Elon Musk and Tesla win dismissal of Dogecoin fraud lawsuit

Elon Musk and Tesla have successfully fended off a federal lawsuit accusing them of defrauding investors through manipulation of the cryptocurrency. Dogecoin US District Judge Alvin Hellerstein issued the dismissal on Thursday night in Manhattan, ruling in favor of Musk and his electric vehicle company. The lawsuit, brought by investors, alleged that Musk used Twitter posts, a 2021 appearance on NBC's "Saturday Night Live," and other promotional activities to drive up Dogecoin’s value and then sell it for profit, causing significant financial losses.

The investors claimed that Musk's activities—including a notable increase in Dogecoin's price by over 36,000%—were part of a scheme to manipulate the market. They pointed to an April 2023 incident when Musk’s decision to replace Twitter’s logo with the Dogecoin Shiba Inu emblem resulted in a 30% surge in Dogecoin’s price, which he allegedly exploited for profit.

Judge Hellerstein ruled that Musk's statements about Dogecoin, including his claims that it could become the "currency of Earth" or be used to buy Tesla vehicles, were mere "aspirational puffery" rather than factual representations susceptible to falsification. The judge determined that these statements could not be reasonably relied upon by investors for a securities fraud claim. Furthermore, he found the claims of market manipulation and insider trading to be insufficiently detailed.

The lawsuit, which sought USD 258 billion in damages, was dismissed with prejudice, meaning it cannot be refiled. Investors had amended their complaint multiple times over the past two years. Musk’s legal team argued that his tweets about Dogecoin were harmless and often whimsical. They also disputed the existence of any suspicious trading activities or ownership of wallets linked to Dogecoin transactions.

In response to the dismissal, Musk’s lawyer Alex Spiro commented, “It’s a very good day for Dogecoin.” The plaintiffs’ attorneys did not immediately respond to requests for comment. The case is Gorog et al v. Musk et al, US District Court, Southern District of New York, No. 22-05037.