Judge Unfreezes $57.6 Million in USDC Linked to Libra Meme Coin Scandal
In a significant development, a federal judge has ordered the unfreezing of $57.6 million in USDC that is tied to the controversial Libra meme coin incident. This ruling comes in the wake of the February launch of the Libra meme coin, which was heavily publicized by Argentine President Javier Milei but ultimately failed within hours of its debut. The judge expressed skepticism regarding the plaintiffs’ chances of winning their case against defendants Hayden Davis and Ben Chow.
Background of the Case
On Tuesday, a Manhattan federal judge lifted the freeze on assets associated with the notorious Libra token, which was introduced in February with backing from President Milei. The judge indicated that she no longer believes that the defendants might abscond with the funds, as they have been cooperative throughout the legal proceedings. Previously, Judge Jennifer L. Rochon had ordered the freezing of these assets in June amid a lawsuit where plaintiffs are seeking damages exceeding $100 million. The frozen funds were held in two wallets managed by Hayden Davis, CEO of Kelsier Labs LLC, and Ben Chow, founder of the decentralized exchange Meteora.
Judge’s Findings on Compliance
During her recent statement, Judge Rochon noted that the defendants had not acted in a manner that suggested they were trying to evade the law, highlighting their compliance with legal processes thus far. She remarked, “It is clear that monetary damages could be available to compensate the alleged class,” and pointed out that the plaintiffs failed to adequately demonstrate any irreparable harm. Consequently, she decided to release the freeze on the USDC assets, which remain intact in their original wallets, holding $13.06 million and $44.59 million respectively.
Concerns About Plaintiffs’ Case
In her ruling, the judge expressed doubts about the likelihood of the plaintiffs—represented by Burwick Law—prevailing in their lawsuit. Although she acknowledged the case is still in its early stages, her skepticism was evident. Mazin Sbaiti, the lead attorney for Davis, expressed satisfaction with the ruling, asserting that it confirms their stance that the case lacks merit. He noted that despite the plaintiffs being given ample opportunity to present evidence, they failed to demonstrate any wrongdoing on their client’s part.
Allegations Against Davis and Chow
The plaintiffs argue that Davis and Chow misled investors regarding the Libra (LIBRA) meme coin, leveraging President Milei’s social media endorsements to lend credibility to the token. Chow’s attorney, Samson Enzer, described the plaintiffs’ allegations as “untested and without merit,” stating that they look forward to moving to dismiss the case.
The Aftermath of the LIBRA Token Launch
The legal disputes are part of the fallout from the LIBRA token’s tumultuous launch, which initially boasted a market capitalization of $1.17 billion before plummeting 97% to just $33 million within 24 hours, as reported by DEX Screener. President Milei had positioned LIBRA as a funding vehicle for small businesses in Argentina, leading many investors to mistakenly perceive it as the country’s official cryptocurrency. This misconception gained traction, particularly as other nations explored their own meme coins around the same period.
Insider Trading Allegations and Fallout
However, despite its promotional efforts, LIBRA was never an official token of Argentina. Allegations of insider trading soon emerged, prompting Milei to delete his promotional post, which contributed to the token’s swift decline. In the aftermath, Davis attempted to clarify the situation through media appearances, becoming a focal point of the controversy as investors sought accountability for the token’s failure. He claimed that his role involved acting as a custodian for the funds tied to Libra, which left him exposed to substantial financial losses.
Connections to Other Projects
Further complicating matters, it was disclosed that Chow’s firm, Meteora, had referred several projects to Davis’ Kelsier Labs, including a meme coin associated with former First Lady Melania Trump. Additionally, investigations revealed interconnected wallets between the launches of the Melania token and Libra. Following the scandal, Chow resigned from Meteora, with his co-founder citing a “lack of judgment” in trusting Davis. Six months later, both Chow and Davis are taking steps to rehabilitate their reputations amidst the ongoing legal challenges.
