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Tesla, SpaceX, and Musk sued by dogecoin investor for $258 billion

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Yahoo Finance's Alexis Keenan explains a lawsuit levied against Tesla, SpaceX, and Elon Musk alleging dogecoin scheme.

Video Transcript

SEANA SMITH: Legal trouble for Elon Musk. A Dogecoin investor is suing him, accusing Musk of running a pyramid scheme to inflate the price of Dogecoin. Alexis Keenan has more on this for us. And Alexis, what can you tell us about the suit?

ALEXIS KEENAN: OK, so this one and Elon Musk has a lot this week. So we've got to keep him straight. This one comes from a Dogecoin investor. And his name is Keith Johnson. And he wants to have this lawsuit certified as a class. So it is brought in a federal court in Manhattan. And what he wants is $258 billion. See, that's--

DAVE BRIGGS: Billion.

ALEXIS KEENAN: Billion with a B. And what he says is that Elon Musk, SpaceX, and Tesla are all responsible for manipulating Dogecoin to the point that it has had such vast fluctuations in both its price and its volume of trading, that they need to be responsible and they need to pay this money to the investors during a certain time frame, right? These shareholder lawsuits are usually during a certain span of time. They're saying that this was taken advantage of by Musk and company, that they are benefiting.

But what's not part of this lawsuit is we can't see what that benefit is. There's no allegation or evidence there yet to say Elon Musk's SpaceX or Tesla bought at price X and sold at price Y. So let's take a look at the time frame of concern. Particularly, it's about April 2021 through June of this year. But the lawsuit goes all the way back to April 1st of 2019 when the market cap was $250 million, with an M. At that time-- and note it's April Fool's Day there-- the day after, Musk tweets that Dogecoin is his favorite cryptocurrency.

So that's sort of the entree of Musk into this territory. Go forward to May 2021. There are some huge escalations in price that coincide with a lot of tweets from Musk. You've got 25% escalations in price. You have 500% escalations in price. Then you get all the way to June when the price had dropped to $7 billion from a high of $86 billion. And that's what the investors are concerned about here. They want to make up that spread.