Elon Musk’s love affair with tweeting about meme cryptocurrency Dogecoin may be coming back to bite the prospective Twitter owner.
The tech billionaire, along with his companies Tesla and SpaceX, are now facing a federal lawsuit from a Dogecoin investor alleging Musk operated a pyramid scheme via Dogecoin. The plaintiff, Keith Johnson, accused Musk of using “his pedestal as World’s Richest Man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement,” according to the complaint. He is seeking $86 billion (equitable to the overall loss in value since Dogecoin’s peak in May 2021) and wants the value tripled.
Johnson filed the suit Thursday in the Southern District of New York and is seeking class-action status.
The filing claims that Musk and the companies of which he serves as CEO “were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading.” The date referenced aligns with when Musk first began tweeting about the Shiba Inu-inspired coin in April 2019, saying “Dogecoin might be my fav cryptocurrency. It’s pretty cool.”
According to Decrypt, Musk reiterated on Twitter that he had no crypto holdings beyond .25 Bitcoin given to him by a friend. After that initial April 2019 tweet, Musk continued tweeting about Dogecoin, which coincided with spikes in both searches of the meme coin and its increase in value. Dogecoin’s value jumped from $0.057 USD to $0.37 USD by the end of April 2019.
At its peak in May 2021, Dogecoin was worth $0.73 USD. This high mark coincided with Musk’s appearance on Saturday Night Live, and the coin tumbled almost immediately after. Musk infamously referred to Dogecoin as “a hustle” during a “Weekend Update’ sketch on the episode he hosted on May 8, 2021 while portraying a fictitious financial expert.”
Within two weeks of Musk’s stint as SNL host, the price of Dogecoin lost more than half of its value. As of Thursday, Dogecoin’s current value sits at $0.056 USD.
However, Musk’s relationship with Dogecoin goes even further. In 2019, he began advising a team of part-time Dogecoin developers to improve the efficiency of its blockchain. According to Ross Nicoll, one of the developers that worked with Musk, the Tesla CEO offered to fund their work and continued to provide advice after they declined his offer.
In addition to the $258 billion dollar sum, the lawsuit also requests that Musk and the companies he runs be barred from promoting Dogecoin and for trading Dogecoin to be declared gambling under both federal and New York state law.
Neither Musk nor representatives of Tesla or SpaceX have commented publicly on the lawsuit.