Tesla and SpaceX CEO Elon Musk is facing a $258 billion lawsuit filed by investors that accuses him of promoting the cryptocurrency Dogecoin through a pyramid scheme. However, Musk and his lawyers have reportedly requested a United States judge to dismiss the lawsuit, calling it a “fanciful work of fiction”. The matter is now in Manhattan’s federal court and a decision is yet to be made.
Musk’s lawyers have dismissed his Dogecoin tweets – including “Dogecoin Rulz” and “no highs, no lows, only Doge” – as being too vague to warrant a fraud claim. They have argued that tweeting words of support for a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion is not illegal. The investors, on the other hand, cited Musk’s SNL appearance where he portrayed a financial expert calling Dogecoin “a hustle” as the basis of their lawsuit.
The controversy around Dogecoin started in 2013. Dogecoin founders Billy Markus and Jackson Palmer created the parody cryptocurrency with the intention of mocking cryptocurrencies such as Bitcoin. However, Dogecoin gained popularity due to memes and its community of fans that created a cult following around the cryptocurrency. In 2021, Elon Musk played a significant role in increasing Dogecoin’s popularity among retail investors through his tweets and public appearances. As a result, the value of Dogecoin surged by over 900% in May 2021 alone.
Currently, Dogecoin is the world’s 15th largest cryptocurrency with a market cap of $36 billion. The price of Dogecoin has surged 200% in the last 30 days, resulting in a bull run that has sparked renewed interest in cryptocurrency. The cryptocurrency markets have seen significant attention recently, with Bitcoin hitting an all-time high of over $63,000 in April 2021.
With Dogecoin surging to new highs, concerns around the legality and sustainability of the cryptocurrency have been raised. Some experts say that the ongoing rise of Dogecoin is fuelled by hype, driven by celebrity endorsements and social media. Moreover, critics of Dogecoin argue that the cryptocurrency lacks a clear purpose or use case and its prices are driven purely by market speculation.
Furthermore, the alleged pyramid scheme related to Dogecoin has raised concerns about its legitimacy. A pyramid scheme is an illegal business model in which new investors pay money into the scheme and the money is used to pay earlier investors. The scheme works until there is no new money coming in, and earlier investors lose their money. If the lawsuit against Musk progresses, it could have significant implications for the cryptocurrency industry as a whole.
Despite the concerns around Dogecoin, some crypto enthusiasts believe that it has the potential to become a legitimate and sustainable cryptocurrency. Dogecoin has a large and loyal community that continues to promote the cryptocurrency. Moreover, Dogecoin has been used for charitable causes, such as sponsoring Olympic athletes and funding projects to bring clean water to developing nations.
In conclusion, the controversy around Elon Musk and Dogecoin highlights the volatility and uncertainty that surrounds the cryptocurrency industry. While some experts are optimistic about the potential of Dogecoin, there are also concerns about its legitimacy and long-term sustainability. The ongoing legal battle will shed light on the future of Dogecoin and its role in the broader cryptocurrency ecosystem.
