Dogecoin Litigation Continues: Musk and Investors Clash Over Sanctions After Dismissal

You may have thought you’d heard the last of the securities class action launched by Dogecoin investors against Elon Musk after the judge threw out the plaintiff’s fourth amended complaint in August. But you’d be wrong. 

As they say, you can’t keep a good doge down. And now, lawyers for both parties are back for more legal shenanigans with each having filed cross-motions for post-dismissal sanctions against the other.

The class action was launched by Dogecoin investors in 2022, alleging that Musk engaged in insider trading and manipulated the price of Dogecoin through his public statements on Twitter / X and his appearance on Saturday Night Live. The complainants say Musk drove up the price of the memecoin in what the initial filing described as a “deliberate course of carnival barking, market manipulation and insider trading”.

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“Science, Bitch!” Claims Investors’ Lawyer

Musk’s lawyers say the plaintiffs in this case made a series of frivolous “whack-a-mole” style complaints in an effort to extract whatever they could from the billionaire businessman. Following these claims Musk’s team alleges that the plaintiffs’ lawyer, Evan Spencer, hinted that he’d be prepared to settle the class action for US$5 million.

Spencer though, has a different story. In his latest filing, Spencer says all the complainants’ claims were made in good faith and that they allege “dozens of misrepresentations [by Musk] with particularity”. 

Spencer further claims that the latest amended complaint is science-backed, writing that it “incorporates numerous scientific studies which strongly suggest that Dogecoin’s trading price and volume were solely attributable to Musk’s activity, and that he was knowingly manipulating the market.”

He said that some of Musk’s lawyers from the firm Quinn Emanuel Urquhart & Sullivan should be sanctioned and disqualified for illegally revealing Spencer’s confidential settlement order to the press in an attempt to scuttle his appeal.

Chances of Sanctions Seems Slim

The chances of either side being granted post-appeal sanctions seem low as the judge in this case, U.S. District Judge Alvin Hellerstein of Manhattan, has already previously denied sanctions motions to both parties. In his ruling from December last year Judge Hellerstein said that the investors had indeed “presented non-frivolous and good-faith issues to litigate”, but also found that Spencer hadn’t provided any compelling evidence that Musk’s lawyers had leaked confidential information to the media. 

However, the judge did leave open the possibility for further sanctions claims.  And, like doges at the park desperate to be let off the leash, both parties have now bounded back to the courts the moment they sensed freedom.

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In a statement emailed to Reuters, Spencer said he was “confident that defendants’ motion for sanctions will be denied”. Musk’s lawyers haven’t made any public comment on the latest chapter in the ongoing legal tussle.