Investors in Dogecoin have amended their claim in a class action lawsuit against Tesla CEO Elon Musk, accusing him of engaging in insider trading. Before Musk took control of Twitter, has been consistent in promoting Dogecoin on the social media network.
It was gathered that the complaint was first submitted in June 2022 but recently gained official attention this year. According to the amended complaint, Musk allegedly participated in insider trading by utilizing his knowledge of Tesla’s financial performance to benefit his investments in Dogecoin.
According to the investors, Musk exploited confidential information about Tesla’s financial performance to make well-informed trades in Dogecoin. Investors who lost money due to Musk’s tweets on Dogecoin are suing him for damages, alleging that the billionaire used his influence as CEO of Tesla/Twitter to inflate the price of the cryptocurrency unfairly.
According to the updated lawsuit, Musk’s tweets and other public comments about Dogecoin were part of a planned campaign to advertise the cryptocurrency, which he held a sizable quantity of, and he did so for his benefit. Among other accusations against Musk is that the value of the social media network had reportedly decreased to about 33% of the $44 billion Musk spent for it when he acquired it in October 2022.
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Investors contend that a significant contributing element to this decrease was Musk’s tweets regarding Dogecoin, which caused investors to lose faith in the platform and Musk’s ability to manage it. They contend that he was given an unfair edge over other investors, allowing him to make money from them.
Musk Denies Allegation; Experts Explain His Many Lawsuits
Musk has not yet responded to the revised allegation but has previously refuted accusations of ‘impropriety’ concerning his tweets regarding Dogecoin. Musk, in a tweet dated May 2022, declared that he would “never sell any of [his] Doge holdings” and that he was “working with Doge devs to improve system transaction efficiency.”
He has previously said that the joke-like nature of his tweets about Dogecoin should not be taken seriously. On May 12, Musk revealed that Linda Yaccarino, the previous head of worldwide partnerships and advertising at NBCUniversal, would succeed him as CEO of Tesla sometime in June.
The revelation took aback many investors, and some analysts theorized that it might be connected to the ongoing legal issues Musk is currently dealing with. Also, investors recounted that the Twitter boss sold around $124 million worth of DOGE in April.
Investigation into this reveals that it was around the same time the company changed its Twitter blue bird logo with the Shiba Inu dog logo. It was also gathered that the coin experienced a more than 30% increase in its price immediately after a quick change in the logo.
In addition to the Dogecoin lawsuit, he is being sued over his tweets about a 2018 Thai cave rescue and a 2016 Tesla acquisition proposal of SolarCity. Regulators and investors have also criticized Musk for his controversial tweets, which have ranged from jokes about Dogecoin to charges of market manipulation.
The Implication Of The Lawsuit On DOGE Explained
Industry analysts believe that Musk and the cryptocurrency sector as a whole may suffer significantly depending on how the Dogecoin case turns out. They claim that if the investors are successful in their complaint, it may serve as a model for other legal actions against people who advertise cryptocurrencies on social media.
Stakeholders who opined on this development fear that this might cause Musk’s tweets and other public utterances to come under more scrutiny, which might hurt his standing reputation in the industry.
According to an analysis on the CoinDesk platform, the updated case against Musk speaks volumes about how investors’ doubts about the potential risks of investing in cryptocurrencies are growing and how the market needs more regulation and monitoring. Meanwhile, opinions from different sources have shown that there will be more legal challenges and governmental actions as the acceptance of cryptocurrencies grows.