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

NEW YORK – Mr Elon Musk is being accused of insider trading in a proposed class action by investors accusing the Tesla chief executive of manipulating the cryptocurrency Dogecoin, costing them billions of dollars.

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

Investors said this included when Mr Musk sold about US$124 million (S$167 million) worth of Dogecoin in April after he replaced Twitter’s blue bird logo with Dogecoin’s shiba inu dog logo, leading to a 30 per cent jump in Dogecoin’s price. Mr Musk bought Twitter last October.

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

Investors have accused Mr 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 in June 2022.

Mr 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, US District Judge Alvin Hellerstein said he would “likely” allow the third amended complaint, saying the defendants would not likely be prejudiced.