In this article, we are going to go over Elon Musk sued over claims of Dogecoin pyramid scheme, and answer the question is Dogecoin a pyramid scheme.
A dogecoin investor is suing Elon Musk and two of his firms, Tesla Inc. and SpaceX, for $258 billion, claiming that they are running a “pyramid scheme” to create the cryptocurrency’s price bubble.
Elon Musk sued over claims of Dogecoin pyramid scheme
On Thursday, Keith Johnson filed a class-action lawsuit in Manhattan federal court against Musk and his enterprises, alleging fraud and breach of racketeering and gambling laws. The suit demands class-action status for dogecoin investors who have lost money since April 2019. The lawsuit says that:
“Defendants falsely and deceptively claim that dogecoin is a legitimate investment when it has no value at all,”
“Dogecoin is not a currency, stock or security. … It is not based upon or tied to anything of value. … It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.”
The lawsuit filed by Johnson claims Dogecoin investors have lost $86 billion since Musk started purchasing and promoting it in 2019, as well as triple damages of $172 billion. It also seeks to prohibit Musk and his firms from advertising Dogecoin, as well as an injunction forcing him to equate Dogecoin trading to gambling.
Musk, the world’s richest man, has tweeted about Dogecoin on several occasions in recent years, almost always causing a price increase. Musk dubbed himself “The Dogefather” in April 2021 while advertising his upcoming “Saturday Night Live” appearance; Dogecoin plummeted the next day after it was described as a hustle in a sketch Musk appeared in on the show.
SNL May 8
— Elon Musk (@elonmusk) April 28, 2021
The lawsuit alleges that Musk acted with fraud and negligence when he promoted Dogecoin, alleging that he knew the price was being artificially driven. It also notes Musk’s long history of failing to comply with the Securities and Exchange Commission.
Dogecoin was created as a joke, yet it gained enormous popularity in 2021, with Elon Musk being one of its most vocal promoters. Tesla started accepting Dogecoin for purchases of goods earlier this year, and Musk has indicated that SpaceX will soon follow suit. His association with Dogecoin is so apparent that when he decided to buy Twitter, Dogecoin rose just because of it.
What is a pyramid scheme?
A pyramid scheme is a type of business model in which people are enrolled via the promise of money or services for bringing others into the company, rather than the sale of goods or investments. Pyramid schemes are unsustainable and frequently illegal as recruiting increases. Pyramid schemes have taken many forms throughout history. Some multi-level marketing programs have been labeled as pyramid schemes.
Is Dogecoin a pyramid scheme?
Dogecoin does not create sufficient revenue to cover operational costs. It does not pay interest or a dividend. In comparison to other top cryptocurrencies, it has no unique value. The best method to profit from Dogecoin is to buy in and then immediately promote its price by posting memes on social media and telling friends, relatives, and passers-by that it’s going to the moon.
The only way the Dogecoin price will rise over time is if more people or organizations buy-in. The early Dogecoin investors have already made a killing. Its value has increased by more than 13,300% while on its hay day. However, the Dogecoin community failed to bring on additional buyers, and the prices, therefore, stagnated and then plummet to where it is today.
In a nutshell, fractional ownership of a firm is represented by a share of stock. In the future, that company will expand and develop, and your fractional ownership stake will appreciate in value. However, Dogecoin’s price does not improve or create any value over time. Even long-term Dogecoin investors require more buyers to push the price higher.
Dogecoin’s creator, Billy Markus, has stated that he created the currency as a joke in about two hours. Dogecoin, according to Markus, is mostly driven by the greater fool theory. The idea that only fools buy an investment hoping that later more foolish people will buy it back at a higher price is known as the greater fool theory. He also claimed that most of the cryptos are fraudulent. Bill Gates made similar remarks concerning NFTs very recently.
Dogecoin DOGEUSD, +2.48% traded at a fraction of a penny before 2021, when it rose to an all-time high of about $68 with a market capitalization of roughly $500 million. It currently has a price of around 5 cents according to CoinMarketCap data, down 68% year to date and down 81% over the past year. It’s also been hit hard by the recent cryptocurrency downturn, falling 35% over the previous month. This crypto downturn was caused by the Terra stablecoin crash, and it had many effects on the crypto market as a whole.
Elon Musk net worth
Elon Reeve Musk is a business magnate and investor. He is the founder, CEO, and Chief Engineer at SpaceX; angel investor, CEO, and Product Architect of Tesla, Inc.; founder of The Boring Company; and co-founder of Neuralink and OpenAI. With an estimated net worth of around US$203 billion as of June 2022, Musk is the wealthiest person in the world according to both the Bloomberg Billionaires Index.
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