Investors Drop Lawsuit Accusing Elon Musk of Rigging Dogecoin

Investors in the cryptocurrency who said the world's richest person and his electric car company Tesla committed fraud and insider trading are withdrawing their appeal.

Investors in the cryptocurrency Dogecoin who accused Elon Musk and his electric car company Tesla of fraud and insider trading are withdrawing their appeal from an August 29 dismissal of their case.

The investors, who were seeking class-action status, had also asked the 2nd U.S. Circuit Court of Appeals in Manhattan to sanction Musk’s lawyers for allegedly interfering with the appeal, including by demanding payment of their hefty legal fees.

Musk and Tesla, meanwhile, withdrew their motion to sanction the investors’ lawyer for allegedly pursuing a “frivolous” case with ever-changing legal theories to “extort a quick handout.”

A stipulation dismissing the appeal and both sides’ motions was filed on Thursday night in federal court in Manhattan. It requires approval by U.S. District Judge Alvin Hellerstein.

The investors had sued Musk in June 2021, accusing him of losing them money by driving up Dogecoin's price with tweets and other actions, then abandoning the cryptocurrency.

They said Musk and Tesla touted Dogecoin to boost its price and sell their holdings at inflated levels, while knowing the cryptocurrency had no intrinsic value.

Investors accused Musk of using Twitter posts, an appearance on NBC’s “Saturday Night Live” and other stunts to trade Dogecoin at their expense, including by timing trades to Musk’s public statements and activities.

The investors said Musk's conduct caused them to lose money because he failed to disclose his trades, and his statements and actions artificially inflated Dogecoin's price.

Musk's lawyers had called the investors' lawsuit “desperate” and said the investors were trying to “manufacture jurisdiction” over Musk in New York, where he does not live.

They said the investors' claims were barred by statutes of limitation and other legal doctrines, and that Musk's statements about Dogecoin were protected by the First Amendment.

Musk and Tesla are also facing separate securities fraud lawsuits over Musk's tweets about a possible take-private transaction for Tesla in August 2018.