Judge Dismisses $258B Lawsuit That Claimed Elon Musk Orchestrated a “Crypto Pyramid Scheme”

Almost two years after the filing, Judge Alvin Hellerstein of the US District Court for the Southern District of New York has decided to drop the lawsuit that sought $258 billion in damages.

A United States court has dismissed a class action lawsuit that sought a whopping $258 billion in damages from Elon Musk and his companies, SpaceX and Tesla. The lawsuit, filed almost two years ago, accused Musk of orchestrating a “crypto pyramid scheme” and using his status as the world’s richest person to manipulate the price of Dogecoin (DOGE).

The plaintiffs in the lawsuit claimed that Musk’s actions led to losses for investors and that his statements about DOGE could be construed as a “Dogecoin Pyramid Scheme.” They alleged that Musk promoted the cryptocurrency to profit from the volatility he created.

Specifically, the lawsuit pointed to Musk's appearance on Saturday Night Live in 2021, during which he portrayed a financial expert in a skit and briefly mentioned DOGE, calling it "a hustle." Following the skit, the price of DOGE dropped over 25% from its all-time high of $0.73 and has not recovered to those levels since.

However, in his Aug. 29 decision, Judge Alvin Hellerstein of the US District Court for the Southern District of New York dismissed the lawsuit, stating that Musk's statements about DOGE were "aspirational and puffery, not factual" and were "susceptible to being falsified." He added that no “reasonable investor could rely upon them” to make investment decisions.

The judge also found that the facts did not support the plaintiffs’ allegations of a “pump and dump” scheme, market manipulation, or insider trading, underscoring that it was “not possible to understand the allegations that form the basis” of these claims.

Musk's legal team had previously urged the court to dismiss the lawsuit, arguing that the Tesla CEO's support for dogecoin on social media alone was too imprecise to quantify as allegations of fraud.

At the time of publication, dogecoin's price showed no reaction to the dismissal and was down 86.4% from its all-time high price.

It's worth noting that Musk has largely distanced himself from the cryptocurrency sector in recent years. His electric vehicle company, Tesla, which once embraced Bitcoin (BTC) as a form of payment, reversed its decision shortly after Musk's SNL appearance. However, the company has reportedly held onto its BTC