Elon Musk was hit with a $258 billion lawsuit over the tech mogul’s backing of digital currency that alleges the CEO of Tesla and SpaceX is “engaged in a crypto pyramid scheme by way of dogecoin cryptocurrency.”
In federal court papers filed in Lower Manhattan, the plaintiff, Keith Johnson, names Musk as well as his electric car company, Tesla, and the space tourism firm SpaceX.
Johnson wants $86 billion in damages, plus trebled damages of $172 billion, for losses incurred from trading dogecoin since 2019. He is seeking to represent a class of people who have lost money investing in dogecoin.
The lawsuit also demands that Musk, Tesla and SpaceX cease promoting dogecoin.
“Dogecoin is not a currency, stock, or security. It’s not backed by gold, other precious metal, or anything at all. You can’t eat it, grow it, or wear it,” according to the court filing.
The lawsuit continues: “It doesn’t pay interest or dividend. It has no unique utility compared to other cryptocurrencies…It’s not secured by a government or private entity.”
“It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”
Musk has not responded to the lawsuit.
Earlier this year, Musk revealed that Tesla had begun accepting dogecoin for transactions in its online store. SpaceX is expected to follow suit in the near future.
The announcement sent the value of dogecoin surging.
Tesla also spent $1.5 billion on bitcoin in February 2021 – a move the electric car marker said would provide “more flexibility to further diversify and maximize returns on our cash.”
At the time of the disclosure, the price of bitcoin was hovering in the $30,000 to $40,000 range.
Musk this week broke his silence on the recent collapse in digital asset prices — and responded to a meme revealing the next sector of the economy he expects to plunge.
Musk reacted to the steep selloff in bitcoin, the largest cryptocurrency by market cap, which briefly plunged below $21,000 — its lowest level since December 2020.
“Cryptonight,” Musk tweeted Tuesday night.
Musk also replied to a meme posted by dogecoin co-creator Billy Markus.
The cartoon image showed the grim reaper approaching a door labeled “real estate” after previously making grisly stops in rooms labeled “stocks” and “cryptocurrency.”
“True,” Musk said in response to the post.
The billionaire has repeatedly touted investments in cryptocurrencies in recent years. In March, he declared that he “won’t sell” his holdings in bitcoin, Ethereum and Dogecoin despite rising inflation and economic uncertainty that has led many investors to sell riskier asserts.
The world’s richest man has never disclosed how much of his wealth is tied to crypto.
Dogecoin was trading 4.79% higher on Thursday afternoon while other well-known cryptocurrencies like bitcoin were trading lower.
One dogecoin was worth just north of 6 cents — well off its all-time high of 74 cents back in May.
Bitcoin fell 1.07% to $21,062.88. Ethereum rose 0.53% to $1,113.69, according to Coinbase data.