Elon Musk and Companies Sued Over Alleged Dogecoin ‘Ponzi Scheme’ 

Updated by Geraint Price
In Brief
  • Investor files $258 billion suit against Elon Musk and his companies.
  • He is seeking to stop Musk and others from promoting the token.
  • Johnson also wants investing in DOGE to be classified as gambling under federal and New York state law.
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Elon Musk and his companies Tesla and SpaceX are being sued over claims they have been involved in a Ponzi scheme to back the Dogecoin crypto.

The lawsuit claims that Musk and his companies were involved in a racketeering effort to raise the price of the DOGE token. 

Investor Keith Johnson claims that Musk and the companies were promoting the token as a legitimate investment when it has no value at all. He represents a larger group of investors who have lost money by investing in the asset.

Doge has no value, claims investor

“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” Johnson said in his complaint, filed in federal court in Manhattan.

“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,” the lawsuit continues.

“It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”

Johnson is seeking $86 billion in damages, plus further damages of $172 billion, as well as an order blocking Musk and his companies from promoting Dogecoin. 

DOGE Price: TradingView

He further wants Dogecoin trading to be classified as gambling under federal and New York state law. The price of DOGE dropped 6% following the news. 

The complaint said Dogecoin’s selloff began around the time Musk hosted the NBC show Saturday Night Live and, playing a fictitious financial expert on a Weekend Update segment, called Dogecoin “a hustle”.

Statements from Elon Musk are a common occurrence in the crypto market and often have consequences. Johnson was likely referring to Musk’s influence and how it can result in a massive jump in DOGE’s prices.

Musk recently reacted to Dogecoin’s founder, saying that 95% of crypto are scams. He has yet to comment on the action.

The case is listed as Johnson v. Musk, 22-cv-05037, US District Court, Southern District of New York (Manhattan).

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