5 ms·

Musk, Tesla, SpaceX Are Sued for Alleged Dogecoin Pyramid Scheme

87 points by jc_811 4y ago

tromp 4y ago
> “Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” Johnson said in his complaint, What makes a cryptocurrency a "legitimate investment" ? It clearly is a risky and highly speculative investment, but it's not clear to me what separates legitimate ones from illegitimate ones. Johnson's claim that Dogecoin has no value at all seems rather bogus, as it still trades at well over 1 cent per coin (we can agree it has no "inherent value").
- horsawlarway 4y ago
  I'd say when the original creator of the "currency" defines it as a joke, and the coin is configured so that ~14.5 million new coins are minted every day... It's safe to consider it illegitimate as an investment. At a minimum, it certainly can't be considered a valid value store, since the amount of currency in circulation inflates at an incredible pace, and without regard to the current value.
  - tromp 4y ago
    I strongly disagree. First of all, whether it's 14.5 coins per day or 14,500 or 14.5M or 14.5B doesn't matter at all, since it's just arbitrary scaling (just like how each bitcoin is really 100B satoshi). Secondly, a fixed block subsidy is an entirely reasonable emission schedule, with yearly supply inflation going down at a steady rate, taking 2 decades to drop down to 5% (better than fiat this year), and taking 5 decades to be the 2% that fiat aims for. In fact, there's one serious cryptocurrency that chose exactly such an emission, averaging one coin per second forever. It's the only coin that doesn't have the current generation hog the majority of (soft [1]) total supply... [1] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
    - joshjdr 4y ago
      This comment looks like a lawsuit waiting to happen!
    - randomhodler84 4y ago
      100M sats per BTC my dude
  - Schroedingersat 4y ago
    No argument that it isn't a scam, but you appear to fundamentally misunderstand the concept of exponential growth. Adding a linear amount to a pool induces an exponentially decaying inflation rate which becomes negligible after a decade or two. As such, dogecoin is the same fomo/'store of value'/deflationary scam as all the other coins, just skewed a little less towards the first suckers to join the ponzi scheme
  - Salgat 4y ago
    Can we stop with this disingenuous oversimplified "big number bad" argument? Dogecoin is the only major coin with an intentional long term inflation rate comparable to real world fiat. That has merit and novelty as far as cryptocurrencies go, especially if your goal is for it to be an actual currency.
- kayamon 4y ago
  I suppose it depends if there's someone manipulating it. A coin like Bitcoin is immune to internal manipulation -- there's one Bitcoin mined every ten minutes, and no one can change that, no matter how much money they have. Satoshi proved that a blockchain is only secure if it's the blockchain with the longest accumulated proof-of-work record. Dogecoin's blockchain is shorter, and they can't win a race where the other players are already ahead. Miners will generally only mine the blockchain with the most value, thus the market for one mining the leading crypto squeezes out the market for mining all the others. Miners must vote with their electricity as to which blockchain to support. No other blockchain can ever maintain its stability as long as Bitcoin exists. The game theory that backs Bitcoin also proves that all other cryptocurrencies cannot work in the long term.
  - tromp 4y ago
    > Dogecoin's blockchain is shorter Not only is blockchain length immaterial to its relevancy, but Dogecoin's chain is in fact longer, as its block interval is only 1 minute, so it is asymptotically 10 times longer than Bitcoin. > there's one Bitcoin mined every ten minutes You mean one block (containing an subsidy starting at 50 Bitcoin that's halved every 4 years). > Miners will generally only mine the blockchain with the most value Wrong; SHA256 miners will mine the most profitable SHA256 chain, such as Bitcoin. Scrypt miners have totally different ASICs and will mine the most profitable scrypt chain. > No other blockchain can ever maintain its stability as long as Bitcoin exists. The game theory that backs Bitcoin also proves that all other cryptocurrencies cannot work in the long term. The theory behind Bitcoin long term security is rather shaky in fact, requiring a constant backlog of high-fee paying transactions once its block subsidy becomes insignificant. Chains with a tail emission face no such issues.
