HomeCryptoElon Musk charged with insider trading for manipulating the price of Dogecoin

Elon Musk charged with insider trading for manipulating the price of Dogecoin

Bad news for Elon Musk who has new charges of insider trading against him for manipulating the price of the cryptocurrency Dogecoin in a series of events from 2021 to the present.

All the support shown toward Dogecoin on Twitter may have been part of a move engineered on purpose by the Tesla CEO, who now faces legal consequences for pumping up the crypto’s price.

Full details in the news below.

Elon Musk and new market manipulation charges involving Dogecoin

Here we go again: Elon Musk has been charged for the third time with insider trading for artificially manipulating the price of Dogecoin through a series of actions mainly involving tweets praising the crypto market’s first memecoin.

Second, Musk allegedly exploited other “publicity stunts” such as appearing on “Saturday Night Live” in 2021 and promoting on social media by some influencers to profit from Dogecoin trading.

The charges were filed on 31 May in Manhattan federal court by a group of crypto investors who, following and amending an earlier $258 billion class action lawsuit from June 2022, filed new charges against Tesla‘s CEO.

As per the letter filed with the court, the stakeholder allegedly engaged in a “deliberate carnivalesque course of barking, market manipulation and insider trading.”

Specifically what is being disputed against Musk is the legality of Musk’s choice to replace Twitter’s bird logo for a few days with that of Dogecoin, depicting the well-known Shiba Inu dog.

Indeed, after that event, it was discovered that the second richest man in the world allegedly sold from his personal wallet, bags of Dogecoin amounting to $124 million.

Musk’s lawyers, with regard to the June 2022 lawsuit (the second) had defended by stating:

“There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion.”

However, in the new document filed in Manhattan there is a dispute of this old claim, which according to the group of investors harmed by market manipulation, is no longer credible.

The ball is now in the hands of US District Judge Alvin Hellerstein, who, as anticipated, will most likely accept the “amended compliant” i.e., the modification of the previous charge, adding that the defendants will not have to serve prejudice.

Elon Musk is paying dearly for his sympathy toward Dogecoin

Hence, Elon Musk once again finds himself in the spotlight for illegally contributing to the rise in the price of Dogecoin, on which he obviously profited from trading.

The news comes as no surprise at all to most, who noticed the ambiguity with which Musk had dealt with the memecoin.

In the sights of investors suing Tesla’s CEO is a particular emphasis on the instance in which Musk allegedly placed the Dogecoin logo on the Twitter home page.

That choice, which in Musk’s defense would be part of a “gesture of sympathy,” allegedly drove the price of $DOGE up more than 22% in just one hour of trading on the market.

Questa immagine ha l'attributo alt vuoto; il nome del file è image-25-1024x600.png
Hourly chart of Dogecoin (DOGE/USDT) price

In the following hours and days, the crypto went through a distribution phase that basically nullified all the previous pump, a typical scenario of market manipulation.

In the lawsuit filed in Manhattan, on-chain transactions and the address that allegedly belonged to Musk are mentioned, demonstrating the multibillionaire’s impeccable timing in dumping his positions in the very aftermath of the crypto’s pump.

This time Elon could really pay dearly for his actions if only the judge challenges him on the “fun and sympathy” aspect.

Investors involved in the case state that:

“Musk’s pretense that promotion of Dogecoin was just well-meaning fun—not meant to be taken seriously—is not credible.”

To be honest, I do not think any of us ever believed that there was no ulterior motive behind Musk’s exploits, given and considering that his Twitter profile has more than 140 mln followers.

We will see in the coming months how the judicial events of the case will follow. 

Focus on the price of Dogecoin

The DOGE cryptocurrency represents the first memecoin by market capitalization with a total value of more than $10 billion.

Currently, the crypto’s price is $0.0717 with a volume in the last 24 hours of $165 million.

Analyzing the chart of Elon Musk’s favorite dog we can see how the price is now crushing the 60-period moving average on a daily time frame, yet remaining above the $0.065 support.

Very interestingly, every sudden pump in price, in addition to always having Musk’s hand in it, has been followed by a rapid decline.

This, as mentioned earlier, is typical of scenarios in which one or more whales manipulate the price of an asset through social influence techniques.

Questa immagine ha l'attributo alt vuoto; il nome del file è image-26-1024x549.png
Daily chart of the price of Dogecoin (DOGE/USDT)

DOGE currently has a drawdown from the all-time highs recorded in May 2021 of more than 90%.

It is not easy to get an idea of the future price direction for this cryptocurrency: too many variables are in the way, such as Musk’s influence and the SEC affair that considers Dogecoin a security.

What is certain is that in times of insecurity and market instability, investors prefer to stay away from more speculative assets like DOGE. 

On the other hand, the memecoin trend was revived a few weeks ago thanks to the appearance and appreciation of the crypto PEPE; which quickly won the sympathy of the degens of the crypto world.

All this only fortifies this asset class, which, while it remains lacking in fundamental characters, cannot be ignored.

Most likely, when markets return to more liquidity and noteworthy trading volumes, memecoins like DOGE will also return to their appreciation phase.

Alessandro Adami
Alessandro Adami
Graduated in "Information, Media and Advertising", for over 4 years interested in the cryptocurrency and blockchain space. Co-Founder of Tokenparty, community active in spreading crypto-enthusiasm. Co-founder of Legal Hackers Civitanova marche. Information technology consultant. Ethereum Fan Boy and supporter of Chainlink oracles, strongly believes that smart contracts will be central in the development of society.