An investor in dogecoin, originally created as a joke but whose value increased and fell as it was promoted by Elon Musk, has filed a $US258 billion ($367 billion) lawsuit against the billionaire and his companies Tesla and SpaceX.
- The lawsuit claims dogecoin investors have lost around $US86 billion since Mr Musk began promoting it
- Mr Johnson is asking for Mr Musk to reimburse this sum as well as pay double that in damages
- The value of dogecoin rose in 2021 after Mr Musk posted social media messages about the currency
Keith Johnson, who says he lost money after investing in dogecoin, described himself as an “American citizen who was defrauded” by what he called a “Dogecoin Crypto Pyramid Scheme.”
He is asking for his motion, filed in a New York court, to be classified as a class action suit on behalf of those who have suffered losses by investing in dogecoin since 2019.
Since Mr Musk began promoting the virtual currency, investors have lost around $US86 billion, Mr Johnson estimates.
He would like Mr Musk to reimburse investors this sum, plus pay double that in damages — an additional $US172 billion.
Founded in 2013, dogecoin’s creators say it was intended as an ironic response to two big internet phenomena: cryptocurrencies such as bitcoin, and a meme image of a Shiba Inu dog.
The price of dogecoin traded at just fractions of a cent for most of its existence.
But it saw its value leap at the beginning of 2021, rising to $US0.73 in May of that year, amid a buying frenzy that surrounded the GameStop saga and after online messages about it from Mr Musk.
On Thursday, however, it was worth less than six cents.
Mr Johnson said he believes Mr Musk increased “the price, market cap and trading volume of dogecoin” through his promotion of it.
He included tweets from Mr Musk, the world’s richest man who has more than 98 million followers on Twitter, including one promising that SpaceX would “put a literal dogecoin on the literal moon.”
Mr Johnson named Mr Musk’s Tesla electric car maker in the suit since it accepts dogecoin as payment for certain derivative products.
SpaceX was also included for having named one of its satellites after dogecoin.
Mr Johnson likened dogecoin to a pyramid scheme since the virtual currency has no intrinsic value nor is it a product.
Additionally it is not backed by a tangible asset and the number of “coins” is unlimited.
Suits by investors who feel cheated by the promises of virtual currency are on the rise in the United Sates.