Elon Musk, Tesla win dismissal of Dogecoin ‘pyramid scheme’ lawsuit, US judge says posts ‘aspirational, not factual’

Tech billionaire Elon Musk and his auto company, Tesla, won the dismissal of a lawsuit that accused them of misleading social media followers and creating a $258 billion "pyramid scheme" for the meme cryptocurrency Dogecoin, Bloomberg reported.

Investors who were influenced by Musk's frequent tweets about Dogecoin and invested tens of thousands of dollars in the token — which they eventually lost — blamed him for promoting the asset and "pumping up" its price.

Musk made statements such as “One word: Doge”, which created a frenzy among his followers on Twitter (now known as X). They also alleged that Musk further inflated the price by announcing that Tesla would accept Dogecoin as payment for merchandise.

US Judge Dismisses Lawsuit

New York District Federal Judge Alvin Hellerstein dismissed the claims on August 29. He held that Musk’s statements on social media were “aspirational” rather than “factual and susceptible to being falsified” and “no reasonable investor could rely upon them”, as per the report.

The case is Johnson v. Musk, 22-cv-05037, US District Court, Southern District of New York (Manhattan). The report noted that the complaint was filed in 2022.

In addition to the pyramid scheme allegations, the lawsuit also accused Musk and Tesla of participating in a “pump and dump” scheme with Dogecoin. But Judge Hellerstein said that it was “not possible to understand” those allegations.

Investors Plan to Appeal

A lawyer for the plaintiffs said his clients are disappointed and plan to appeal.

“Musk’s statements and publications were far more than puffery, and a class of millions lost billions of dollars as a result,” attorney Evan Spencer said in a statement.

Dogecoin was the original meme coin — a type of cryptocurrency that originated from internet memes or jokes. Its logo is a picture of a Shiba Inu dog.

(With inputs from Bloomberg)