Dogecoin Investors’ Class Action Lawsuit Now Accuses Elon Musk of Insider Trading

The amended lawsuit now alleges Elon Musk has engaged in market manipulation and securities fraud related to Dogecoin.

By Andrew Asmakov

3 min read

The ongoing lawsuit against Elon Musk over his Dogecoin dealings has taken another turn.

The group of DOGE investors has now accused the billionaire of engaging in manipulative practices that influenced the price of the popular meme cryptocurrency.

In an amended filing made on May 31 in the U.S. District Court for the Southern District of New York, the investors contend that Musk leveraged his substantial social media following on Twitter and his public appearances, such as hosting NBC’s Saturday Night Live in May 2021, to profit from DOGE trades through what they describe as "transparent cryptocurrency market manipulation."

The filing lists a long string of other examples, which the plaintiffs claim to be instances of market manipulation.

These include Musk taking to Twitter in May 2021 to share a meme of two sequential screenshots from the film The Matrix, one of actor Keanu Reeves as the character Neo, labeled, “What are you trying to tell me, that I can make a lot of money with Dogecoin?” and another of actor Laurence Fishburne as the character Morpheus but with a cartoon Shiba Inu superimposed over his face and text reading, “No Neo. I’m trying to tell you that Dogecoin is money.”

The complaint also alleges that Musk—the self-proclaimed “Dogefather” and “Dogecoin CEO”—was “unjustly enriched by billions of dollars” through “undisclosed sales of Dogecoin based on insider information.”

Per the filing, Musk allegedly caused the price of DOGE to spike 30% after replacing the Twitter blue bird logo with the Dogecoin Shiba Inu logo for three days in April this year.

DOGE investors claim securities fraud

While seeking the court’s permission to modify their complaint to include allegations of Musk's involvement in insider trading of DOGE, the investors also reiterated their assertion that the meme coin qualifies as a security under the standards set by the U.S. Securities and Exchange Commission.

“This is a securities fraud class action arising from a deliberate course of carnival barking market manipulation and insider trading by the world’s richest man Elon Musk, who hijacked an emergent pop-culture phenomenon to cross-promote himself and his companies, and to pad his obscene fortune, preying on the earnest hopes of vulnerable Americans, including war veterans, blue-collar workers, and the elderly,” reads the filing.

The initial $258 billion class action lawsuit was filed in June 2022 and has seen two amendments since then.

The Tesla and SpaceX CEO sought to dismiss the lawsuit in March this year, with the billionaire’s lawyers saying that "this court should put a stop to plaintiffs' fantasy and dismiss the complaint."

"There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion," Musk’s lawyers said at the time.

They also rejected the investors' claim that Dogecoin qualified as a security since the plaintiffs’ claim rested “on a mere rhetoric.”

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