A federal judge threw out a $258 billion lawsuit that had accused Elon Musk of orchestrating a racketeering scheme to manipulate the price of Dogecoin, a win for the billionaire in a high-stakes legal fight.
The class action suit, according to a Reuters report, first filed in June 2022, has had a long and circuitous history, until its final arguments before Manhattan District Judge Alvin Hellerstein on August 30, 2024.
One Keith Johnson filed a class-action complaint against Musk alleging that his constant support of Dogecoin set off a rocketing price frenzy followed by a dizzying drop that cost many investors much.
Decision Of The Court
Judge Hellerstein reasoned that allegations against Musk were unfounded and characterized Musk’s remarks about Dogecoin as “aspirational puffery.”
In other words, the judge claimed that Musk’s publicly published comments and tweets were more about hype than actual hard data.
The class-action lawsuit claimed that Musk operated a “pump and dump” scheme by inflating the value of Dogecoin using his social media profile and then selling his interest to turn a profit.
The judge did, however, note that the claims were light on information and nebulous in nature, not supported by the relevant detail necessary to move forward with such a suit.
Elon Musk and Tesla have won a major legal battle as a federal judge dismisses the $258 billion lawsuit accusing them of manipulating Dogecoin. #ElonMusk #Tesla #Dogecoin #CryptoLawsuit #CourtRuling #DogecoinSurgehttps://t.co/qlSVsQX6q7 pic.twitter.com/HWI5RAscdy
— Republic (@republic) August 30, 2024
In the case of Musk, whose tweets usually send the Dogecoin community abuzz, especially after he appeared on “Saturday Night Live” and Musk briefly turned Twitter’s logo into the Dogecoin logo, were viewed as seminal moments in the coin’s stratospheric rise.
The judge said no reasonable investor could rely on Musk’s public statements as the basis for securities fraud despite its outlandish claims.
Elon Musk Happy
The mood flipped dramatically after the ruling. Alex Spiro, Musk’s lawyer, said that his client was relieved and pleased. He added that today was “extremely fantastic for Dogecoin.”
By contrast, the plaintiffs-who amended their complaint several times-walked away from court today with no clear avenue forward. It was dismissed with prejudice, meaning they can’t reopen action, slams the door on their allegations against Musk and Tesla.
Formally known as Johnson v. Musk, this ruling received quite a lot of media attention due in large part to Musk’s fame and his very long relationship with Dogecoin-a cryptocurrency that began as a joke but became quite serious to its devotees.
The result of this case may set a dramatic precedent for the decisions of future cases involving meme coin investing and social media promotion.
Broader ImplicationsThe settlement has raised serious questions over the responsibilities of high-profile figures promoting cryptocurrency. Musk is renowned for his light-hearted, sometimes erratic tweets about Dogecoin, which have equally given cause for investor glee and frustration.
Though his comments might amuse some as light-hearted entertainment, others say they had the potential to carry significant financial consequences.
Just as Dogecoin searches for its place in the crowded cryptocurrency landscape, the legal landscape with regard to endorsements will also continue to shift.
Investors may have to be more careful and do their own research before making trading decisions based on celebrity endorsements.
The decision by the court lets not only Elon Musk but also Tesla off serious allegations, underlining the complex connection between social media influence and financial markets.
A reminder of the many risks in investments tied to digital currency, particularly with the whim of famous characters, this story makes many investors temper excitement over Dogecoin, realizing that the market can be quite unpredictable, and caution is thus rather significant.
Featured image from Technext, chart from TradingView