Tesla Inc (NASDAQ:TSLA) CEO Elon Musk is once again under scrutiny as he faces a proposed $258 million class action lawsuit accusing him of insider trading and manipulating the meme cryptocurrency Dogecoin (CRYPTO: DOGE).
Investors allege that Musk used various tactics, including Twitter posts, paid influencers, and his appearance on “Saturday Night Live,” to profit from Dogecoin at their expense, using wallets controlled by him or Tesla. The news was reported earlier by Reuters and Gizmodo.
A key incident mentioned in the lawsuit is Musk’s sale of around $124 million worth of Dogecoin in April, shortly after replacing Twitter’s logo with Dogecoin’s Shiba Inu dog logo. This move resulted in a significant 30% price surge for Dogecoin.
Investors claim that Musk deliberately manipulated the market and engaged in insider trading, defrauding them while promoting himself and his companies.
Musk’s lawyer and Tesla have chosen not to comment on the allegations, and the investors’ lawyer has yet to respond.
This lawsuit has been ongoing since June of last year, with the investors incorporating these new accusations in a proposed third amended complaint.
In April, Musk’s lawyers filed a motion to dismiss the lawsuit, calling the previous claims a “fanciful work of fiction” based on his innocuous tweets.
Financial analyst Ric Edelman expressed strong opposition to Dogecoin two years ago, referring to it as the “bad boy of crypto.”
“They’re discounting all the risks that exist in the economy,” Edelman referred to Dogecoin. “They’re taking an attitude that nothing’s going to go wrong, that there will be no black swans and that everything will continue to be wonderful.
He criticized the lack of legitimate use cases and highlighted the involvement of wealthy individuals, including Musk, in a pump-and-dump scheme that caused extreme price volatility.
Edelman also faulted the U.S. Securities and Exchange Commission for not providing sufficient oversight, creating an environment prone to risky behavior and quick wealth accumulation in the cryptocurrency space.
“Or in a diversified fund, either in coins or in DeFi,” said Edelman in reference to cryptocurrency space. “So there are increasingly a wide variety of investment opportunities. In other words, the investment community is no longer waiting for the SEC to approve of an ETF. There are other ways you can engage. You don’t have to wait for an ETF anymore.”
Produced in association with Benzinga
Edited by Alberto Arellano and Joseph Hammond