Cash News
Elon Musk really likes Dogecoin. In recent years, Musk has talked up the Shiba Inu-themed cryptocurrency on Saturday Night Livemused about becoming its CEO, and even suggested he would send it to the moon on a SpaceX rocket. It was not clear if Musk really meant all this, but New England electrician Keith Johnson took the claims seriously enough to spend hundreds of dollars on Dogecoin—and then lead a $258 million class action lawsuit after the currency dropped in value.
The lawsuit claimed Musk and his company Tesla had run an illegal “pump and dump” scheme to inflate the price of Dogecoin, and then cash out after other investors rushed in to buy it. Other Dogecoin buyers—including an Arkansas retiree and a New York Ivy League student—also joined the lawsuit, which sought $86 billion in damages, plus triple damages of $172 billion.
Alas for the plaintiffs, their claim fell flat after a federal judge in New York tossed the case on Thursday. In a terse two-page ruling, U.S. District Judge Alvin Hellerstein summarized the various claims Musk had made about Dogecoin on Twitter (now X). Those included that:
“Dogecoin might be his favorite currency and that he had purchased some for his son, that Dogecoin is the people’s crypto and the future currency of Earth, that Dogecoin might become the standard for the global financial system and the currency of the internet [and…] that Tesla vehicles could be bought with Dogecoin.”
Even though Musk had praised Dogecoin to the moon, Hellerstein found his statements were no more than “puffery”—a word judges have used for more than a century to describe advertising claims intended to drum up hype, and that did not amount to serious promises.
The legal concept of puffery was first expressed by a U.K. appeals court in 1892 in a case involving the maker of a quack medicine “smoke ball” that promised to prevent the flu, and who offered a £100 reward to anyone who contracted it while using the product. A judge in the case asked if the promise was a “mere puff” before concluding that it wasn’t.
In the Dogecoin case, though, the judge concluded Musk’s claims did amount to more than a puff.
“No reasonable investor could rely upon them,” wrote Hellerstein, adding that they could not be the basis of a lawsuit. The judge added that he could not understand related allegations claiming that Musk and Tesla had engaged in a “pump and dump.”
The ruling led fans of Musk and Dogecoin to post celebratory memes on X:
Elon Musk just won the dismissal of a long-running, baseless billion-dollar lawsuit accusing him of rigging Dogecoin and engaging in insider trading. 🔥 pic.twitter.com/ppcXEEJJQb
— Sir Doge of the Coin ⚔️ (@dogeofficialceo) August 29, 2024
The judge also threw the case out with prejudice, meaning the plaintiffs don’t get another chance to amend the lawsuit in hopes of making it stick. Johnson’s lawyer, however, has vowed to appeal the ruling—though that may be a long shot.
Meanwhile, Dogecoin remains a fixture of the crypto scene with a market cap of over $14 billion, which makes it the eighth biggest crypocurrency. The coin is currently trading around 10¢—a far cry from the 73¢ it reached in May of 2021 as word spread that Musk would be talking it up on Saturday Night Live.