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Allegations of Market Manipulation and Insider Trading
The revised complaint in a class-action lawsuit alleges that Elon Musk engaged in a calculated series of "market manipulation and insider trading", manipulating the Dogecoin market deliberately and theatrically.
A cohort of Dogecoin investors have petitioned to update a class-action lawsuit against Elon Musk, soon-to-be ex-CEO of Twitter, accusing him of manipulating the price of the popular meme-based cryptocurrency.
In a document filed on May 31 in the United States District Court for the Southern District of New York, the plaintiffs argue that Musk exploited his vast Twitter following and media presence to gain from DOGE trades by means of a “blatant program of cryptocurrency market manipulation." The complaint implies that Musk benefited from DOGE trades at the detriment of other investors, triggering the token's price surge by altering Twitter's logo to the Dogecoin logo.
Previous Lawsuits and Amendments
The investors initiated their first complaint in June 2022 — post-Musk’s initial Dogecoin promotion on Twitter but prior to his acquisition of the social media giant — the lawsuit has since been revised at least twice based on Musk's subsequent actions. They sought court permission to update their complaint, alleging Musk's engagement in DOGE insider trading and asserting the token should be considered a security as per U.S. Securities and Exchange Commission standards.
The amended lawsuit declared, “This is a securities fraud class action brought forth from a purposeful course of flamboyant market manipulation and insider trading by the world’s wealthiest individual, Elon Musk. He exploited an emerging pop-culture phenomenon to promote himself, his businesses, and to expand his exorbitant wealth. He capitalized on the genuine aspirations of susceptible Americans, including war veterans, manual laborers, and senior citizens."
Musk’s Response and Twitter Logo Change
In the days following his legal team's request for dismissal of the second amended lawsuit, Musk altered the Twitter logo to Dogecoin's image on April 3. At the time, the filing from the Twitter CEO maintained that sharing "amusing images" and "expressing words of encouragement" didn’t constitute fraud.
Related: Elon Musk’s Legal Battle with Microsoft over AI Trained on Twitter Data
As of the time of writing, Musk hasn't tweeted regarding the updated complaint. As one of the wealthiest people worldwide, the Twitter CEO has frequently voiced opinions about Dogecoin and other digital currencies, often inciting significant price movements for these tokens. He began commenting on DOGE to his millions of Twitter followers in 2019.
Twitter’s Declining Value and Musk’s Departure
Following Musk's acquisition of Twitter in October 2022, the social media platform's value has reportedly plunged to roughly 33% of the $44 billion he spent. On May 12, he announced his intention to step down as CEO in June, with former NBCUniversal’s chair of global advertising and partnerships, Linda Yaccarino, set to replace him.
