Elon Musk alongside Tesla and Space X are being dragged to court for manipulating Dogecoin prices to profit from its trading.
Dogecoin was launched in 2013 by Jackson Palmer and Billy Markus after a meme featuring a Shiba Inu dog. Unlike other popular crypto currencies, it is an inflationary coin, meaning it has a low price with an unlimited supply.
The lawsuit is a class-action in which Keith represents a group of Dogecoin investors who lost their money since 2019 due intentionally manipulated prices. It is brought on the grounds that Musk by misrepresenting Dogecoin as a legitimate investment, violated Racketeer Influenced and Corrupt Organizations Act (RICO) through wire fraud, negligence and deceptive practices and that he thereby unjustly enriched at the expense of the investors. The accusation against Musk is that “he used his pedestal as the world’s richest man to operate and manipulate the Dogecoin pyramid scheme for profit, exposure and amusement”.
“Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading. Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all” Keith’s complaint added.
At the time of filing federal papers the price of a Dogecoin stood at just 4.79 cents, down from its record high 74 cents in May 2021.
Keith’s legal position is that Dogecoin has no real value at all, and purely designed and promoted for a scam. However whether Keith has got hold of convincing evidence to demonstrate Dogecoin is a pyramid scheme is still not clear. In 2021 Musk ran a poll on twitter asking his followers to vote on whether Tesla should accept Dogecoin. Following poll results which saw a nearly 80% in favor, in early 2022 Tesla started accepting Dogecoin as a payment method for its merchandise except Tesla’s electric cars.
Do you want Tesla to accept Doge?
— Elon Musk (@elonmusk) May 11, 2021
The multibillionaire
businessman has been repeatedly endorsing investments in Dogecoin on twitter,
knowing very well that they did not have any value. A repeated pattern ofconstant price fluctuations can be seen following Musk’s endorsing tweets.
Musk’s tweets trigger temporary price hikes which after a few days usually fade
away. Keith claims that Musk garnered support for Dogecoin usage in order to
artificially inflate its prices, thereby allowing them to profit from large
scale trading peaking at certain intervals.
In addition to demanding
$86 billion as compensatory damages, Keith is seeking for an order blocking
Elon and his companies from promoting Dogecoin. Keith also wants Dogecoin
trading to be declared a gambling under federal and New York state laws. And to
make up for the trading losses due to steep plunge of Dogecoin prices, Keith is
also asking for the amount of damages to be tripled. Treble damages are
estimated at $172 billion.
The lawsuit came in at a
time when crypto currencies are seeing a dramatic decline in their market
prices. Federal interest rate hikes are making safe assets like bonds and
Treasuries more attractive than higher-risk digital assets like
crypto. Bitcoin, the world’s largest crypto currency fell by nearly 30% in
the past 7 days hitting well below $20 000per Bitcoin, the lowest since late
2020. Musk made his predictions that crypto currency market is the next sector
of economy to plunge. CoinGecko date shows Ethereum, the second largest crypto currency also
crashing to just under $1044 per ether.
No comments:
Post a Comment