Multiple news sites reported on Friday that Dogecoin investor Keith Johnson filed a class-action lawsuit against Elon Musk and his companies Tesla and Spacex on Thursday in Manhattan federal court.
The lawsuit alleges that Elon Musk, SpaceX, and Tesla Inc. engaged in a crypto pyramid scheme (also known as a Ponzi scheme) involving the cryptocurrency dogecoin (DOGE).
The lawsuit also alleges that Musk and his companies "falsely and fraudulently represent dogecoin as a genuine investment when it has no value whatsoever."
Johnson alleged that DOGE is "just a swindle in which 'bigger fools' are duped into purchasing the coin at a premium."
Based on the court complaint, Johnson is an American citizen who claims he was cheated by the defendants' "crypto pyramid scheme" involving dogecoin.
Johnson asserted that Musk, Tesla, and Spacex are engaged in illegal racketeering to raise the price of the popular dog-themed meme coin.
"Since defendant Musk and his companies Spacex and Tesla Inc. began purchasing, creating, promoting, and running dogecoin in 2019, [the plaintiff] and the class have lost nearly $86 billion in this crypto pyramid scheme," according to the court papers.
Since April 2019, Johnson has sought to represent a class of crypto investors who have lost money trading in the crypto.
A lawyer for Johnson did not immediately reply to queries for comment regarding the particular proof his client had or expects to possess that proves dogecoin has no value at all and the defendants operated a pyramid scheme.
The plaintiff is seeking $86 billion in damages and triple damages totaling $172 billion. Moreover, he seeks an injunction prohibiting Musk, SpaceX, and Tesla from promoting dogecoin.
On Twitter, the CEO of Tesla has been pushing dogecoin. He stated that the meme cryptocurrency has monetary potential, referring to it as the "people's crypto."
In May, he disclosed that SpaceX will soon accept DOGE for the purchase of products, and that Starlink subscriptions may follow.
Tesla currently takes meme coins as payment for select products. Musk has reportedly proposed accepting dogecoin payments for some Twitter services if he becomes the social media platform's owner.
The complaint also pointed out that dogecoin's selloff began around the time Musk presented NBC's Saturday Night Live and referred to Dogecoin as "a hustle" during the show's Weekend Update segment.
In February 2021, Tesla announced it had purchased $1.5 billion worth of bitcoin and briefly accepted it as payment for vehicles.