The downturn is a particularly bloody period for the crypto market. Many investors have suffered huge losses as a result of misguided trades. Some of them are trying to recover their money in unique ways. One of them is the $258 billion lawsuit that Elon Musk himself received.
Class action lawsuit for promoting cryptocurrency pyramid scheme
On Thursday, June 16, a class action lawsuit was filed against Elon Musk in New York District Court by one of the attorneys at Evan Spencer Law. The group of individuals behind it accuse the world’s richest man, as well as his companies SpaceX and Tesla Inc. of engaging in a financial pyramid scheme based on Dogecoin (DOGE).
While the event itself is described as insane, what is even more surprising is the skyrocketing amount of damages the plaintiff is seeking. We’re talking about $258 billion, which is more than 34 times DOGE’s current capitalization and nearly three times its ATH.
Keith Johnson, one of the people behind the lawsuit points out that Musk and his companies “have unjustly enriched themselves by $86 billion as a result of the cable fraud, gambling venture, false advertising, deceptive practices and other wrongful conduct.”
That’s the same amount of loss he and the other accusers reported. The damages were to be incurred between May 2021 and June 2022. Thus, the plaintiff is seeking restitution and additional damages of $172 billion.
Musk’s fault, however, or ill-considered investment decisions?
As Johnson reports:
“Defendant Musk is a self-proclaimed ‘Dogefather,’ a ‘former Dogecoin CEO,’ partner, developer, spokesperson, publicist, marketer, salesman, and promoter of Dogecoin who has assembled a ‘Doge Army,’ including his corporations and various billionaires, influencers, and celebrities, to increase the price, market capitalization, and trading volume of Dogecoin.”
It is worth mentioning here that the prosecutors are demanding that Dogecoin trading be recognized as a form of gambling. The consequence of this is supposed to be Musk’s violation of state and federal regulations concerning this industry.
So is trading in cryptocurrencies really gambling? Or perhaps a hardship due to high price volatility caused by the adoption of modern, often illiquid technology?
The community harshly assesses the demands
The crypto community has overwhelmingly ridiculed the lawsuit brought against Musk, suggesting that it is absolutely ridiculous. Rahul Sood, CEO of Irreverent Labs, sums it up:
“It’s amazing that someone in the United States could bring such a stupid class action lawsuit. All these guys knew what they were getting into. Ridiculous.”
The risks that come with investing in crypto assets are well known to everyone. Thus, high volatility here becomes a great opportunity, but also a great threat.