Elon Musk, the CEO of Tesla, has amassed immense power to drive stocks with his musings, thanks to his cult base, but murky laws make it impossible for regulators to reel him in. Through a series of tweets and corporate updates, the celebrity CEO, who has more than 54 million Twitter fans and a dedicated Reddit following, has whipsawed the blockchain industry and sent several stocks soaring this year. This week, that power was demonstrated. Musk’s tweet on last Wednesday, announcing that Tesla will no longer allow bitcoin purchases, sent the cryptocurrency down 17%, roiling bitcoin futures and pulling the wider cryptocurrency sector down with it.
This week, Dogecoin had a wilder adventure, first plummeting since Musk referred to it as “a hustle” on “Saturday Night Live” in the United States. It leapt again after Musk revealed that his commercial rocket venture, SpaceX, would accept it as payment. On Thursday, the upstart cryptocurrency received a boost when Musk announced that he was working on ways to improve transaction efficiency. Although consumer activists said Musk was causing harm to investors and making a mockery of the public markets, it was uncertain if he was violating the laws merely by wielding his power. “The issue here is that a loose cannon CEO proceeds to shot his mouth off over a variety of possible market driving activities,” said Dennis Kelleher, CEO of think tank Better Markets. “It’s clearly reckless, but it may not be illegal.” Tesla’s spokeswoman did not respond to a request for comment.
Musk’s latest tweets on dogecoin sparked a surge in the digital currency, which began as a social media satire. Dogecoin, which was almost useless in late 2020, has risen to become the fourth-largest cryptocurrency by market value, according to CoinMarketCap.com. Other tweets this year about retailer GameStop and online store Etsy tended to lift their stakes, while investors incorrectly purchased shares of gadget manufacturer Signal Advance, thinking it was the trading ticker for Musk’s supported chat app Signal. However, lawyers said Musk would be breaking the law if he moved an asset price with the intent of enriching himself or others close to him, or if he used inside intelligence. Reuters was unable to determine Musk’s wealth holdings. For others, Musk is no better than top investors like Warren Buffett or Ray Dalio, who have been controlling markets even before Musk.
Furthermore, Musk’s use of social media to reach out to people personally may have muddied the legal waters in his favour. “Previously, access to these officials was limited to personnel and news releases. Now it is up to the general public to interpret this knowledge specifically “said Timothy Shields, a technology-focused associate at Kelley Kronenberg. “It is extremely difficult for regulators to discern and therefore regulate where Musk’s expression actually reflects himself vs Telsa.” Requests for comment from the Commodity Futures Trading Commission, which oversees bitcoin derivatives, were not returned. The Securities and Exchange Commission (SEC) and the U.S. exchanges “check for irregular activity through controlled markets,” according to an SEC spokesperson.
