Elon Musk's well-known support for Dogecoin has landed the billionaire entrepreneur a $248 billion lawsuit from a cryptocurrency investor for allegedly running a pyramid scheme.
In a complaint filed in federal court in Manhattan, plaintiff Keith Johnson accused Musk of racketeering for touting Dogecoin and driving up its price, only to then let the price tumble. The accusations are serious but appear to be quite difficult to demonstrate.
"Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading. Musk used his pedestal as World's Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement."
Excerpt from Keith Johnson's complaint
In the complaint, the plaintiff argues that Dogecoin's selloff began around the time Musk hosted the NBC show "Saturday Night Live," on which occasion he called Dogecoin "a hustle" while playing a fictitious financial expert on the show's "Weekend Update" segment (see video at the top of this page).
Johnson is seeking $86 billion in damages, representing the decline in Dogecoin's market value since May 2021, and wants the sum tripled. He also seeks to block Musk and his companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law.
Reuters reached out to a lawyer for Keith Johnson asking what specific evidence his client has or expects to have that proves Dogecoin is worthless and the defendants ran a pyramid scheme. The news agency did not receive a reply.
Elon Musk openly supported Dogecoin in 2021, tweeting in May that he was working with the cryptocurrency's developers to improve transaction efficiency. Earlier in the year, he even ran a poll on social media asking if Tesla should accept Dogecoin as a form of payment. Then in May 2022, he said on Twitter that Dogecoin can be used to buy Tesla and SpaceX merchandise.
According to Investopedia, Dogecoin was started in 2013 by Jackson Palmer and Billy Markus, initially as a joke based on a popular meme featuring a Shiba Inu dog.
While created seemingly as a joke—it has the image of a Shiba Inu as its logo—the peer-to-peer, open-source cryptocurrency is derived from Litecoin and uses the same proof-of-work technology. Notable features are its low price and unlimited supply, which is why it is labeled as an "inflationary coin." It is typically used as a tipping currency for social media content by a loyal community of supporters.