An investor in dogecoin, a cryptocurrency originally created as a joke but whose value rose and fell when promoted by Elon Musk, has filed a $258 billion lawsuit against the billionaire and his Tesla companies. and SpaceX.
Keith Johnson, who claims to have lost money after investing in dogecoin, describes himself as a “US citizen who was defrauded” by what he called a “dogecoin cryptocurrency pyramid scheme”.
He accuses Musk, electric car company Tesla Inc. and space tourism company SpaceX of “illegal organized crime” to inflate the price of dogecoin, and then bring it down. Musk is CEO of Tesla and SpaceX.
The investor asks that his motion, filed in a New York court, be classified as a class action on behalf of those who have suffered losses from investing in dogecoin since 2019.
Since Musk started promoting the virtual currency, investors have lost about $86 billion, Johnson estimates. He would like Musk to reimburse investors that amount, in addition to paying double in damages: another $172 billion.
“Defendants were aware since 2019 that dogecoin was worthless and yet they promoted dogecoin for profit,” the lawsuit reads. “Musk used his pedestal as the richest man in the world to operate and manipulate the dogecoin pyramid scheme for profit, exposure and fun.”
Johnson named Tesla, Musk’s electric car maker, in the lawsuit as the company accepts dogecoin as payment for certain derivative products. SpaceX was also included for naming one of its satellites dogecoin. The author compared dogecoin to a pyramid scheme, as the virtual currency has no intrinsic value and is not a product. In addition, it is not backed by a tangible asset and the number of “currencies” is unlimited.
Founded in 2013, the creators of dogecoin say it was intended as an ironic response to two big internet phenomena: cryptocurrencies like bitcoin and the popular meme of a Japanese Shiba Inu dog.
Dogecoin’s price traded in fractions of a cent for most of its existence. However, the value rose in early 2021, reaching $0.73 in May of that year, triggered by the Reddit forum, in a similar move to what happened to the video game store chain GameStop, and after well-received tweets. Musk’s humors on the matter.
These types of actions are called meme stocks or “meme actions”. These are stocks that gain popularity among investors through social media. These are often company actions that have gained momentum thanks to users of forums like Reddit.
For example, on this forum, the group called WallStreetBets coordinated a series of maneuvers to boost GameStop’s shares on the stock exchanges.
Shortly afterward, a Reddit user calling himself “Satoshi” created the SatoshiStreetBets forum, with the original aim of making a “GameStop effect” with the cryptocurrency market. One of the first posts on the forum read: “Let’s turn DOGECOIN into something. That’s it. That’s the post.”
Dogecoin is known as memecoin or meme cryptocurrencies, which are digital currencies whose value has more to do with the popularity of social networks than their quality as a software product. Dogecoin is one of the most well-known meme coins, but there are many others.
The popularity of dogecoins prompted many users to start buying them and the value of the coin began to soar, at one point becoming the ninth most valuable cryptocurrency in the world. However, last week it was worth less than six cents.
In Johnson’s opinion, Musk contributed to increasing “the price, market capitalization and trading volume of dogecoin” through his promotion.
As an example, he featured tweets from Musk, the richest man in the world who has more than 98 million Twitter followers, including one in which he promised that Spacex would “put a literal dogecoin on the literal moon.”
Lawsuits from investors who feel cheated by the virtual currency’s promises are on the rise in the US.
Johnson’s complaint includes comments from Warren Buffett, Bill Gates and others who question the cryptocurrency’s value.
Neither Tesla, SpaceX, nor Musk’s attorney so far have responded to requests for comment. He did not write anything on his Twitter account on the topic.
This text was originally published here.
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