Elon Musk and Tesla Win Dismissal of Dogecoin Lawsuit

By Jonathan Stempel

NEW YORK (Reuters) – Elon Musk and his electric vehicle company, Tesla (NASDAQ:TSLA), successfully had a federal lawsuit dismissed that accused them of defrauding investors through the promotion of the cryptocurrency Dogecoin and insider trading, resulting in billions in losses.

The ruling was made on Thursday night by U.S. District Judge Alvin Hellerstein in Manhattan.

Allegations Against Musk

Investors claimed the world’s richest person exploited Twitter posts, his 2021 appearance on NBC’s “Saturday Night Live,” and other publicity stunts to trade profitably, utilizing several Dogecoin wallets controlled by him or Tesla. They alleged that Musk intentionally inflated Dogecoin’s price over 36,000% over two years before letting it crash, timing trades with his public statements regarding Dogecoin.

One specific claim included Musk selling Dogecoin in April 2023 after changing Twitter’s blue bird logo to the Dogecoin Shiba Inu logo, which led to a 30% price surge.

Judge’s Ruling

However, Hellerstein ruled that Musk’s tweets regarding Dogecoin as the future currency of Earth and its potential utility for purchasing Teslas or being sent to the moon through SpaceX were “aspirational and puffery,” not factual or falsifiable. Therefore, no reasonable investor could rely on these tweets to support a securities fraud claim. The judge also stated that it was “not possible to understand” the investors’ claims of market manipulation and insider trading.

As a result, the lawsuit was dismissed with prejudice, meaning it cannot be refiled. Investors initially sought $258 billion and had amended their complaint four times over two years.

Lawyers for the investors did not respond to requests for comment.

Musk’s lawyer, Alex Spiro, commented in an email: “It’s a very good day for Dogecoin.”

In seeking dismissal, Musk’s lawyers argued that there was nothing wrong with his “innocuous and often silly tweets.” They also stated there was no evidence that Musk owned two wallets for suspicious trading or that he or Tesla ever sold Dogecoin.

On “Saturday Night Live,” Musk referred to Dogecoin as a “hustle” while portraying a fictitious financial expert during a segment of “Weekend Update.”

Musk acquired Twitter in October 2022, rebranding it as X. According to Forbes, he is worth $239.3 billion.

The case is Gorog et al v. Musk et al, U.S. District Court, Southern District of New York, No. 22-05037.