Elon Musk and his companies have been sued for $258bn by an investor who claims he was “defrauded” by a Dogecoin “pyramid scheme.”
The investor, Keith Johnson, has named the entrepreneur, as well as his companies Tesla and SpaceX, in the lawsuit filed in federal court in Lower Manhattan on Thursday.
Mr Johnson is demanding $86bn in damages in addition to tripled damages of $172bn for losses incurred from trading the cryptocurrency since 2019.
Dogecoin has notably been a favorite topic of the world’s richest person, who has regularly discussed it on social media.
The price of one dogecoin on Thursday was just below six cents, a long way off from its May 2021 high of 74 cents.
“Dogecoin is not a currency, stock, or security. It’s not backed by gold, other precious metal, or anything at all. You can’t eat it, grow it, or wear it,” the lawsuit states.
“It doesn’t pay interest or dividends. It has no unique utility compared to other cryptocurrencies…It’s not secured by a government or private entity.
“It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”
Mr Johnson wishes to represent other investors who have lost money in Dogecoin since April 2019.
He is also seeking an order blocking Mr Musk and the companies from promoting Dogecoin, and declaring that trading Dogecoin is gambling under US and New York law.
Mr Musk, who has a personal fortune of $217bn, said in March that he would not sell bitcoin, Ethereum or Dogecoin, despite billions of being wiped off their values in recent months.
The entrepreneur has not yet responded to the lawsuit.