Tesla’s driving force, billionaire Elon Musk, finds himself under the legal spotlight as he faces allegations of insider trading concerning the volatile cryptocurrency, Dogecoin. A proposed class-action lawsuit, led by a group of investors, points an accusing finger at Musk for allegedly using diverse tactics to manipulate the digital currency’s price and profiting from the manoeuvre. This, they claim, has cost them billions.
The lawsuit, filed at a Manhattan federal court, highlights various tactics employed by Musk. It alleges that he utilized Twitter posts, engaged online influencers, and even exploited his appearance on the popular NBC show, Saturday Night Live. These well-calculated “publicity stunts,” the lawsuit suggests, allowed Musk to trade lucratively through several Dogecoin wallets believed to be under his or Tesla’s control.
One such manipulation tactic highlighted in the lawsuit was when Musk sold Dogecoin worth approximately US$124 million in April. This sale followed his move to replace Twitter’s blue bird logo with Dogecoin’s trademark shiba inu dog logo, triggering a 30% surge in the cryptocurrency’s value. The lawsuit points out that this occurred after Musk’s acquisition of Twitter in the previous October.
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The claimants in the lawsuit accuse Musk of embarking on a “deliberate course of carnival barking, market manipulation and insider trading.” They assert that this course enabled the billionaire, listed by Forbes as the world’s second-richest person, to deceive investors and promote his personal and corporate interests. They further blame Musk for driving up Dogecoin’s price more than 36,000% over two years and subsequently triggering a crash.
This latest round of allegations have been included in a proposed third amended complaint in a lawsuit that was initially launched in June 2022. Responding to the previous accusations, Musk and Tesla had branded the second amended complaint a “fanciful work of fiction,” dismissing it as unjustified.
However, US District Judge Alvin Hellerstein appears inclined to give the third amended complaint a chance. He declared in a recent order that it is “likely” to be permitted, noting that the defendants would not likely suffer any prejudice.
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