Elon Musk accused of insider trading of dogecoins

Tesla CEO Elon Musk has been accused of trading on privileged information against his followers using dogecoin, in a court filing against the tech entrepreneur on Wednesday.

The allegations are a continuation of a lawsuit amounting to $258 billion filed by the same group in June 2022, accusing Musk and his companies of causing hundreds of billions in losses for dogecoin owners.

Dogecoin agenda

According to a revised filing in federal court in Manhattan on May 31, Elon Musk participated in a ‘deliberate course of carnival market manipulation’, through a ‘circus of publicity’ aimed at pumping the price of dogecoin.

These antics include his public appearances and social media activities affecting dogecoin dating back to April 2019. These antics increased the price of dogecoin by 36,000% to $0.70+ by May 2021. Today, doge is trading 90% lower than its peak.

– Musk’s excuse that promoting dogecoin was just good-natured fun and should not be taken seriously is not credible – states the filing, labeling the tycoon a ‘top predator’, and his millions of followers on Twitter as prey.

The lawsuit states that numerous studies have already shown the effect of Elon Musk’s tweets on the price of dogecoin. Indeed, Musk’s announcements that he would start accepting dogecoin at SpaceX in 2021, and his visit to Twitter’s headquarters after acquiring the company last year, contributed to the price change of doge.

Musk again leveraged his influence by changing Twitter’s blue bird logo to a picture of doge for three days, helping to boost it by 30%.

The filing adds that Musk and Tesla profited from trading around the billionaire’s ‘planned moves’, citing blockchain records as evidence.

Specifically, the lawsuit claims that a wallet address (DH5ya) was found, which allegedly belonged to Musk and became the largest individual holder of dogecoins by February 2021. This wallet then sold dogecoin worth millions of dollars multiple times during April 2021.

Securities fraud?

A key part of the lawsuit is the assumption that dogecoin is an unregistered security under existing standards of the U.S. Securities and Exchange Commission (SEC).

Musk was founded by dogecoin creators Billy Markus and Jackson Palmer back in 2013, but they have remained uninvolved in the project’s development for years. Markus often jokes with Elon Musk on Twitter, and both frequently make cheerful comments about crypto on Twitter.

When the original lawsuit was filed last year, Musk’s lawyers said the lawsuit was fanciful.

– There is nothing illegal about tweeting words of support or funny pictures about a legitimate cryptocurrency that still holds a market capitalization of nearly $10 billion – they said.