Elon Musk, Tesla, and SpaceX are being sued for an astounding $258 billion—not a typo, that’s billion—for running a pyramid scheme through the Dogecoin cryptocurrency. According to a Reuters (opens in new tab) report, the suit was filed by Dogecoin investor Keith Johnson, who accused Musk of using his wealth and position as CEO of the two companies to promote Dogecoin to drive up its price, before ultimately letting it fall.
“Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading,” the complaint says. “Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement.”
Dogecoin was introduced in 2013 mainly as a joke, but there is no such thing as satire under capitalism, and in very short order it became the first meme coin, and a legitimate (such as they are) cryptocurrency. Its value was flatlined near zero for years until Musk tweeted about it (opens in new tab) in late 2020, which caused a sharp jump in price. Subsequent tweets in 2021 pushed it even higher; it peaked in May 2021 at $0.74 but has since come crashing down, shedding more than 90% of its price (opens in new tab), and currently sits at roughly $0.06.
Ironically, the suit claims that the Dogecoin dump began when Musk hosted Saturday Night Live, which also happened in May 2021: During a Weekend Update segment, Musk appeared as a cryptocurrency expert, but after trying and failing several times to explain what Dogecoin is, he ultimately agreed with the host that the whole thing is “a hustle.”
Johnson wants Musk and his companies prohibited from promoting Dogecoin, and for trading Dogecoin to be declared gambling under federal and state laws. He also wants, again, $258 billion: $86 billion in actual damages, representing the loss of Dogecoin value since May 2021, plus a claim for treble damages. It seems like a long shot—filing a lawsuit is a long way from winning one (or even having it heard) and even if Johnson comes out on top, Musk is rich but he’s not that rich—but I guess if you’re going to take a shot, you might as well aim high.
Musk isn’t the only wealthy person to run into trouble for promoting Dogecoin. Former anti-virus guru John McAfee was charged with fraud (opens in new tab) in 2021 for running schemes involving multiple cryptocurrencies including Dogecoin. Shortly before McAfee was scheduled to be extradited to the US to face charges, he was found dead (opens in new tab) in a Spanish prison cell.