Elon Musk is accused of insider trading by investors in Dogecoin lawsuit

Investors proposing a class action lawsuit have accused Tesla CEO Elon Musk of insider trading and manipulating the cryptocurrency Dogecoin, costing them billions of dollars.

In a Wednesday night filing in Manhattan federal court, investors said Musk used Twitter posts, paid online influencers, his 2021 appearance on NBC’s “Saturday Night Live” and other “publicity stunts” to trade profitably at their expense through several Dogecoin wallets that he or Tesla controls.

Investors said this included when Musk sold about US$124 million of Dogecoin in April after he replaced Twitter’s blue bird logo with Dogecoin’s Shiba Inu dog logo, leading to a 30% jump in Dogecoin’s price.

A “deliberate course of carnival barking, market manipulation and insider trading” enabled Musk to defraud investors, promote himself and his companies, the filing said.

Musk bought Twitter last October. He also runs SpaceX, a rocket and spacecraft manufacturer, as well as Tesla, which makes electric cars.

Alex Spiro, a lawyer for Musk and Tesla, declined to comment on Thursday. The investors’ lawyer did not immediately respond to requests for comment.

Investors have accused Musk, the world’s second-richest person according to Forbes magazine, of deliberately driving up Dogecoin’s price more than 36,000 per cent over two years and then letting it crash.

They included their latest accusations in a proposed third amended complaint, in a lawsuit that began last June.

Musk and Tesla had in March sought a dismissal of the second amended complaint, calling it a “fanciful work of fiction,” and on May 26 said another amendment was unjustified.

In a Wednesday order, U.S. District Judge Alvin Hellerstein said he would “likely” allow the third amended complaint, saying the defendants would not likely be prejudiced.

Hellerstein also granted the investors’ request to dismiss the nonprofit Dogecoin Foundation as a defendant. Its lawyer Seth Levine called the dismissal “the appropriate result.”