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Elon Musk and the Spread of Bitcoin Misinformation

Olawale Ameen Olawale Ameen
28th March 2021
Elon Musk and the Spread of Bitcoin Misinformation

Elon Musk isn't new to daring adventures and inventive startups. The entrepreneur and business magnate is the founder of a number of companies, all pioneers of new and innovative ideas in their various segments.

As the founder, CEO, CTO, as well as the chief designer of SpaceX, an aerospace manufacturer and transport service company which he founded in 2002, he has led the company to become a major player in space exploration. He is also the chairman and product architect at Tesla Motors, an electric car company. 

He was at the fore-front of digital payment with his co-founding of X.com, an online financial service and email payment company through which he along with others took over Paypal in the 90s and early 2000s. 

But of all these, his biggest gamble yet is that which he is stacking on bitcoin.

The digital currency is gradually gaining some level of credit worthiness as major names like himself are staking a bet on its future acceptability as a possible fiat currency.

Betting Big on Bitcoin

On Wednesday, March 24th, Elon Musk announced via his Twitter handle that Tesla would now accept bitcoin as payment for its cars.

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His tweet gathered more than 4k comments, 22k retweets and 162k likes and even sent bitcoin prices skyrocketing shortly after. 

This was one of several instances from the past few months in which Musk’s actions have driven activities around the cryptocurrency market.

For example, on January 29th, Musk added the hashtag #bitcoin to his Twitter bio, a move that helped to briefly push up the price of the cryptocurrency by as much as 20%. 

On Monday February 8th, Tesla announced that it had bought $1.5 billion worth of bitcoin in a move that is seen by many as an effort to be a major player in the trading of the cryptocurrency.

The transaction raised the market value of the company well above one trillion dollars and the cryptocurrency price soared to a record high of above $58,000. This was after a period that had sent the cryptocurrency price on a downward spiral.

In a filing with the Securities and Exchange Commission, Tesla said it had bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”

The electric car manufacturer also announced that it would start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.” This would see Tesla becoming the first major auto manufacturer to do this.

The reverse happened on February 22 when he tweeted that cryptocurrency prices seemed to be inflated. The value of bitcoin fell 7% after his tweet.

Why does one man’s tweet, and actions affect the price of a currency that ought to be used by millions, and even billions of people worldwide? What happens when his information happens to be wrong?

Charged with fraud for false and misleading claims

Musk has gotten into trouble with the authorities for his market moving tweets in the past. In 2018 he tweeted about taking the company private at $420 per share. The SEC charged him with fraud.

“A chairman and CEO of a public company has important responsibilities to shareholders,” Stephanie Avakian, co-director of the SEC’s division of enforcement, said during a press conference. “Those responsibilities include the need to be scrupulous and careful about the truth and accuracy of statements made to the investing public, whether those statements are made in traditional forms such as a press release or an earnings call or through less formal methods such as Twitter or other social media. Neither celebrity status nor reputation as a technological innovator provide an exemption from the federal securities laws.”

If found guilty, the SEC sought to bar Musk from serving as an officer or director of a publicly traded company. He was able to eventually settle with the SEC and maintain his position as CEO even though he lost his chairmanship position and had to pay a huge fine.

He has been in trouble for his tweets and statements numerous times in the past, as stated in the following stories: Elon Musk's Mouth, and Tweets, Land Him in Trouble Again, The SEC says Elon Musk is in ‘blatant violation’ of securities fraud settlement, Elon Musk Is Tweeting Stuff That Could Get Him in Trouble Again.

What this essentially points to is the fact that as much as his bet and staking of his trust in cryptocurrency is good, it may also be dangerous. The risk and possibility of millions of people losing their money because of just a single tweet containing false information runs high.

What remains to be seen is how much the involvement of a major dominant voice such as Musk, can affect the performance of such a currency as it heads towards global acceptance.


Photo credit: FREDERIC J. BROWN/AFP via Getty Images

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