    - Salgat 4y ago
      Length doesn't mean much, it's size that matters, and that comes down to total transactions across all blocks, as transactions per block is not some fixed number.
      - 4y ago
- suifbwish 4y ago
  Most non physical things you are capable of buying have absolutely no value except what gullible people in large numbers ascribe to them. What you really want to invest in are stars, planets and magical items.
bko 4y ago
> Johnson is seeking to represent a class of people who have lost money trading in Dogecoin since April 2019. He is asking for $86 billion in damages, plus triple damages of $172 billion, as well as an order blocking Musk and the companies from promoting Dogecoin, and declaring that Dogecoin trading constitutes gambling under US and New York law. I am not a lawyer, but don't you have to prove that you actually incurred those damages? Was this dude long $100 billion on Doge?
- cududa 4y ago
  “Seeking to represent a class” - he can bring the case as a class action lawsuit but a) needs to get others to join his class then b) if the judge accepts it, other defendants can jockey for being the one representing the case. Different lawyers will make different arguments why they should get the case then the judge chooses which plaintiff and lawyers get the class action. So that’s what “seeking to represent a class” means. He’s not seeking that amount for himself, but rather to distribute to everyone who bought dogs based on Musk’s tweeting
- jjtheblunt 4y ago
  Johnson's greed and entitlement ($172 billion?) are remarkable.
  - soSadm4n 4y ago
    No more than Musks; he’s not building all that stuff. But name on paperwork is all it really takes to be “richest in the world.”
  - thephyber 4y ago
    Or… he’s just bootstrapping a class action lawsuit and using some guerrilla marketing (a fantastical damages claim to get lots of social media coverage). It’s almost like he’s using similar tactics to those Musk uses with his companies… Not remarkable. In the age of Trump, this is basic opening offer for a negotiation. The further you move the opening offer beyond the value you expect, the more you influence the Overton Window in your benefit.
mountainriver 4y ago
Only in America “I lost money because of dumb investments, I’m going to sue”
- kevingadd 4y ago
  Investor protections are not unique to the United States, and investments are heavily regulated because of how easy it is for regular laymen to get duped
gitfan86 4y ago
Ironically, Elon is one of the few famous business people that regularly points out that all money is worthless, and that the real economy is goods and services not entries in a database.
- sdfhdhjdw3 4y ago
  Ironically, or shall we say dishonestly, he follows up on that by manipulating the market for his benefit.
- phatfish 4y ago
  Exactly the sort of thing I would expect the (paper?) richest person in the world to say. Obviously money is worthless to you when you have more than you could ever need.
- dubswithus 4y ago
  Well, that is ironic considering he is a Dogecoin holder himself. His wallet has allegedly been found. Hopefully this lawsuit confirms it.
IYasha 4y ago
I hoped the title would continue like "for making autopilot disable itself one second before car crash". So "they" waited some time to deliver a massive blow to crypto market - bitcoin hits last year minimum, other cryptos are shaking, now dogecoin is going to suffer. Looks pretty deliberate to me...
- dubswithus 4y ago
  1) All cryptos follow Bitcoin so Dogecoin going up or down doesn’t effect the market. 2) This lawsuit only effects Elon’s ability to shill the coin. If Dogecoin can’t prosper without a promoter it is worthless.

