After being accused of operating a “pyramid scheme,” Elon Musk is presently being sued for much more than he is worth. On June 16, a lawsuit was filed in Manhattan against the world’s wealthiest man, demanding $258 billion in damages. It is estimated that Tesla CEO Elon Musk has a net worth of $212.5 billion, according to Forbes’ “real-time billionaires.”
The billionaire’s fortune is mostly invested in Tesla shares, which fluctuate in value alongside the firm. According to Forbes, Musk controls around a quarter of Tesla and 9.1% of Twitter. Musk’s portfolio also includes the $125 billion SpaceX spaceship and satellite manufacturing firm, among other things. A considerable portion of Musk’s Tesla stock is being used as collateral for loans, according to the website, and a deduction has been made to account for this.
The co-founding of PayPal was Musk’s first important contribution to the IT industry. The South African entrepreneur cashed out after contributing significantly to the development of the payment service and concentrated his energies on Tesla, which is now the world’s largest electric car manufacturer. The Boring Company and Neuralink are among the firms Musk has worked with, in addition to PayPal, Tesla, and SpaceX.
The billionaire has also earned a reputation for proposing bizarre answers to far-flung challenges, such as utilizing nuclear bombs to make Mars livable in 2015. Musk has also been a big proponent of cryptocurrencies, which might get him in trouble.
Musk’s support for cryptocurrencies
Musk has had a significant impact on the cryptocurrency industry. Tesla was one of the first large corporations to accept cryptocurrencies as a payment method under Musk’s leadership. Tesla is unique in that it not only takes Bitcoin, the most well-known and perhaps most coveted cryptocurrency, but it also accepts payments in Dogecoin, a meme-based cryptocurrency.
Musk also has a long history of tweeting about bitcoin, which seems to have generated massive price swings in several coins. Dogecoin, which has been priced at a fraction of a penny for the bulk of its lifespan, is the most severe example of this. The fact that there is no hard limit on the number of Dogecoins in existence contributes to its low value, but the fact that it is based on a famous joke does not help its legitimacy. Despite its drawbacks, Dogecoin reached an all-time high of 64 cents per coin in May 2021, because of Musk’s constant tweeting about the currency and pledges to physically take it “to the moon.” It has now dropped below a penny per coin, and one person is blaming Musk for the entire mess.
The wealthiest guy on the planet and his $258 billion issues
According to Reuters, Musk was sued for $258 billion in federal court in Manhattan on June 16, 2022. Keith Johnson, the guy who filed the complaint, believes Musk inflated the price of Dogecoin before allowing the cryptocurrency’s value to drop. According to the lawsuit, Musk utilized his “world’s wealthiest man” status, following, and platform to “run and manage the Dogecoin Pyramid Scheme for profit, publicity, and entertainment.” Musk allegedly “supported Dogecoin to benefit from its trade,” according to Johnson, despite knowing the cryptocurrency had “no value.”
To back up his claims, the complainant has submitted quotations from some of the world’s wealthiest individuals, like Warren Buffett and Bill Gates, who have cast doubt on the feasibility of Bitcoin. The lawsuit seeks three times the amount that Dogecoin’s value has dropped since May 2021. Johnson also wants Dogecoin trading to be classified as gambling under federal and state law. Musk has not yet responded to the case.
Despite the allegations, Musk’s activities do not seem to fulfill the description of a “pyramid scheme,” which is defined as “an unlawful investment swindle based on a hierarchical arrangement of network marketing,” according to Investopedia. A pyramid scheme entails the person at the top of the pyramid persuading two individuals to join the scheme, each of whom then recruits two more people to join the plan. The recruitment process continues, and money continues to flow up the “pyramid” until the lowest levels become too enormous, and the latecomers lose their investments.
The Tesla founder’s business and Twitter actions have put him in court before. One of the divers who assisted in the rescue of a group of youngsters trapped in a cave in Thailand sued him in 2019. Musk replied to Vernon Unsworth as “pedo man” on Twitter after he made critical comments about a submarine he deployed to the site of the rescue. This led to Musk winning a $190 million slander case (via BBC).
Even the US government has taken notice of Musk’s tweets about Tesla stock sales and a possible takeover, leading to a lawsuit from the Securities and Exchange Commission and an investigation into his conduct by the Department of Justice.
Most recently, Musk has been in court on problems relating to his planned acquisition of the social media network Twitter. Shareholders have sued Musk, alleging that he broke securities regulations by failing to declare his stock acquisition on time. If a person buys more than 5% of a corporation, the law requires them to report their interest within 10 days. Musk held more than 5% of Twitter by March 14, but did not report his acquisition to the Securities and Exchange Commission until April 4, when he had over 9% of the company.