The cryptocurrency world has witnessed an intriguing phenomenon: the power of Elon Musk’s tweets in swaying Dogecoin’s price. However, a growing chorus of investors suggests that Musk’s social media influence may be more calculated than it appears, going so far as to accuse him of trading based on his Twitter activity.
A Scandal Unfolding: Accusations of Insider Trading Against Musk
The controversy surrounding the Tesla CEO deepens as a group of memecoin investors leveled allegations of insider trading against him in a court filing. This legal action posits that Musk exploited his vast following to manipulate the price of Dogecoin (DOGE) for his benefit.
It is not the first time that Musk finds himself in hot water. These allegations are a significant addition to an ongoing $258 billion class action lawsuit from June 2022, where the same group accused Musk and his associated enterprises of causing financial losses to Dogecoin holders amounting to hundreds of billions.
Digging Deeper: Musk’s ‘Carnival Barking Market Manipulation’
In a recent update to the filing in Manhattan federal court, the plaintiffs assert that Musk has pursued “a deliberate course of carnival barking market manipulation,” which they describe as a “publicity circus” aiming to inflate Dogecoin’s price.
This manipulative strategy, they claim, involved Musk making public appearances and using his social media platforms to hype up Dogecoin since April 2019. These actions led to a 36,000% surge in Dogecoin’s price to $0.70+ by May 2021. Today, DOGE trades at a dramatic 90% reduction from that high.
Dissecting the Strategy: Musk as an ‘Apex Predator’
“Musk’s assertion that his promotion of Dogecoin was harmless amusement—not intended for serious consideration—is hardly credible,” reads the court document. The plaintiffs paint a striking picture of Musk as an “apex predator,” preying on his millions of Twitter followers.
In their filing, they underscore that multiple studies already showcase the dramatic influence of Musk’s tweets on Dogecoin’s price. Crucially, the timing of Musk’s announcements that SpaceX would start accepting Dogecoin in 2021 and his subsequent visit to Twitter HQ significantly impacted DOGE’s price fluctuations.
Further Allegations: Tracing Transactions to Profitable Moves
Another special episode involved Musk changing Twitter’s logo to the iconic Shiba Inu of the Doge meme, which allegedly caused a 30% price spike in the coin.
Furthermore, the lawsuit suggests that Musk and Tesla have made profitable trades based on the billionaire’s “intended moves,” pointing to blockchain records as evidence. According to the suit, a wallet address identified as DH5ya, which they claim is linked to Musk, became the largest single holder of Dogecoin by February 2021. This wallet reportedly sold millions of dollars worth of Dogecoin at various points in April 2021.
Dogecoin: A Closer Look at Its Legal Status
One crucial argument underpinning the lawsuit is the presumption that Dogecoin qualifies as an unregistered security under existing U.S. Securities and Exchange Commission regulations.
Interestingly, Dogecoin was created by Billy Markus and Jackson Palmer back in 2013, with Musk being a notable supporter. However, the founders have long ceased actively involved in the project’s development. However, that hasn’t stopped them from engaging in light-hearted Twitter exchanges with Musk, adding humor to the cryptocurrency world.
Rebuttal from Musk’s Camp: A Legal Fight Continues
In response to the original lawsuit filed last year, Musk’s legal team brushed off the accusations as whimsical, asserting, “There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion.”
As the drama unfolds, it’s clear that this story is about more than just tweets. At stake is the debate around the role of influential figures in the volatile world of cryptocurrency, raising questions about the ethics of market manipulation and the future regulation of digital currencies.
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