A United States court has dropped a $258 billion class action lawsuit on Elon Musk and his companies over claims that they promoted a “Crypto Pyramid Scheme.”
The class action lawsuit was filed against Elon Musk, Tesla, and Space X and was seeking a whopping $258 billion in damages.
Judge Alvin Hellerstein of the US District Court for the Southern District of New York dropped the case nearly two years after it was filed.
The core of the class action lawsuit opined that Elon Musk used his position as the world’s richest man to promote Dogecoin, a leading meme coin. The price of Dogecoin surged by a staggering 36,000% following Elon Musk’s promotion of the coin.
However, the price of the crypto asset dropped drastically after a while and never reached the heights it attained after Elon Musk promoted it.
This massive fluctuation in price cost investors a lot of money, and the plaintiffs behind the class action lawsuit against Musk termed the event a “Dogecoin Pyramid Scheme.”
They argued that Elon Musk’s motive for promoting the memecoin was to profit from the volatility his subtle endorsement of the coin would create.
In previous years, Elon Musk has used his massive community on X to promote Dogecoin as a crypto asset. At a point, there was strong speculation in the global crypto community that he was behind the project.
Elon Musk took things a little further by appearing on a Saturday Night Live skit in 2021, where he cosplayed a financial expert, referring to Dogecoin as a “Hustle.”
Few days from the SNL skit, Dogecoin dropped by 25% from an all-time high of $0.73 and never recovered from the drop.
The United States court in New York passed its verdict on the class action lawsuit on Aug. 29, arguing that Elon Musk’s comment on Dogecoin and promotion on X were not factual but aspirational. He argued that no reasonable investor would take such a statement as financial advice.
Musk’s legal team had previously called for the dismissal of the case, saying that their clients’ comments and subsequent promotion of Dogecoin were not specific enough to quantify allegations of fraud.
Elon Musk over the years seems to have made a U-turn on cryptocurrency. His company Tesla reversed the decision to accept payments in Bitcoin, and Elon Musk has long stopped the promotion of Dogecoin or any crypto asset.
Despite the drop in price of Dogecoin, the meme coin still remains the largest meme coin by market capitalization. Dogecoin has a market capitalisation of over $14 billion.
Memecoins like Dogecoins are strongly driven by the community around the project. Dogecoin surged back in the day due to the action of Elon Musk, which created a vibrant community for the crypto asset. However, today, the hype around the project has cooled off a little.
