A man claims that he and others were duped into a pyramid scheme by world-richest man Elon Musk and his companies, and investors have lost billions with the collapse of the cryptocurrency market.
And the bottom fell out when Musk went on Saturday Night Live!
This week, Keith Johnson filed a lawsuit against Musk, SpaceX and Tesla in federal court. Both of the companies were created by Musk, who is in the process of buying Twitter.
Johnson said he is one of the people who invested in Dogecoin cryptocurrency.
Musk or the companies have yet to respond to the federal lawsuit.
According to the filing obtained by RadarOnline.com Online, Musk and his companies are engaged in a crypto pyramid scheme by using Dogecoin. The crypto fund does not offer any value, the filing contends. It’s not backed by a metal, such as gold, it doesn’t pay interest and is not secured by the government.
Instead, it’s a currency where the number of coins is unlimited and the value comes from the hope that the price will rise indefinitely, the filing read.
The scheme started with a $3 million cap when it launched in 2013, according to the filing. In 2019 Musk started to post on social media about his support of Dogecoin. The suit then outlines dozens of posts and comments made by Musk on social media.
Dogecoin had the support of celebrities such as chef Guy Fieri, Shark Tank judge Mark Cuban, KISS member Gene Simmons and a host of others, the suit read.
The backing led the price of Dogecoin to rise its market cap to around $11 billion. But it started to fall when Musk started to Tweet about selling the cryptocurrency, the filing read.
Then the price rose again when Musk and SpaceX showed support for the currency.
The market cap kept rising to $95 billion until Musk went on Saturday Night Life in May 2021. On the show, he played a character who said Dogecoin was a “hustle,” according to the filing. That caused the market cap to shrink to $45 billion in a week.
The price continued to fluctuate over the next several months based on Musk’s social media posts, the filing read.
“Every statement and endorsement from Defendants on social media regarding Dogecoin has knowingly caused millions of people to spend billions of dollars buying into the Dogecoin Crypto Pyramid Scheme,” the suit read.
The entire crypto market cap rose to $3 billion before crashing in recent months.
Crypto investors have lost billions of dollars thanks to the crash that some have referred to as “crypto winter.” It has led to layoffs among some of the largest companies. Bitcoin — perhaps the most well-known cryptocurrency — has seen its value cut by two-thirds from its all-time high.
The suit alleged the market crashed after Musk said on SNL that crypto was a “hustle.”
Musk started to inflate the Dogecoin’s market cap from $250 million when he first started to get involved to $93 billion, the suit stated. But the crash has lowered the market cap to $7 billion. The suit claims Johnson and the other investors should be paid the $86 billion difference and an additional $172 billion for other harms.
The suit alleges wire fraud and other claims for the unknown number of investors who partook in the pyramid scheme.
If the claims do prove to be true, the Musk and cryptocurrency would be the largest-Ponzi scheme in history. To compare, the Bernie Madoff scheme totaled about $65 billion.