Crypto Controversy: Libra Token Creators Face Legal Showdown in NY Court

TLDR

Table of Contents

Kelsier Ventures, KIP Protocol and Meteora face class-action lawsuit over Libra memecoin scandal
Lawsuit claims artificially inflated price benefited insiders while investors lost money
Libra token promoted by Argentine President Javier Milei but he is not named as defendant
Insiders allegedly siphoned $107 million from liquidity pools, causing 94% price crash
Blockchain firm Nansen reports $251 million in total investor losses from the incident

A class-action lawsuit has been filed in New York against the creators of the Libra (LIBRA) memecoin. The lawsuit names Kelsier Ventures, KIP Protocol, and Meteora as defendants.

These companies are accused of launching the token in a “deceptive, manipulative and fundamentally unfair” manner. The legal action was filed on March 17 by Burwick Law on behalf of its clients.

Tonight, our firm filed a class action complaint in the Supreme Court of New York on behalf of our client. We allege that Kelsier, KIP, Meteora, and related parties orchestrated an unfair token launch ($LIBRA), allegedly misleading purchasers and harming retail investors. pic.twitter.com/H7dD2LaARK
— Burwick Law (@BurwickLaw) March 18, 2025

The Libra token gained attention when it was promoted by Argentine President Javier Milei on social media platform X. Milei presented it as an economic initiative to help fund private sector projects in Argentina.

According to the lawsuit, the token’s creators used a “predatory” one-sided liquidity pool. This method helped to artificially inflate the memecoin’s price at launch.

The lawsuit claims insiders were able to profit while regular buyers suffered losses. Within hours of the launch, insiders allegedly removed about $107 million from the liquidity pools.

Token price collapse

This rapid withdrawal caused a steep 94% crash in Libra’s market value. The token collapse left many investors with heavy losses.

The lawsuit mentions President Milei but does not name him as a defendant. Instead, the legal action focuses on the companies behind the token.

Burwick Law accuses the defendants of using Milei’s influence to promote the token. This created a false sense of legitimacy and misled investors about the economic potential of the token.

The lawsuit states that about 85% of Libra tokens were kept back at launch. The “predatory infrastructure techniques” used by the defendants were not shared with investors.

Over 86% of investors sold at a loss

Blockchain research firm Nansen looked into the Libra incident. They found that out of 15,430 large Libra wallets they studied, over 86% sold at a loss.

These losing wallets combined for $251 million in losses. Only 2,101 wallets made a profit, taking home a combined $180 million.

Kelsier Ventures and its CEO Hayden Davis were among the biggest winners from the token launch. They claim to have made around $100 million from the Libra token.

Davis is now facing potential legal trouble beyond the US lawsuit. An Argentine lawyer has requested an Interpol red notice for him.

On February 17, Davis claimed he did not directly own the tokens and would not sell them. This statement came after the token crash had already happened.

President Milei has tried to distance himself from the memecoin scandal. He has argued that he didn’t “promote” the Libra token but merely “spread the word” about it.

Argentina’s opposition party called for Milei’s impeachment over his involvement with the token. However, these efforts have had limited success so far.

The lawsuit seeks several forms of relief for affected investors. These include compensatory and punitive damages, return of “unjustly obtained” profits, and measures to prevent similar token offerings in the future.

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