Daily Times

Cryptocurrency- a part of the financial market which has never been short of a drama and its relationship with Tesla’s Elon Musk has been somewhat a stop-start rollercoaster. However, only this time, the posterboy of crypto world has dismantled crypto’s largest currency Bitcoin bit by bit, owing to series of tweets which has sent retail investors into a major sell off-as it fell more than 9% on Monday to as low as $42,185, its lowest since February.

The outspoken proponents of the largest crypto coin are having a hard time due to Elon Musk’s tweets. The entire ‘scandalous’ twitter mania kicked off in February, when Musk announced that he electric vehicle manufacturer Tesla had purchased $1.5 billion of bitcoin and planned to accept the cryptocurrency in future as a means of payment from its customers. The valuation of the largest cryptocurrency began to skyrocket that day from just over $39,000 to $46,000, and then later went on to touch all-time high of almost $65,000 in April – sending Tesla’s profit of well over $1 billion. Bitcoin bulls continued the hype, until April, when it witnessed some correction following the revelation that Tesla has sold some 10pc of its holding “to prove liquidity”. It is worth mentioning that most of these revelations and announcements which had triggered Bitcoin price volatility, is incumbent upon Elon Musk’s tweets.

However, fast-forward to May, Elon Musk’s tweet sent Bitcoin in a tailspin, when he announced that Tesla won’t accept payment in Bitcoin, triggering a 17% slide citing its huge carbon footprint. Driving the decision, Musk said, he was concerned over the amount of energy it takes to “mine” bitcoin, with much of it done in China using cheap, climate-destroying thermal coal. Tesla could revisit the decision if the situation changes, he added.

Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process. World’s largest crypto currency’s mining consumes about the same amount of energy annually as the Netherlands did in 2019, University of Cambridge and the International Energy Agency showed, generating between 22 million and 22.9 million metric tons of carbon dioxide emissions a year, according to a 2019 study in scientific journal Joule.

Many are still wondering and still unsure over why it took this long for one of the world’s geniuses to figure out what everyone already knew about Bitcoin’s carbon footprint? But it didn’t end here, Musk-mania continued and sent Crypto investors in panic when he implied in a Twitter exchange on Sunday that Tesla has sold or may sell the rest of its bitcoin holdings. An unverified twitter user who goes by @CryptoWhale said, “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”. To which Musk replied, “Indeed.” But Musk only cleared the air on Monday, when hundreds of billions of dollars were already lost. “To clarify speculation, Tesla has not sold any Bitcoin,” Musk said in a tweet, but was it enough to end the market speculation and pare losses,, since the crypto giant has dropped by almost a quarter since Musk’s reversal on Tesla taking it as payment.

This tweet mania, which has wiped off hundreds of billions from the crypto market, hasn’t really attracted the US security exchange commission’s (SEC) eye, but it is in clear terms market manipulation and nothing short of a corporate scandal. Influential US venture investor Fred Wilson, a founding partner of Union Square Ventures, has already called on Musk for ” playing games.” Wilson taking to twitter said “It is hard to take anyone who does that seriously. I’ve lost enormous respect for him over the last year because of it.” Musk was also taken to task by the founder of one of the first physical cryptocurrency exchanges who slammed what he perceives as hypocrisy on the part of Elon Musk.According to Nick Spanos, founder of Bitcoin Center in NYC and co-founder of Zap Protocol, the presence of over $1 billion worth of Bitcoin on Tesla’s balance sheet means Musk is still willing to reap the profits of what he deems a dirty environmental hazard, Cointelegraph cited Spanos.

Spanos also referenced the attention brought on Musk by the U.S. Securities and Exchange Commission when he was deemed to have manipulated Tesla share prices with irresponsible and ill-considered tweets. He questioned whether Musk is now subjecting Bitcoin to the “same slings and arrows of outrageous fortune that befall a cryptocurrency when a world-renowned billionaire decides to take an interest in it? Maybe, like with his DOGE-for-Tesla tease, this is all contrived to manipulate Bitcoin’s price. Didn’t he get into trouble for manipulation of Tesla share prices?”.

In 2018, Tesla CEO Musk was charged with fraud by US SEC , over allegation that Musk issued “false and misleading” statements and failed to properly notify regulators of material company events relating to Musk’s tweets, a charge that Tesla agreed to settle. According to the SEC’s complaint, Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption, and Tesla despite notifying the market in 2013 that it intended to use Musk’s Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk’s tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC filings. Nor did it have sufficient processes in place to ensure that Musk’s tweets were accurate or complete.

Earlier in April, Barstool sports founder Portnoy also accused Musk for profiting off the volatility his tweets create in a brief twitter spat with Musk, when he said, if he was “understanding this correctly”, that Musk “buys bitcoin. Then he pumps it. It goes up. Then he dumps it and makes a fortune”.

Now is May-meltdown going to count as a fraud, market manipulation or violation of its previous settlement- since one of the provisions of the settlement was that Musk have his tweets about Tesla pre-approved by an in-house lawyer. It is yet to be known whether, the SEC will haul back Musk into the court again- for that SEC has to prove Musk’s tweets resulted in Tesla CEO profiting off of Bitcoin price volatility, but it is right for many retail investors to shun Elon Musk as a crypto guru, since it’s simply business for him.

Musk, recently has been pushing into dogecoin. His aerospace venture, SpaceX, announced last week it would accept dogecoin as payment to launch the “DOGE-1 mission to the Moon.” His endorsements have helped boost the price of the coin to hundredfold, pushing acceptance among some traders.Therefore, it’s simply corporate America at large at the expense of ordinary investors.