Elon Musk finds himself faced with a Complaint accusing Dogecoin price manipulation and Bitcoin. Investors accuse him of exploiting his influence online to make profits at the expense of other investors. An investigation is currently underway to examine these allegations.
New charges against Elon Musk: Market manipulation or insider trading?
Elon Musk, the well-known billionaire, faces recent charges of market manipulation and insider trading. Lawsuit filed in Manhattan federal court says Musk intentionally allegedly increased the value of Dogecoin by 30% after changing his Twitter logo to that of the famous Doge in April.
It is estimated that he then sold around $124 million worth of this coin-inspired cryptocurrency.
Here is an overview of the new charges:
- Securities Fraud: If it weren’t for Musk’s “erroneous statements and material omissions”, the plaintiffs and affected class of people would not have purchased Dogecoin. The plaintiffs also claim that this manipulation is supported by Musk’s “manipulation of the Bitcoin market”.
- Insider trading: Musk and Tesla artificially inflated the price of Dogecoin in an attempt to profit from it.
- Common Law Fraud: Musk made “knowingly and recklessly misleading misrepresentations” to Dogecoin investors.
- Unjust enrichment: The plaintiffs allege that Musk and Tesla were “unfairly enriched with billions of dollars” due to “undisclosed sales of Dogecoin based on inside information.”
The complaint states that Elon Musk “has assumed extensive responsibility for the entire Dogecoin business, which gives rise to a fiduciary relationship necessary to establish a charge of insider trading.”
Even though he is not clearly specified how Elon Musk took on this responsibility for dogecoin, the documents mention that Musk’s choice (from four candidates) as ‘CEO’ by Dogecoin enthusiasts was accepted by Musk.
The impact of Musk’s tweets on the price of Dogecoin in 2021
Analysis of Musk’s impact on Dogecoin price in 2021 reveals a significant correlation between his tweets and changes in the price of DOGE. Between May and November 2021, Musk shared messages about Dogecoin 30 times, on 22 different days. For five of those days, the value of Dogecoin increased by more than 20%.
Notably, a tweet from Musk on May 20, informing that he would not be selling Dogecoin, led to a 32% increase in price of this cryptocurrency.
Moreover, Musk’s influence appears to extend beyond the immediate impact of his tweets. During this same period, on six occasions, the Dogecoin managed to maintain an increase of more than 5% a week after a message from Musk.
Despite this, Elon Musk seems to have moderated his enthusiasm for Dogecoin. During a recent interview, the eccentric billionaire clearly not recommended to invest all your savings in this cryptocurrency.
It is obvious that when talking about a coin meme with volatility that can reach tens or even hundreds of percent, it is important to remember this.
258 BILLION DOLLARS COMPLAINT
As this case unfolds, it remains to be seen whether Elon Musk’s actions will legally qualify as insider trading or market manipulation.
Nevertheless, this case has already sparked a wider debate about the influence of public figures in the cryptocurrency markets and the need for increased regulatory oversight. According to a memo filed Wednesday, defendants have until June 14, 2023 to file an objection to the amended complaint.
It is important to note that the original complaint claimed, $258 billionwhile the market capitalization of Dogecoin, when diluted, is approximately $10 billion.
Sources: Blockworks, The Guardian