Gate.io Blog Elon Musk Is Accused Of Manipulating Dogecoin

Elon Musk Is Accused Of Manipulating Dogecoin

22 July 14:12

[TL; DR]

Elon Musk is one of the individuals that can affect the rise and fall of crypto prices.

It is unclear about the “back-door” relationship that exists between Elon Musk and Dogecoin.

On the 16th of June, 2022, Keith Johnson slammed a lawsuit on Elon Musk for running a pyramid scheme to promote Dogecoin.

According to Keith Johnson, a Dogecoin investor, Elon Musk has, over the years, promoted Dogecoin and led to the acceptability of the meme coin by a lot of investors.

Keith Johnson is seeking about $258 billion in damages because the meme coin has no value, as painted by Elon Musk and his companies, Tesla and SpaceX.

In the class action lawsuit filed in Manhattan, Keith Johnson wants the court to declare the trading of Dogecoin as illegal under the United States and New York law.

While there is no direct correlation or relationship between Dogecoin and Elon Musk, the court has much to unravel with the evidence presented by Keith Johnson.

Keywords: Elon Musk, Dogecoin, investment, promote, meme coin, lawsuit, Keith Johnson.

[Full Article]

Over the years, we have seen the cryptocurrency ecosystem being controlled by some variables. Some of these variables influencing the price and fall of digital assets include individuals and personalities. Elon Musk is one of these individuals who has continued to be a determinant factor in the soar or surge in price value of cryptocurrencies.

Recently, we identified his camaraderie with Dogecoin, which was eventually followed by a lawsuit. This article will identify the relationship between Elon Musk, his conglomerates, and Dogecoin. In addition, we shall examine the “Manipulation” lawsuit against Elon Musk.

Let’s dig in!

The Dogecoin

Image: Finance Magnates

Dogecoin is an open-source cryptocurrency launched by Jackson Palmer and Billy Markus in 2013. This meme coin uses a proof of work mining mechanism. When Palmer and Markus found Dogecoin, it was considered a faster alternative to Bitcoin. Dogecoin is regarded as a fun and friendly internet currency.

Dogecoin started as a satire on several fraud crypto coins that had sprung up at the time. It took its name and logo from a Shiba Inu meme that was earlier launched and became viral shortly after its launch.

The development of Dogecoin is considered the first “meme coin” and the first “Dog coin.” Within the first two weeks of its launch, Dogecoin had started gathering buzz and attention, and it was easy to reach a market value of $8 million. Between 2017 and 2018, Dogecoin surpassed the $1 billion market cap, and by October 2021, the market cap was about $31.9 billion.

Elon Musk’s Relationship With Dogecoin

Image: Nairametrics

There are several instances where Elon Musk, alongside his companies, has shown keen interest and promoted Dogecoin. It is, however, suitable to identify a few of these instances.

Firstly, in April 2021, Elon Musk tweeted, "Doge barking at the moon.” This tweet was where it all started. A couple of days later, Elon teased his followers about the possibility of Dogecoin featuring in his “Saturday Night Live” program.

On another occasion, Musk endorsed Dogecoin over Ethereum. He said it is easy to access Decentralized Finance (DeFi) using Dogecoin (DOGE).

Finally, in January, Elon Musk announced that Tesla would accept DOGE, a meme-based cryptocurrency, as payment for its merchandise, such as the “GigaTexas” belt buckle and mini models of its electric vehicle.

Elon Musk And The Alleged Manipulation Lawsuit

Over the years, Elon Musk has become a direct influence in the cryptocurrency ecosystem. His reactions and actions have led to the rise and fall in the price value of cryptocurrency tokens.

Elon Musk has publicly promoted and aligned with one of the cryptocurrencies, DogeCoin. Several times, Elon Musk has promoted DogeCoin leading to the rise in the price value. Elon Musk eventually acquired the “self-proclaimed” name of ‘Doge's father.’

Investigation shows that several individuals, investors, and crypto enthusiasts took an interest in the meme coin and acquired several units due to the publicity and promotion by Elon Musk.

Since April 2021, when Elon Musk tweeted, “Doge barking at the moon,” the token's value has soared. Similarly, when he called himself the “Dogefather” in a tweet, the value of Dogecoin increased by 20%.

Surprisingly, on the 16th of June, 2022, Keith Johnson, a Dogecoin investor, sued Elon Musk for running a “pyramid scheme” to support and promote Dogecoin. He is requesting about $258 billion in damages.

According to Keith, Elon Musk touted Dogecoin, which drove up its price in an attempt to manipulate the cost of the meme coin. He said, “ Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading………… Musk used his pedestal as World’s richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure, and amusement.”

In a class action lawsuit filed by Keith Johnson in Manhattan, he accused Elon Musk of using his conglomerates, Tesla and SpaceX, to operate an illegal racketeering enterprise to inflate the price value of the Dogecoin (DOGE).

Dissecting the lawsuit and the allegations against Elon Musk, the allegation seeks to prove that Elon, alongside Tesla and SpaceX, deceitfully promoted Dogecoin as a real investment opportunity, which has no inherent value.

Keith Johnson is seeking $86 billion in damages with an additional $172 million in triple damages. He wants the court to grant an injunction barring Elon Musk and his companies from marketing or promoting Dogecoin. Finally, Keith Johnson wants the court to declare the trading of Dogecoin illegal under the United States and New York law.

Since the lawsuit was filed, Elon Musk has not commented on the case. The allegation of manipulation leveled against him and his company, his attorneys, have also refused to comment. Experts have studied the situation closely and come up with some insinuations.

Elon Musk, Tesla, and the moon tourism operator; SpaceX has shown interest in the meme coin and have directly or indirectly promoted the token. In April 2019, when Elon first tweeted about Dogecoin, the price value of Dogecoin stood at $0.002927. The meme coin reached its peak of $0.72 in May 2021. Experts assert that Elon Musk contributed to the growth of this meme coin.

However, are the allegations made by Keith that Elon Musk and his companies deceitfully promoted the coin true or false? Also, is there inside information or agreement between the developers of Dogecoin and Elon Musk that led to the promotion of the token?

Finally, is it an offense for a prominent personality or multinational organization to encourage patronage and investing in a digital asset? All these questions will be provided an answer to and would form the basis for the court to consider Elon Musk guilty of the charges leveled against him or not.

Conclusion

The matter is now before a court of competent jurisdiction; there is a limit to what experts can say to not sound in favor of either party.

However, the plaintiff, Keith, is yet to ascertain how the promotion of Dogecoin by Elon has caused him or led to the loss of his investment. The developers of Dogecoin need to come out and identify whether this blockchain protocol has intrinsic value and is worth investing in or not.

Author: Valentine. A, Gate.io Researcher

This article represents only the researcher's views and does not constitute investment suggestions.

Gate.io reserves all rights to this article. Reposting of the article will be permitted, provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.

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