Judge Dismisses Lawsuit Accusing Elon Musk and Tesla of Manipulating Dogecoin

Elon Musk and his company Tesla have successfully had a federal lawsuit dismissed that accused them of defrauding investors by promoting the cryptocurrency Dogecoin and engaging in insider trading, allegedly leading to billions of dollars in losses.

The ruling, issued by U.S. District Judge Alvin Hellerstein in Manhattan on Thursday night, marks a significant win for Musk.

Investors claimed that Musk, the world's wealthiest individual, used his Twitter platform, a 2021 appearance on NBC's "Saturday Night Live," and other publicity stunts to profit at their expense. They alleged that he and Tesla manipulated Dogecoin's price through several Dogecoin wallets they controlled, driving its value up by more than 36,000 percent over two years before allowing it to crash.

The lawsuit highlighted specific instances, such as when Musk replaced Twitter’s blue bird logo with the Dogecoin Shiba Inu dog logo in April 2023, causing Dogecoin’s price to jump 30 percent. Investors claimed Musk then sold off Dogecoin, profiting from the surge.

However, Judge Hellerstein ruled that Musk’s tweets about Dogecoin being the "future currency of Earth," its potential use to purchase Teslas, and even sending it to the moon via SpaceX were "aspirational and puffery," rather than factual statements that could be proven false. As such, the judge determined that no reasonable investor could rely on these statements as the basis for a securities fraud claim.

Hellerstein also found the investors' claims of market manipulation and insider trading to be unsubstantiated, noting it was "not possible to understand" their arguments. Consequently, the lawsuit was dismissed with prejudice, preventing the investors from refiling the case. The plaintiffs had originally sought $258 billion and had amended their complaint four times over two years.

Following the ruling, Musk’s lawyer, Alex Spiro, expressed satisfaction, stating, "It's a very good day for Dogecoin."

Musk’s legal team had argued that his tweets were merely harmless and often humorous, denying any wrongdoing. They also contended there was no evidence to support the claim that Musk owned two wallets used for suspicious trading or that either he or Tesla sold Dogecoin during the relevant period.

During his "Saturday Night Live" appearance, Musk referred to Dogecoin as a "hustle" while playing a fictional financial expert in a "Weekend Update" segment.

Musk, who acquired Twitter in October 2022 and later rebranded it as X, currently has a net worth of $239.3 billion according to Forbes.