Elon Musk requested a U.S. judge on Friday to dismiss a massive $258 billion racketeering lawsuit that accuses him of operating a pyramid scheme to bolster the cryptocurrency Dogecoin. In a late-night filing in Manhattan federal court, Musk's and Tesla Inc's (TSLA.O) lawyers described the lawsuit filed by Dogecoin investors as a "fanciful work of fiction" that revolves around Musk's "innocuous and often silly tweets" concerning Dogecoin.
According to the lawyers, the investors failed to clarify how Musk aimed to defraud anyone or what risks he withheld. They also argued that Musk's statements such as "Dogecoin Rulz" and "no highs, no lows, only Doge" were too ambiguous to substantiate a fraud allegation.
Musk's legal team stated, "There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion. This court should put a stop to plaintiffs' fantasy and dismiss the complaint." In a footnote, the lawyers further disputed the investors' assertion that Dogecoin could be considered a security.
Evan Spencer, the investors' attorney, expressed confidence in the case's success via email. The investors accused Musk, currently the world's second-richest person according to Forbes, of intentionally inflating Dogecoin's price by more than 36,000% over two years before letting it plummet. They argued that this generated billions of dollars in profit at the expense of other Dogecoin investors, even though Musk was aware the currency lacked intrinsic value.
Investors also referenced Musk's appearance on a "Weekend Update" segment of NBC's "Saturday Night Live," where he played a fictional financial expert and referred to Dogecoin as "a hustle."
The damages sought in the lawsuit, $258 billion, amount to triple the estimated decline in Dogecoin's market value in the 13 months before the lawsuit was filed.
The Dogecoin Foundation, a nonprofit organization, is also named as a defendant in the case and is seeking the dismissal of the lawsuit.
Musk's tweets on his Twitter account, which he owns, have sparked several legal battles. On February 3, Musk secured a court victory when a San Francisco jury determined he was not liable for an August 2018 tweet in which he claimed to have secured financing to make Tesla a private company.
The case, Johnson et al v. Musk et al, is being heard in the U.S. District Court for the Southern District of New York under the case number 22-05037.
