Elon Musk is being accused of insider trading in a proposed class action lawsuit by investors accusing the Tesla CEO of manipulating the cryptocurrency Dogecoin, accusing the CEO of causing billions of dollars in damages.
In papers filed Wednesday night in Manhattan federal court, investors allege that Musk used Twitter posts, paid online influencers, an appearance on NBC's "Saturday Night Live" in 2021, and other "promotional activities" to manipulate several of his or Tesla's controlled through several Dogecoin wallets, and made profitable transactions at their expense, he said.
Investors said this was also the case when Musk replaced Twitter's blue bird logo with Dogecoin's Shiba Inu logo in April and sold about $124 million of Dogecoin, causing Dogecoin's price to jump 30%.
Through "a deliberate course of carnival barking, market manipulation, and insider trading," Musk was able to deceive investors and promote himself and his company, the application said.
Musk acquired Twitter last October. He also runs SpaceX, which makes rockets and spacecraft, and Tesla, which makes electric cars.
Alex Spiro, an attorney for Mr. Musk and Tesla, declined to comment Thursday. Lawyers for the investors did not immediately respond to a request for comment.
Investors accuse Musk, the world's second-richest man according to Forbes magazine, of deliberately raising Dogecoin's price by more than 36,000% over two years and then letting it crash.
They included the latest accusations in a proposed third amended complaint in the lawsuit that began last June.
In March, Musk and Tesla moved to dismiss the second amended complaint, calling it a "work of fiction," and on May 26 they said another amendment was improper.
In an order Wednesday, U.S. District Judge Alvin Hellerstein said the defendants would not be prejudiced and would "probably" grant the third amended complaint. Hellerstein also granted the investors' request to dismiss the nonprofit Dogecoin Foundation as a defendant. Seth Levine, the foundation's attorney, characterized the dismissal as an "appropriate result."
The case is Johnson et al. v. Mask et al., U.S. District Court, Southern District of New York, No. 22-05037.