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While the lingering crypto winter remains talk of the town everywhere from Wall Street to Art Basel, a single story arose this past week to encapsulate the storyâs central themes.
On Thursday, news broke that one-time âDogefatherâ and wealthiest private citizen on the planet Elon Musk will answer to American law following a class action lawsuit filed in downstate New York, the region encompassing all of NYC. The federal complaint accuses Musk of perpetuating a pyramid scheme through his ongoing involvement with notorious cryptocurrency Dogecoin.
Keith Johnsonâa purported âbillionaire investorâ whose full story remains obscured at presentâinitiated the suit on June 16 with legal counsel from Manhattan-based Evan Spencer Law on behalf of all Dogecoin investors, seeking a sum total retribution of $258 billion.
âJohnson is seeking $86 billion in damages, representing the decline in Dogecoin’s market value since May 2021, and wants it tripled,â Reuters reported. âHe also wants to block Musk and his companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law.â
The âClaims for Reliefâ section of the official court documentâJohnson v. Musk et al, U.S. District Court, Southern District of New York, No. 22-05037âsays âthe class is so numerous that joinder of all members is impractical.â Should courts fine the defendants guilty, class members will be determined âthrough crypto exchanges, the Dogecoin blockchain, and voluntary disclosure.â
As that official court document states, co-founders Billy Markus and Jackson Palmer launched Dogecoin cryptocurrency in 2013, when it began trading at $0.0002. âMarkus openly admitted that he created Dogecoin as a joke, and that it relied 99.99% on the âgreater fool theory.ââ Thatâs a real ideology defined by Investopedia, where âyou can make money from buying overvalued securities because there will usually be someone (i.e. a greater fool) who is willing to pay an even higher price.â
But Johnson isnât suing the founders. Heâs suing Musk, who didnât get involved with Dogecoin until 2019âafter crypto had really hit the collective consciousness, and after an online Dogecoin survey elected Musk as their de facto âCEO.â In fact, Johnson doesnât just want to take Musk to taskâhis suit also names Musk’s companies SpaceX and Tesla Inc. as parties.
A series of ninety very convincing points under the legal documentâs âStatement of Factsâ section illustrate direct correlation between Muskâs infamous tweets and the rise/fall of Dogecoinâs value.
One highlight arises in point 73, recounting a tweet where Musk offered to âeat a happy meal on TV if @McDonalds accepts Dogecoin.â The court document says that âWhile this offer was not accepted the Dogecoin price increased from $0.14 to $0.15 in 24 hours (8% increase) as a result of the Tweet.â
The âStatement of Factsâ section closes with three critical conclusions. First, Musk abused his public reputation on Twitter and âknowingly caused millions of people to spend billions of dollars buying into the Dogecoin Crypto Pyramid Scheme.â Second, Muskâs actions caused Dogecoinâs value to crest at $3 trillion in Summer 2021. Third, âSince that time, nearly $2 trillion has been lost in the crypto marketplace as the entire crypto market cap is presently close to $1 trillion, crashing after Defendant Musk told the world on Saturday Night Live that crypto was, âa hustle.ââ
On May 26, 2022, Musk tweeted âDogecoin Trillionaire, the Movie.â The court document notes this post âhad no effect on the price, apparently the first time this has ever occurred.â Johnson âsold his Dogecoin in June 2022 at a price of $0.08, losing approximately 70% of his investment.â
Apologies on my part for relaying the court document backwards, but the introduction to Johnsonâs suit opens with this emphatic claim: âDogecoin is not a currency, stock, or security. Itâs not backed by gold, other precious metal or anything at all⊠Itâs simply a fraud.â

Did Johnson and his fellow investors not know this on the front end? Are they not guilty of the same senseless speculation that Muskâs pied piper to in this instance? Why did Johnson wait so long to sell his Dogecoin when the direct correlation between its value and Muskâs empty words prove so evident? Would this suit exist if the story swung the other wayâif all the investors were as rich as their one-time leader promised theyâd be? The trial, should it take place, will probably answer these questions.
Certain Tweets throughout the âStatement of Factsâ section show Musk encouraging Dogecoin holders to sell their assets, which seems to signify bad faith meant to benefit solely himself and his compatriots. At times it feels like this case isnât about unethical behavior on a moral basis. It seems like Johnson was saddened to find himself on the bottom of the pyramidânot the top.
Nonetheless, every court ruling sets precedent, and this is a pressing moment for cryptocurrency policy. Musk and his companies have failed to comment on the case yet. Not much to do now but wait and see how the legal system unfolds.
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