A federal court in Manhattan has dismissed a lawsuit accusing Elon Musk and Tesla Inc. of defrauding investors over the cryptocurrency Dogecoin. The lawsuit, filed in June 2023, claimed that Musk and Tesla manipulated the Dogecoin market, inflating its value by 36,000%.
Plaintiffs' Allegations
The lawsuit alleged that Elon Musk used his social media influence to promote Dogecoin and endorse it for purchasing Tesla merchandise. The plaintiffs argued that this led to the cryptocurrency's price spiking dramatically. They also accused Musk of leveraging his popularity to inflate the cryptocurrency's value, subsequently profiting from its decline.
Court’s Ruling
Judge Hellerstein rejected the plaintiffs' claims. The ruling stated that Musk’s comments about Dogecoin were not fraudulent but were rather promotional and puffery. Statements about Dogecoin being the 'future currency of Earth' or being used to buy Teslas were deemed promotional rather than actionable fraud. The judge noted that there was no substantial evidence to support claims that Musk or Tesla unfairly manipulated the market or traded Dogecoin to their advantage.
Reactions and Current Situation
Elon Musk and Tesla have welcomed the court's decision, viewing it as a validation of their actions. Musk has previously stated that his comments about Dogecoin were humorous and did not intend to mislead investors. At the time of writing, Dogecoin is trading at $0.1009, with almost no change over the last 24 hours.
The court's dismissal of the lawsuit against Elon Musk and Tesla sets a significant precedent in the legal treatment of public statements about cryptocurrencies. The Dogecoin market remains stable despite legal challenges and accusations of manipulation.
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