In a proposed class action, investors have levelled accusations against Elon Musk, the CEO of Tesla Inc (TSLA.O).
Specifically, they accused him of insider trading and manipulating the cryptocurrency Dogecoin. Their allegations suggest that Musk’s actions cost them billions of dollars and violated securities laws. The investors assert that Musk intentionally carried out these actions.
Additionally, they claim that the purpose of these actions was to engage in market manipulation and insider trading. As a result, the lawsuit seeks to hold Musk accountable for his alleged misconduct.
The allegations state that Musk aimed to trade profitably through his actions. Further, he carried out these actions at the expense of investors.
Exploiting Social Media and Publicity Stunts
The investors assert that Musk used various tactics to drive the price of Dogecoin in his favour. These tactics included Twitter posts, paid online influencers, and his appearance on NBC’s “Saturday Night Live.” The investors specifically point to incidents where Musk sold about $124 million of Dogecoin in April.
This sale coincided with Musk replacing Twitter’s logo with Dogecoin’s Shiba Inu dog logo, resulting in a significant increase in the cryptocurrency’s value. These actions, the lawsuit claims, constituted a deliberate course of carnival barking, market manipulation, and insider trading.
In October, Elon Musk purchased Twitter, further expanding his association beyond Tesla Inc to include SpaceX, a renowned rocket and spacecraft manufacturer.
In response to the accusations, Musk and Tesla’s lawyer, Alex Spiro, declined to comment. The investors’ lawyer, on the other hand, has not yet provided a response.
The Alleged Scheme of Elon Musk : Long-Term Impact
The investors involved in the lawsuit argue that Elon Musk deliberately manipulated Dogecoin’s price, inflating it by more than 36,000% over two years, and then allowed it to crash. They assert that this alleged scheme allowed Musk to defraud investors while promoting himself and his companies.
As part of an ongoing lawsuit that began in June, the investors have included these latest accusations in a proposed third amended complaint.
Elon Musk Legal Proceedings and Dismissal
In March, Musk and Tesla sought to dismiss the second amended complaint, referring to it as a “fanciful work of fiction.” However, on May 26, they claimed that another amendment was unjustified.
U.S. District Judge Alvin Hellerstein, in a Wednesday order, expressed his likelihood of allowing the third amended complaint, stating that it would not likely prejudice the defendants. Judge Hellerstein granted the investors’ request to dismiss the nonprofit Dogecoin Foundation as a defendant, as its lawyer, Seth Levine, deemed the dismissal to be the appropriate result.
The case, identified as Johnson et al v. The U.S. is currently hearing the case of Musk at the District Court for the Southern District of New York. Elon Musk faces serious allegations of insider trading and market manipulation that could have far-reaching implications for both himself and the cryptocurrency community.
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