ANALYSIS: Musk Crypto Tweets Increase Shareholder Lawsuit Risks

April 6, 2021, 4:17 PM

In our first look at securities law risks of recent Bitcoin purchases by Tesla and MicroStrategy, we determined that the Bitcoin buys did not create significant SEC enforcement risks—but Twitter activity by Tesla CEO Elon Musk could. A similar assessment applies to the risk that these Bitcoin buys could lead to shareholder lawsuits against Tesla or MicroStrategy under state corporate laws. The risk of such lawsuits to both companies is currently low, but it could rise in the event of another crash in the price of Bitcoin, and Musk’s Twitter activity could exacerbate the risk for Tesla.

State Corporate Law...

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