Elon Musk: closed the case for insider trading on Dogecoin

Yesterday, Judge Alvin Hellerstein of the Southern District of New York court dismissed the lawsuit filed against Elon Musk for alleged insider trading on Dogecoin.

Curiously, the owner of X did not announce it on his official profile, perhaps because he was too busy posting propaganda for Donald Trump. 

The problem 

The news of the lawsuit against Elon Musk for manipulating the price of Dogecoin was published in June of last year.

The accusations were directed against his tweets and actions that had artificially raised the price of DOGE in 2021, but then obviously let it fall again during the bear-market of 2022. 

Famous was his participation in the television program “Saturday Night Live” in the role of “Dogefather”, precisely the day when the price of DOGE recorded its all-time high (May 8, 2021). 

It is worth noting that after that single peak above $0.7, the price of Dogecoin even fell back below $0.2 just a little over two months later, and during the bear-market of the following year, it plummeted below $0.06, with a temporary cumulative loss exceeding 90%. 

During 2023, it practically did not recover anything until September, then bounced back starting in October only thanks to the awakening of the entire crypto market. 

This year it managed to briefly rise above 0.2$, at the end of March, but only to then return to the current 0.1$. 

The current price is almost double compared to the bottom of 2022. Especially thirty times higher than what it was at the end of 2020, before Musk started promoting it, but it is still 86% lower than the highs.

The end of the causa

The accusers, Colby Gorog, Joshua Flint, Louis Robinson, and Michael Lerro, claim that Musk manipulated the price of Dogecoin with his tweets and actions to profit from it. 

In other words, according to them, he would have bought DOGE before starting to promote it, and then he would have sold it in 2021 before the highs. Subsequently, he would have effectively abandoned it, so much so that at that point the price dropped. 

It is practically a kind of accusation of pump&dump. 

In the document published yesterday, Judge Hellerstein writes that the complaint contained “accusations of substantial false statements by the defendants regarding Elon Musk’s tweets about Dogecoin”.

For this reason, he decided to accept the request for dismissal from the defendants.

The false and misleading statements of the plaintiffs concern the fact that Musk had stated that Dogecoin was his favorite currency and that he had bought some for his son.

Furthermore, that Dogecoin is the people’s cryptocurrency and the future currency of the Earth, that Dogecoin could become the standard for the global financial system and the currency of the Internet.

Finally, Musk agreed to become CEO of Dogecoin, that Musk might put a Dogecoin in SpaceX and take it to the Moon and that Dogecoin would have paid for the mission.

So it was the same judge who examined all these statements and verified that they were not all true. 

Indeed, Judge Hellerstein argues that the plaintiffs’ statements are aspirational and boastful, not factual and susceptible to being falsified. Therefore, they cannot be the basis of a lawsuit, and no reasonable investor could rely on them. 

Furthermore, it adds that it is not possible to understand the accusations underlying the alleged “pump and dump” scheme. That is, it does not detect violations of fiduciary duties (which would be equivalent to insider trading).

The price of Dogecoin

Dogecoin has existed on the crypto markets for about ten years. 

Until 2020 its price had remained very low, so much so that DOGE had never entered the top 10 of the main cryptocurrencies by market capitalization. 

On the other hand, it was born as a joke, and until 2020 it remained essentially just a memecoin. 

However, when Musk started promoting it, it seemed like it could become something else, so much so that the owner of X himself had suggested facilitating its further development. 

It is worth noting that the development of Dogecoin has been practically at a standstill for almost a decade. However, not even with Musk’s intervention have there been significant new developments.

The first real price boom was recorded in January 2021, when it went from $0.03 to more than $0.06. Perhaps it is no coincidence that $0.06 was also effectively the baseline of the bear-market the following year. 

Another coincidence is the bottom of the first drop in 2021, $0.20, which also constituted the top of the rise in 2024. 

Third coincidence could be the $0.10. That is, a level on which the price of DOGE has been a lot during 2023 and to which it has recently returned.

These are probably, for now, the levels to take as a reference, and not the $0.73 of May 2021.