An investor who lost money betting on dogecoin, an originally parodic cryptocurrency inflated in particular by interest from Elon Musk, filed a lawsuit on Thursday seeking $258 billion from the multi-billionaire and his businesses Tesla and SpaceX.
Keith Johnson describes himself as an “American citizen who was defrauded by a dogecoin pyramid scheme set up by the defendants”. He is asking that his complaint, filed in a New York court, be classified as a class action on behalf of investors who have suffered losses by betting on dogecoin since 2019.
Since Elon Musk started promoting the virtual currency that year, people who invested money in it lost around $86 billion, he estimates. He claims reimbursement of this sum and double in damages, or 172 billion.
Elon Musk ‘inflated price, capitalization and trading volumes’
Created in 2013, dogecoin was an ironic response to the two Internet phenomena of the year: cryptocurrencies, which multiplied in the wake of bitcoin, and montages of a photo of a Shiba Inu dog that was very popular on the Internet. The price of dogecoin has moved below a penny for the majority of its history.
But boosted by a certain buying frenzy around improbable values at the start of 2021 as well as by Elon Musk’s multiple messages of praise on Twitter, dogecoin soared to over 70 cents in May 2021. Before starting to back down shortly after a satirical show aired in which Elon Musk called virtual currency a “scam” in a sketch. It evolved Thursday at less than 6 cents.
Keith Johnson believes that Elon Musk has “inflated the price, capitalization and trading volumes” of cryptocurrency by advertising it. He transcribed in his complaint the many tweets broadcast on the account of the richest man in the world, which has more than 98 million subscribers, including one promising to take “literally a dogecoin to the Moon”.
Dogecoin, a pyramid scheme?
It also includes two companies led by the entrepreneur: electric vehicle maker Tesla for accepting dogecoin as payment for certain derivatives, and space company SpaceX for naming one of its satellites after dogecoin.
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Keith Johnson likens dogecoin to a pyramid scheme, in that, according to the complaint, the virtual currency has no intrinsic value, produces nothing, is not backed by any tangible asset, and the number of “coins” in circulation is unlimited.
Complaints from investors who feel cheated by the promises of virtual currencies are currently increasing in the United States without any guarantee of their outcome.