87 points by jc_811 4y ago

> “Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” Johnson said in his complaint, What makes a cryptocurrency a "legitimate investment" ? It clearly is a risky and highly speculative investment, but it's not clear to me what separates legitimate ones from illegitimate ones. Johnson's claim that Dogecoin has no value at all seems rather bogus, as it still trades at well over 1 cent per coin (we can agree it has no "inherent value").

horsawlarway 4y ago
I'd say when the original creator of the "currency" defines it as a joke, and the coin is configured so that ~14.5 million new coins are minted every day... It's safe to consider it illegitimate as an investment. At a minimum, it certainly can't be considered a valid value store, since the amount of currency in circulation inflates at an incredible pace, and without regard to the current value.
- tromp 4y ago
  I strongly disagree. First of all, whether it's 14.5 coins per day or 14,500 or 14.5M or 14.5B doesn't matter at all, since it's just arbitrary scaling (just like how each bitcoin is really 100B satoshi). Secondly, a fixed block subsidy is an entirely reasonable emission schedule, with yearly supply inflation going down at a steady rate, taking 2 decades to drop down to 5% (better than fiat this year), and taking 5 decades to be the 2% that fiat aims for. In fact, there's one serious cryptocurrency that chose exactly such an emission, averaging one coin per second forever. It's the only coin that doesn't have the current generation hog the majority of (soft [1]) total supply... [1] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
  - joshjdr 4y ago
    This comment looks like a lawsuit waiting to happen!
  - randomhodler84 4y ago
    100M sats per BTC my dude
- Schroedingersat 4y ago
  No argument that it isn't a scam, but you appear to fundamentally misunderstand the concept of exponential growth. Adding a linear amount to a pool induces an exponentially decaying inflation rate which becomes negligible after a decade or two. As such, dogecoin is the same fomo/'store of value'/deflationary scam as all the other coins, just skewed a little less towards the first suckers to join the ponzi scheme
- Salgat 4y ago
  Can we stop with this disingenuous oversimplified "big number bad" argument? Dogecoin is the only major coin with an intentional long term inflation rate comparable to real world fiat. That has merit and novelty as far as cryptocurrencies go, especially if your goal is for it to be an actual currency.
kayamon 4y ago
I suppose it depends if there's someone manipulating it. A coin like Bitcoin is immune to internal manipulation -- there's one Bitcoin mined every ten minutes, and no one can change that, no matter how much money they have. Satoshi proved that a blockchain is only secure if it's the blockchain with the longest accumulated proof-of-work record. Dogecoin's blockchain is shorter, and they can't win a race where the other players are already ahead. Miners will generally only mine the blockchain with the most value, thus the market for one mining the leading crypto squeezes out the market for mining all the others. Miners must vote with their electricity as to which blockchain to support. No other blockchain can ever maintain its stability as long as Bitcoin exists. The game theory that backs Bitcoin also proves that all other cryptocurrencies cannot work in the long term.
- tromp 4y ago
  > Dogecoin's blockchain is shorter Not only is blockchain length immaterial to its relevancy, but Dogecoin's chain is in fact longer, as its block interval is only 1 minute, so it is asymptotically 10 times longer than Bitcoin. > there's one Bitcoin mined every ten minutes You mean one block (containing an subsidy starting at 50 Bitcoin that's halved every 4 years). > Miners will generally only mine the blockchain with the most value Wrong; SHA256 miners will mine the most profitable SHA256 chain, such as Bitcoin. Scrypt miners have totally different ASICs and will mine the most profitable scrypt chain. > No other blockchain can ever maintain its stability as long as Bitcoin exists. The game theory that backs Bitcoin also proves that all other cryptocurrencies cannot work in the long term. The theory behind Bitcoin long term security is rather shaky in fact, requiring a constant backlog of high-fee paying transactions once its block subsidy becomes insignificant. Chains with a tail emission face no such issues.
  - Salgat 4y ago
    Length doesn't mean much, it's size that matters, and that comes down to total transactions across all blocks, as transactions per block is not some fixed number.
    - 4y ago
suifbwish 4y ago
Most non physical things you are capable of buying have absolutely no value except what gullible people in large numbers ascribe to them. What you really want to invest in are stars, planets and magical items.

bko 4y ago

> Johnson is seeking to represent a class of people who have lost money trading in Dogecoin since April 2019. He is asking for $86 billion in damages, plus triple damages of $172 billion, as well as an order blocking Musk and the companies from promoting Dogecoin, and declaring that Dogecoin trading constitutes gambling under US and New York law. I am not a lawyer, but don't you have to prove that you actually incurred those damages? Was this dude long $100 billion on Doge?

cududa 4y ago
“Seeking to represent a class” - he can bring the case as a class action lawsuit but a) needs to get others to join his class then b) if the judge accepts it, other defendants can jockey for being the one representing the case. Different lawyers will make different arguments why they should get the case then the judge chooses which plaintiff and lawyers get the class action. So that’s what “seeking to represent a class” means. He’s not seeking that amount for himself, but rather to distribute to everyone who bought dogs based on Musk’s tweeting
jjtheblunt 4y ago
Johnson's greed and entitlement ($172 billion?) are remarkable.
- soSadm4n 4y ago
  No more than Musks; he’s not building all that stuff. But name on paperwork is all it really takes to be “richest in the world.”
- thephyber 4y ago
  Or… he’s just bootstrapping a class action lawsuit and using some guerrilla marketing (a fantastical damages claim to get lots of social media coverage). It’s almost like he’s using similar tactics to those Musk uses with his companies… Not remarkable. In the age of Trump, this is basic opening offer for a negotiation. The further you move the opening offer beyond the value you expect, the more you influence the Overton Window in your benefit.

mountainriver 4y ago

Only in America “I lost money because of dumb investments, I’m going to sue”

kevingadd 4y ago
Investor protections are not unique to the United States, and investments are heavily regulated because of how easy it is for regular laymen to get duped

gitfan86 4y ago

Ironically, Elon is one of the few famous business people that regularly points out that all money is worthless, and that the real economy is goods and services not entries in a database.

sdfhdhjdw3 4y ago
Ironically, or shall we say dishonestly, he follows up on that by manipulating the market for his benefit.
phatfish 4y ago
Exactly the sort of thing I would expect the (paper?) richest person in the world to say. Obviously money is worthless to you when you have more than you could ever need.
dubswithus 4y ago
Well, that is ironic considering he is a Dogecoin holder himself. His wallet has allegedly been found. Hopefully this lawsuit confirms it.

IYasha 4y ago

I hoped the title would continue like "for making autopilot disable itself one second before car crash". So "they" waited some time to deliver a massive blow to crypto market - bitcoin hits last year minimum, other cryptos are shaking, now dogecoin is going to suffer. Looks pretty deliberate to me...

dubswithus 4y ago
1) All cryptos follow Bitcoin so Dogecoin going up or down doesn’t effect the market. 2) This lawsuit only effects Elon’s ability to shill the coin. If Dogecoin can’t prosper without a promoter it is worthless.