Tesla and Space X CEO Elon Musk is facing allegations of insider trading in a proposed class-action suit filed by a group of investors, claiming that Musk used a variety of methods, including Twitter posts, paid online influencers, and high-profile public appearances, to manipulate the value of the meme-inspired crypto Dogecoin ($DOGE).
Investors in the class action lawsuit argue that these actions, which they believe were taken at their expense, led to losses totaling billions of dollars. The accusations were made in a court filing on Wednesday night in Manhattan.
In the suit, investors assert that Musk, through his control over various Dogecoin wallets, was able to trade to his advantage by using his significant influence to affect the cryptocurrency’s price.
Specific incidents of alleged manipulation include an episode in April when Musk reportedly replaced Twitter’s blue bird logo with the Shiba Inu dog logo of Dogecoin. This move led to a 30% surge in Dogecoin’s price, after which Musk is said to have sold about $124 million worth of the cryptocurrency. The logo was removed from Twitter shortly after.
As CryptoGlobe reported, an analysis of Google search data found that searches for the meme-inspired cryptocurrency exploded nearly 2,000% after Twitter changed its logo to that of Dogecoin.
The court filing accuses Musk of a “deliberate course of carnival barking, market manipulation and insider trading” intended to defraud investors while promoting himself and his companies. In addition to Tesla, Musk also controls SpaceX, a leading manufacturer of rockets and spacecraft, and since last October, the social media platform Twitter.
The investors, who have accused Musk of artificially inflating Dogecoin’s price by over 36,000% within a two-year period before allowing it to crash, have included their latest allegations in a proposed third amended complaint, as part of a lawsuit that began in June of the previous year.
Earlier this year, Musk and Tesla sought to dismiss the second amended complaint, referring to it as a “fanciful work of fiction.” They further argued on May 26 that another amendment was unwarranted.
Hellerstein also concurred with the investors’ request to dismiss the Dogecoin Foundation, a nonprofit organization, as a defendant in the case. Seth Levine, the foundation’s lawyer, described the dismissal as “the appropriate result.”
Notably, tens of billions of DOGE tokens are now being held by long-term investors according to blockchain data, as entities that have been HODLing onto the cryptocurrency for over a year now have 44.8 billion tokens, worth over $4.5 billion.
Featured image via Unsplash.
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