In this photo illustration, Elon Musk’s Twitter account is seen displayed on a mobile screen with the Dogecoin logo in the background.

Idris Abbas | Light Rocket | Getty Images

Elon Musk has been accused of insider trading in a proposed class action lawsuit by investors accusing the CEO of Tesla Inc. Manipulating the Dogecoin cryptocurrency, costing them billions of dollars.

In a lawsuit Wednesday night in Manhattan federal court, the investors said Musk used Twitter posts, paying online influencers, his 2021 appearance on NBC’s “Saturday Night Live” and other “hyped business” to profitably trade on their account through various From Dogecoin wallets that he or Tesla controls.

Investors said this included when Musk sold about $124 million of Dogecoin in April after replacing The blue bird logo on Twitter with the Shiba Inu Dogecoin dog logo, which led to a 30% jump in the price of Dogecoin.

The memo said that “a deliberate course of carnival barking, market manipulation, and insider trading” enabled Musk to defraud investors and promote himself and his companies.

Musk bought Twitter last October. He also runs SpaceX, the maker of rockets and spacecraft, as well as Tesla, which makes electric cars.

Alex Spiro, an attorney for Musk and Tesla, declined to comment Thursday. An attorney for the investors did not immediately respond to requests for comment.

Investors accused Musk, the second richest person in the world according to Forbes, of deliberately raising the price of Dogecoin by more than 36,000% 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 were in March sought to separate of the second amended complaint, calling it “an act of fanciful fiction,” and on May 26 said another amendment was not justified.

In an order issued Wednesday, US District Judge Alvin Hellerstein said he would “probably” allow the third amended complaint, saying the defendants would likely not be biased.

Hellerstein also accepted the investors’ request to dismiss the non-profit Dogecoin Foundation as a defendant. Her attorney, Seth Levine, called the dismissal “the appropriate outcome.”

The case is Johnson et al. Musk et al, US District Court, Southern District of New York, No. 22-05037.


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