Elon Musk, Market Manipulation, and Cryptocurrency - Fordham Intellectual Property, Media & Entertainment Law Journal
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Elon Musk, Market Manipulation, and Cryptocurrency

Elon Musk, Market Manipulation, and Cryptocurrency

Elon Musk, the CEO of Tesla, Inc. (“Tesla”), has roughly 48.5 million Twitter followers as of March 5, 2021.1 Although numerically impressive, what makes Musk’s internet following particularly special is its cult-like nature.2 Musk, like other cult leaders, has immense influence over his followers, even publicly admitting to the scope of this power.3 However, this influence has garnered negative attention recently because of Musk’s tweets regarding the cryptocurrencies Dogecoin (“$DOGE”) and Bitcoin (“$BTC”).4


During January and early February 2021, Reddit.com users of the “WallStreetBets” community swarmed to free trading apps like Robinhood to drive up the prices of shorted stocks of companies like AMC Entertainment (“$AMC”), GameStop Corp. (“$GME”), and Blackberry Limited (“$BB”).5 Some stocks, like $GME, saw increases of 700%, creating national fervor because of the sudden spike in stock price.6 Musk quickly picked up the trend, and at 4:08 PM on January 26, 2021, during this period of frenzied trading, tweeted “Gamestonk!!” with a link to the WallStreetBets webpage, garnering more than 250,000 likes and 45,000 retweets.7 $GME’s stock subsequently increased by 140% during after-hour trading.8


But Musk did not stick to tweeting about $GME during this craze—in late January, he began tweeting memes about $DOGE9, and on January 29, 2021 he changed his twitter bio to “#bitcoin.”10 That day, the price of $BTC rose $5,000 or 20%11 and $DOGE’s volatility, trading price, and volume traded reached then all-time highs.12 While incredibly difficult to prove causal links between Musk’s Twitter activity and increased volatility and prices in the cryptocurrency market, some outlets have explicitly linked the two, especially in light of Musk’s tweets in early February.13


On February 8, 2021—just ten days after Musk’s “#bitcoin” bio change—Tesla announced that it purchased approximately $1.5 billion in $BTC sometime in January 2021.14 This announcement caused economists15 and lawyers—like Linklaters’ partner and former branch chief of the SEC’s division of enforcement Doug Davison16—alike to question whether Musk could face investigation from the SEC for market manipulation over his tweets’ seemingly causal connection to $BTC’s price increase. This would not be the first time Musk was investigated by the SEC for his tweets’ influence over stock prices. In 2018, the SEC investigated and sued Musk for misleading tweets regarding securing funding for to move Tesla from a public to private company.17 Musk and the SEC settled out of court, with Musk agreeing to pay $20 million in penalties and to step down as Tesla’s chairman.18


According to the SEC, market manipulation is when someone artificially affects the supply or demand for a security.19 However, while it seems intuitive that the SEC could investigate Musk for market manipulation of $BTC, $BTC itself is widely considered a commodity rather than a security, leaving it generally outside of the the SEC’s oversight.20

Thus, it appears on face value that the SEC’s ability to investigate Musk’s potential manipulation of the $BTC market—despite Tesla’s purchase of $BTC sometime in January—may be in doubt.

  1. Elon Musk (@elonmusk), Twitter, https://www.twitter.com/elonmusk [https://perma.cc/BE88-EJNZ] (last visited Mar. 5, 2021).

  2. See The Cult of an Elon Musk or a Jack Ma Has Its Perks—but Also Perils, The Economist (Feb. 10, 2021), https://www.economist.com/business/2021/02/10/the-cult-of-an-elon-musk-or-a-jack-ma-has-its-perks-but-also-perils [https://perma.cc/YS25-8D33].

  3. See Billy Bambrough, Lawyers Warn Tesla Billionaire Elon Musk Over Bitcoin Boosting Tweets, Forbes (Feb. 10, 2021), https://www.forbes.com/sites/billybambrough/2021/02/10/tesla-billionaire-elon-musk-issued-serious-bitcoin-warning-over-price-boosting-tweets/?sh=5bd278a9bbac [https://perma.cc/P9VT-LRD3].

