Elon Musk and his companies sued for $258B over alleged cryptocurrency pyramid scheme
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Elon Musk and his companies sued for $258B over alleged cryptocurrency pyramid scheme

Elon Musk, SpaceX, and Tesla Thursday were sued for $258 billion by Dogecoin investor Keith Johnson. Johnson accused Musk of orchestrating a cryptocurrency pyramid scheme, also known as a Ponzi scheme.

The class action complaint filed in the US District Court for the Southern District of New York alleged that in 2019 Musk and his corporations, SpaceX and Tesla, purchased, developed, promoted, and operated Dogecoin. The complaint further alleges that Johnson and the rest of the class “lost approximately $86 billion in this Crypto Pyramid Scheme.” The complaint alleges Musk is responsible in part due to his repeated posting of statements and memes on social media about Dogecoin. According to Johnson, this caused the crypto’s price to fluctuate.

Johnson claimed he purchased Dogecoin in April of 2021 as a result of Musk’s conduct. Ultimately, Johnson sold his Dogecoin in June 2022 for a loss of approximately 70% of his investment. The complaint cited high-profile business individuals’ mentions of Dogecoin being a “joke with no real value” and noted how cryptocurrencies overall are “nothing more than a period scheme posing as currency.”

Johnson alleged that Musk committed civil Racketeer Influenced and Corrupt Organizations Act (RICO) violations through wire fraud, gambling, common law fraud, negligence, false advertising, deceptive practices, products liability by failure to warn, and unjust enrichment. Johnson claimed Musk committed wire fraud because he “falsely and deceptively claimed that [D]ogecoin is a legitimate investment when it has no value at all.”

As remedy, Johnson seeks $86 billion in compensatory damages, as well as “treble damages” in the amount of $172 billion—as a result of a statute permitting the court to triple the amount of damages—together with attorneys’ fees and the costs of this action.