When isn’t Elon Musk in the news? Multiple times a day in some cases. From SpaceX to Tesla and Twitter, he’s ubiquitous. But this latest news has a definite dark side for all of his interests and activities. A racketeering lawsuit has been filed against Elon Musk for $258 billion. It alleges he used Dogecoin for a pump-and-dump scheme. Let’s break some of this down before we go too deep into the weeds.
What is the RICO Act?
Remember when Rudy Giuliani was U.S. Attorney for the Southern District of New York? This was before he became Mayor of New York, and way before his current problems advising former President Trump. In 1985, he became famous for using the Racketeer Influenced and Corrupt Organizations Act, known as RICO, to convict various white-collar crimes.
It became law in 1970. How it works is prosecutors present evidence that a pattern of criminal behavior by a company or enterprise took place. Then, the RICO Act allows anyone connected to the company or enterprise is breaking the law. But Guiliani was the first to apply it in this way outside of organized crime, starting in 1979. And he was very successful at it, with over 4,100 convictions.
What does the lawsuit against Elon Musk say?
Today, the RICO Act is a catchall for charging alleged criminals involved in racketeering. In Musk’s case, the filing accuses him of using his various companies to purchase large amounts of Dogecoin cryptocurrency, then, once the value had increased, selling it off before it collapsed.
According to Reuters, “The $258 billion racketeering lawsuit accusing Elon Musk of running a pyramid scheme to support the cryptocurrency Dogecoin has expanded, adding seven new investor plaintiffs and six new defendants including his tunnel construction business Boring Co. According to an amended complaint filed on Tuesday night in Manhattan federal court, Musk, his electric car company Tesla Inc, his space tourism company SpaceX, Boring, and others, intentionally drove up the price of Dogecoin by more than 36,000% over two years and then let it crash.
The lawsuit alleges Musk and investors made billions of dollars.
“By doing so, the defendants profited tens of billions of dollars at other Dogecoin investors’ expense, while knowing all along that the currency lacked intrinsic value and that its value ‘depended solely on marketing,’ the complaint says. The filing charges allege fraud, wire fraud, negligence, false advertising, deceptive practices, and more. It also alleges Elon Musk illegally gambled with the cryptocurrency itself.
The lawsuit alleges eight complaints, but only two must be proven in court for the lawsuit to be successful. We’ll see over the next year whether all of this can be proven, and what that means for Musk. He could be ordered to pay back investors if found guilty, but he could also wind up in prison. Hundreds of organized crime members can attest to that.