Judge Dismisses $258 Billion Lawsuit Against Elon Musk Over Dogecoin Claims

Judge Alvin Hellerstein of the U.S. District Court for the Southern District of New York has rejected a lawsuit against Elon Musk, requesting $258 billion in damages, nearly two years after it was filed. According to the lawsuit, Musk manipulated the value of Dogecoin, causing investors to suffer large losses.

The plaintiffs in the action argued that Musk fraudulently boosted Dogecoin’s price by over “36,000%” before allowing it to plummet, taking advantage of his position as the richest man in the world. They contended that Musk’s activities resembled a “Dogecoin Pyramid Scheme,” implying that he used the volatility of the market to promote the cryptocurrency for his own financial benefit.

A key moment highlighted in the lawsuit was Musk’s appearance on “Saturday Night Live” in 2021, where he jokingly referred to Dogecoin as “a hustle.” This statement coincided with a sharp decline in Dogecoin’s value, which plummeted more than 25% after reaching an all-time high of $0.73. The token has since struggled to recover those price levels.

Court’s Ruling and Implications

In his August 29 decision, Judge Hellerstein concluded that Musk’s remarks about Dogecoin were “aspirational and puffery, not factual,” emphasizing that “no reasonable investor could rely upon them” when making investment decisions. The judge further noted that the allegations of a “pump and dump” scheme, market manipulation, and insider trading lacked sufficient factual basis. He stated that it was “not possible to understand the allegations that form the basis” of the plaintiffs’ claims.

Musk’s legal team had previously urged the court to dismiss the case, arguing that his social media endorsements of Dogecoin were too vague to constitute fraud. The court’s decision to dismiss the lawsuit reflects this perspective.

Despite his early enthusiasm for cryptocurrencies, Musk has gradually distanced himself from the sector. Tesla, his electric vehicle company, initially accepted Bitcoin as a payment method but reversed this decision soon after Musk’s SNL appearance. However, Tesla reportedly continues to hold Bitcoin, as indicated in its Q1 2024 earnings report.

Following the dismissal of the lawsuit, Dogecoin’s price remained stable, though the token is still down 86.4% from its peak.