Dogecoin (DOGE) is one of the world’s 20 most valuable crypto assets. From its comedic origins as a parody token created in just two hours, it now boasts a market cap that exceeds $8 billion. However, new research from forensic blockchain analysis company Elliptic reveals that Elon Musk’s favorite token is also becoming increasingly popular with criminal cartels, child sex rings, and terrorists.
Indeed, Elliptic found “millions of dollars” worth of illicit Dogecoin transactions and while the vast majority of Elliptic’s evidence ties this activity to frauds and Ponzi schemes, there’s hard evidence to suggest it’s finding favor across the full gamut of criminal activity.
In July last year, Israel’s National Bureau for Counter Terror Financing targeted for seizure 84 cryptoasset addresses apparently controlled by Hamas, or used in terror-related activity. This included a number of Doge addresses that had received more than $40,000.
Evidence has also been uncovered of Doge being used in the buying and selling of materials linked to child sexual abuse. However, the currency’s use in this area is still relatively low — according to Elliptic less than $3,000 in payments has been discovered.
Doge is also increasingly rearing its head across various darknet marketplaces. These include “call & email flood service” Just-Kill, drug market Archetyp (although this now only accepts Monero), and the now-defunct exit scam Doge Road.
Malware campaigns are increasingly targeting the former joke coin, according to Elliptic’s recent research. In October 2020, a malware scam known as Cliptomaner was uncovered. Cliptomaner hijacks computers in order to mine crypto. And prior to that, in July 2020, researchers uncovered ‘Doki,’ a Malware campaign that used data contained in Doge transactions to identify command and control servers and build its defences against law enforcement.
Finally, Doge is becoming more popular among far-right extremists and associated organizations.
For example, according to Elliptic’s research, US-based conspiracy-peddling outlet InfoWars has raised more than $1,700 in Doge.
Elliptic attributed criminals’ increased interest in Dogecoin to the heightened liquidity caused by Elon Musk’s marketing campaign. Without doubt, it’s easier to hide among crowds than in a sparsely populated market.
DOGE is down $90 billion since Musk’s SNL appearance
Elon Musk’s cheerleading of Dogecoin reached a crescendo on May 8, 2021 with his guest appearance on Saturday Night Live. Without question, it was one of crypto’s most anticipated television events.
Beforehand, the price of Dogecoin had rallied from the $0.30s to a high of $0.74 in anticipation of the airing. Hours before the episode was broadcast nationwide on US television, the token’s market cap peaked at $98 billion.
As of today, its market cap has crashed 90%, and lost approximately $90 billion.
DOGE investors who listened to Musk are suing him
Now, a Dogecoin investor is suing Elon Musk and his companies for $258 billion. Plaintiff Keith Johnson is attempting to form a class action lawsuit in New York federal court, despite the difficulty of certifying a class of harmed investors. (The US Supreme Court has reiterated that class certification requires “a rigorous analysis” to satisfy prerequisites like “numerosity, commonality, typicality, and adequacy of representation.”)
Johnson believes that Dogecoin is a fraud whose supply is unlimited and is “not based upon or tied to anything of value.” Among a litany of claims, he concludes that Dogecoin is a “crypto pyramid scheme” that Musk “falsely and deceptively” promoted as a legitimate investment.
History of Elon Musk’s Dogecoin involvement
In 2013, Billy Markus and Jackson Palmer co-created Dogecoin in just two hours. Later, Markus publicly admitted that it was a joke. Even so, the coin maintained a cult following. By 2019, Musk joined the project and started buying DOGE personally.
Soon, Musk directed his two companies to integrate Dogecoin. Tesla accepted Dogecoin, though only as a payment method for merchandise. SpaceX named a satellite DOGE-1. Musk even claimed that SpaceX would “put a literal Dogecoin on the literal moon.” He proclaimed himself the CEO and “Dogefather” of the coin, calling it “the people’s crypto.”
Aside from his SNL appearance, most of Musk’s marketing of Dogecoin has occurred on Twitter. He has tweeted dozens of times referencing Dogecoin. Intriguingly, he offered to “literally pay actual $” to buy out major DOGE holders.
As Dogecoin has lost $90 billion worth of market capitalization since Musk’s SNL episode, this class action lawsuit wants to file eye-popping numbers in court. Johnson is seeking $86 billion of monetary damages on behalf of his class plus another $172 billion of trebled damages. Though getting this lawsuit into court is a long shot, these figures exceed Musk’s estimated personal net worth of $213 billion.
Regardless, it’s concerning to see Dogecoin becoming a popular tool for criminals. Elliptic encourages the Dogecoin community to identify illicit actors, fight financial crime, comply with regulation, and work together to make the crypto market safer for all.