Controversial entrepreneur Elon Musk has an undeniable ability to stay in the media spotlight. In one of the most recent cases, he was accused of manipulating the market with the Cryptocurrency Dogecoin. However, a federal judge dismissed the lawsuit, ruling that Musk had engaged in such practices.
The court called his statements mere “publicity stunts” about Dogecoin, rather than a “bump-and-dump” manipulation strategy. Although several people joined this class-action lawsuit demanding large compensations, the eccentric tycoon managed to avoid conviction.
Did Elon Musk Really Manipulate the Market with Dogecoin?
What is clear is that Musk has a special fondness for Dogecoin. This cryptocurrency belongs to a category known as memecoins, and Musk is an avowed enthusiast of this satirical trend that uses memes to communicate ideas. You could say that Elon Musk and Dogecoin are a natural fit.
Since around 2021, Musk has been an active promoter of Dogecoin on social media, using his vast influence to express his enthusiasm for the token. In multiple posts, he praised the cryptocurrency’s “bright future,” even going so far as to claim that he would take it to the moon with SpaceX rockets.
Musk also claimed that Tesla would accept Dogecoin as a means of payment for its electric cars and emphasized that the coin could become the native currency for online commerce. These statements led Dogecoin, which started as a parody, to become one of the cryptocurrencies with the highest market capitalization.
The growing enthusiasm boosted Dogecoin’s price, attracting tens of thousands of investors who believed in its potential. Communities of fans even emerged who sold their belongings to accumulate more DOGE, all thanks to Musk’s tireless promotion.
I will keep supporting Dogecoin
— Elon Musk (@elonmusk) June 19, 2022
The collapse
As is common in the financial world, what goes up tends to come down, and Dogecoin was no exception. Along with the rest of the crypto market, the coin suffered a drastic drop, leaving many investors, especially retail investors, in a vulnerable position during the sell-off.
From a high of $0.68 per coin in 2021, Dogecoin fell to $0.04 in 2022. Currently, the price remains a fraction of its peak value, trading for less than 10 cents.
This crash caused significant losses among investors, leading many to look for someone to blame. The most obvious target was Elon Musk, the main driver of the hype around Dogecoin. A group of citizens filed a class action lawsuit against him for alleged market manipulation.
The suit sought $86 billion in damages, plus treble damages of $172 billion. However, the chances of success were slim, as the plaintiffs had to prove that Elon Musk had sold his DOGE to profit at the expense of investors.
Dogecoin’s crash in 2022 was massive. Source: CoinMarketCap
Judge dismisses Elon Musk’s guilt
As expected, the suit was unsuccessful. District Judge Alvin Hellerstein concluded that Musk’s intentions were not to manipulate the market for profit. After reviewing the businessman’s statements and promises related to Dogecoin, the judge determined that it was simply “publicity stunts.”
In simple terms, Musk is a charlatan when it comes to promoting his interests, but that does not constitute a crime. The judge used the term “puffery” to describe Musk’s statements, a concept that refers to publicity exaggeration and has been common in such cases for more than a century.
In short, Musk’s promotion of Dogecoin did not violate market norms.
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