleges belonged to Musk sold between April 4 and April 6 a total of 1.1 billion and 300 million in Doge, respectively, for $95 million and $29 million.
In a separate statement, presiding judge Alvin Hellerstein said he will “likely” allow the claim to be amended.
When reached on Thursday by Reuters, Musk's lawyer Alex Spiro declined to comment.
The entrepreneur’s legal team argued at the end of March for the lawsuit to be dismissed under the argument that “tweeting words of support” does not constitute fraud.
Able to manipulate Dogecoin price at will
Website Coin Market Cap lists Dogecoin as the eighth-largest crypto token by value, weighing it at just over $10 billion. It was once worth nine times that amount, however, when it hit its peak in early May 2021.
The crypto crash—triggered by the collapse of the TerraUSD stablecoin—was still a year away at the time, but more importantly, Doge soared to that height precisely because of Musk.
The Tesla CEO guest-hosted Saturday Night Live, during which he joked the token would be his Mother’s Day gift and engaged in other crypto-related gags.
“In the absence of a sustained publicity campaign by the world’s richest man, its value would be little to nothing,” the claim asserted.
At one point CEO of PayPal, Musk has explained his fascination with Dogecoin as being rooted in the disruptive potential of the technology to help facilitate online payments—as well as his love of dogs. He himself owns a Shiba Inu he calls Floki, which prompted supporters of the tycoon to create a token featuring the dog’s name in its honor.
Musk’s accusers may, however, find it difficult to prove their claim that he was “preying on the earnest hopes of vulnerable Americans, including war veterans, blue-collar workers and the elderly.”
That is because Musk simply tweeting a picture of his dog perched on the CEO seat at Twitter headquarters is alone cause enough for speculators to pile up on canine-based meme tokens instantaneously.
“One man, Elon Musk, can manipulate the price of Dogecoin at will,” the claim asserted. But someone still has to choose to be on the other side of that trade.
