Elon Musk is being sued for $258 billion over accusations that he ran a pyramid scheme in order to promote a cryptocurrency named Dogecoin.
Launched in 2013 as a joke, the digital asset was purely designed to mock Bitcoin.
However, the DOGE cryptocurrency hit the headlines after climbing up dramatically in 2021.
In a short four months’ time, Dogecoin rallied from $0.004 to $0.73 – a gain of over 18,000%.
During that time, Musk tweeted about DOGE regularly and even called himself the “Dogefather”, but on the day the coin started to fall, he described it as a “hustle” on the American late-night TV sketch comedy show Saturday Night Live.
The token’s price surged by around 4,000% in 2021, but since then it has fallen dramatically. On Tuesday (June 21), Dogecoin traded at $0.06, compared to a May 2021 peak of $0.74. This means the dog-faced cryptocurrency has fallen 92% from its record high seen last May.
The world’s wealthiest man, along with the two companies he is CEO of (Tesla and SpaceX), are accused of promoting Dogecoin to drive up the price of the cryptocurrency and profit from its trading.
An American crypto investor named Keith Johnson went to court, and alleges Musk that he was “defrauded out of money” as a result of the endorsements made by the entrepreneur himself via his tweets and videos on Dogecoin.
Filed in a New York court, the complaint states, “Musk used his pedestal as the world’s richest man to operate and manipulate the Dogecoin pyramid scheme for profit, exposure and amusement.”
Johnson’s attorneys assert that the cryptocurrency “has no value at all”, and court documents feature quotes from billionaires Bill Gates and Warren Buffett, who both have questioned the value of such digital assets.
The complainant wants to represent those who have lost money through Dogecoin since 2019.
According to the lawsuit, “Since defendant Musk and his corporations SpaceX and Tesla, Inc. began purchasing, developing, investing, promoting, supporting and operating dogecoin in 2019, plaintiff and the class have lost approximately $86 billion” in what it called a “crypto pyramid scheme.”
Johnson is suing for $86 billion in damages, representing the drop in the crypto’s value, and asking to triple those losses with an additional $172 billion.
Aside from his demands for $258bn in damages, he also wants Musk and his companies Tesla and SpaceX to be banned from promoting DOGE.
Earlier this year, Tesla started accepting Dogecoin as a payment method for merchandise, but not for its electric cars.
Elon Musk, who is currently in the process of taking over Twitter, has yet to comment on the lawsuit.