  4. See Sam Shead, Elon Musk’s Tweets Are Moving Markets—and Some Investors Are Worried, CNBC (Feb. 1, 2021), https://www.cnbc.com/2021/01/29/elon-musks-tweets-are-moving-markets.html [https://perma.cc/MR75-D5L3].

  5. See James Crowley, A Look Inside the ‘WallStreetBets’ Subreddit Behind the GameStop Stock Boom, Newsweek (Jan. 21, 2021), https://www.newsweek.com/wall-street-bets-reddit-gamestop-stock-market-boom-1564931 [https://perma.cc/S386-FVDA].

  6. Id.

  7. Elon Musk (@elonmusk), Twitter (Jan. 26, 2021, 4:08 PM), https://twitter.com/elonmusk/status/1354174279894642703?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1354174279894642703%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fabcnews.go.com%2FBusiness%2Fgamestop-timeline-closer-saga-upended-wall-street%2Fstory%3Fid%3D75617315 [https://perma.cc/9WR6-45N4].

  8. GameStop Corp. (GME) Historical Data, Yahoo! Finance, https://finance.yahoo.com/quote/GME/history/ [https://perma.cc/2CHJ-57ZP].

  9. See Bambrough, supra note 3.

  10. See Ryan Browne, Bitcoin Spikes 20% After Elon Musk Adds #Bitcoin to His Twitter Bio, CNBC (Jan. 29, 2021), https://www.cnbc.com/2021/01/29/bitcoin-spikes-20percent-after-elon-musk-adds-bitcoin-to-his-twitter-bio.html [https://perma.cc/5DB6-APJ2].

  11. Id.

  12. Dogecoin USD (DOGE-USD) Historical Data, Yahoo! Finance, https://finance.yahoo.com/quote/DOGE-USD/history/ [https://perma.cc/BJW6-T3HF].

  13. See Bambrough, supra note 3.

  14. See Noel Randewich, Musk’s Bitcoin Investment Follows Months of Twitter Talk, Reuters (Feb. 8, 2021), https://www.reuters.com/article/us-crypto-currency-tesla-tweets/musks-bitcoin-investment-follows-months-of-twitter-talk-idUSKBN2A82F0 [https://perma.cc/P8XR-8H6F].

  15. See Christine Lee, SEC Should Monitor Tesla’s Elon Musk for Market Manipulation: Roubini, Yahoo! Finance (Feb. 11, 2021), https://finance.yahoo.com/news/sec-monitor-tesla-elon-musk-063109452.html [https://perma.cc/A6JW-26D3].

  16. See Bambrough, supra note 3.

  17. Press Release: Elon Musk Charged With Securities Fraud for Misleading Tweets, U.S. Securities and Exchange Commission (Sept. 17, 2018), https://www.sec.gov/news/press-release/2018-219 [https://perma.cc/F9CZ-PXXE].

  18. Matthew Goldstein, Elon Musk Steps Down as Chairman in Deal with S.E.C. Over Tweet About Tesla, N.Y. Times (Sept. 29, 2018), https://www.nytimes.com/2018/09/29/business/tesla-musk-sec-settlement.html [https://perma.cc/PHX8-28B3].

  19. See Market Manipulation, U.S. Securities and Exchange Commission, https://www.investor.gov/introduction-investing/investing-basics/glossary/market-manipulation [https://perma.cc/CF3C-UMVU].

  20. See Jay Clayton, Public Statement: Statement on Cryptocurrencies and Initial Coin Offerings, U.S. Securities and Exchange Commission (Dec. 11, 2017), https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11; see also SEC v. Shavers, No. 4:13-CV-416, 2013 U.S. Dist. LEXIS 110018, at *4–6 (E.D. Tex. Aug. 6, 2013); see also Hadar Y. Jabotinsky, The Regulation of Cryptocurrencies: Between a Currency and a Financial Product, 31 Fordham Intell. Prop. Media & Ent. L.J. 118, 153 (2020).

Pearse Walsh

Pearse Walsh is a 2LE staff member on the IPLJ and graduated from Fordham College at Rose Hill in 2019 with a B.S. in General Science and Philosophy. At FLS, he is also a TA for Professor Denno’s Crim class, one of the co-VPs on the FEDS E-Board, and the EVP of the SBA E-Board.