The crypto market has plummeted. An American investor is suing Elon Musk, accusing him of portraying Dogecoin as a legitimate investment when it has no value. He wants Musk and his companies to pay three times the alleged depreciation.
Dogecoin is a digital currency that has existed since 2013 and was powered by Elon Musk.
(dpa)
Tech billionaire Elon Musk and his companies Tesla and SpaceX have been sued by a US investor for losses suffered with the crypto speculation object Dogecoin. In the lawsuit filed in a New York court on Thursday (local time), Keith Johnson accuses Musk and his companies of being part of an illegal Ponzi scheme that drove the Dogecoin price up and then crashed. Johnson is seeking a class action lawsuit for anyone who gambled money off Dogecoins.
The plaintiff accused Musk of presenting Dogecoin as a legitimate investment when it had no value. He wants Musk and his companies to pay for three times all the alleged losses in value Dogecoin holders have suffered since 2019, putting the total at $258 billion. In addition, the accused should bear the legal and procedural costs. Whether and to what extent the lawsuit will be admitted remains to be seen. Musk and his company initially did not comment on the allegations.
Dogecoin is a digital currency that has existed since 2013 and is based on the funny picture of a Japanese dog that has become an internet phenomenon and which was actually supposed to be a joke. Driven by celebrities like Musk, who is followed by a good 98 million user accounts on Twitter, it temporarily developed into one of the hottest speculative objects on the financial market in 2021 and reached a record high of 74 cents in May. Most recently it was only worth around 5 cents. Musk is the richest person in the world, according to Forbes, with an estimated fortune of around $200 billion.
In the general sell-off on the stock exchanges, the crypto market has recently collapsed due to fears of inflation and recession. Not only Dogecoin, but also more established and larger cyber assets such as Bitcoin or Ether have lost massively in value. Dogecoin’s critics have long warned of tendencies towards a Ponzi scheme, in which profits are only possible through fresh funds from new investors. Even well-known crypto fans had their doubts. Bitcoin billionaire Mike Novogratz, for example, said in 2021: “It’s dangerous – if enthusiasm wanes, things could go downhill steeply”.