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Elon Musk, the billionaire X and Tesla owner and key player in the incoming US administration, has become a cause for concern in Brussels, with an EU lawmaker questioning whether his actions are legal under EU law.
Musk's influence over cryptocurrency markets has once again come under scrutiny, this time in relation to the EU's Markets in Crypto-Assets (MiCA) Regulation.
A query submitted to the European Commission by Dirk Gotink, a member of the European Parliament (MEP), highlights concerns about the billionaire's online promotion of crypto-assets such as Dogecoin and Bitcoin, which has been linked to significant market fluctuations.
“Mr Musk was accused of influencing the price of the crypto-asset Dogecoin via statements on X before making trades. We have indeed regularly observed statements by Mr Musk on X favouring the crypto-assets Dogecoin and Bitcoin,” said Gotink, a Dutch MEP who is building a reputation in the Parliament for scepticism about the influence of big tech in the trading bloc.
Price manipulation
The question follows the August 2024 dismissal of a US lawsuit in which Musk and Tesla were accused of using his social media platform, X (formerly Twitter), to manipulate the price of Dogecoin before trading it.
The case drew attention to Musk's regular statements on X, which often lead to price spikes for Dogecoin.
Gotink also pointed to allegations that have emerged that Musk has promoted his own content on X, raising further questions about conflicts of interest and the platform's governance.
In his question, Gotink raised three critical points, including whether Musk's activities could be classified as market manipulation under Article 91(2)(c) of MiCA, as well as whether the European Commission plans to investigate cases like Musk's to protect EU investors from potential losses and fraud stemming from crypto-asset price manipulation.
The MEP also asked whether the commission would assess the systemic risks of crypto-assets as they become more mainstream, particularly in jurisdictions such as the US, where regulatory frameworks are less stringent.
MiCA, which came into force earlier this month, aims to provide a comprehensive regulatory framework for crypto-assets in the EU, addressing issues such as market integrity and increased consumer protection.
However, concerns remain about its ability to regulate such a fast-moving sector, with some calling for an updated iteration of the regulatory framework based on fears that it will not be able to prevent market scandals such as the collapse of FTX.
The MEP’s concern comes at the same time as new regulatory action against Musk in the US.
A new enforcement decision announced by the Securities and Exchange Commission has seen the regulator sue Musk, alleging that he failed to timely file a beneficial ownership report with the commission after acquiring beneficial ownership of more than 5 percent of the outstanding shares of Twitter’s common stock.
According to the SEC, this is in violation of the beneficial ownership reporting requirements under the Securities Exchange Act of 1934, with the regulator suggesting that Musk saved at least $150m at the expense of Twitter shareholders by failing to timely file the beneficial ownership report.
