The organizers behind the LIBRA memecoin are now defendants in a class-action lawsuit in the United States.
Investors, who pooled roughly $107 million, have sued Kelsier Ventures, KIP Protocol, and Meteora in a New York court over their alleged role in the Libra token controversy.
The Supreme Court of New York will hear the case on the Libra token scandal after a class-action lawsuit accused its creators of misleading investors and siphoning over $100 million from unbalanced liquidity pools.
Burwick Law filed a lawsuit on March 17 against Kelsier Ventures, KIP Protocol, and Meteora, accusing them of engaging in unfair and deceptive practices when launching the Libra (LIBRA) token.
The token gained further attention when Argentine President Javier Milei endorsed it on X, claiming it would help stimulate private-sector investment in Argentina.
Burwick Law accused KIP and Meteora, the crypto firms behind LIBRA, of designing a “predatory“ liquidity pool that artificially raised the memecoin’s price, ultimately allowing insiders to enrich themselves at the expense of everyday investors.
In the March 17 filing published on X, Burwick Law alleged that insiders drained nearly $107 million from the liquidity pools in a matter of hours, which wiped out 94% of LIBRA’s market worth.
Although Burwick cited President Milei’s name in the lawsuit, they did not formally accuse him as a defendant.
Burwick accused the defendants of exploiting Milei’s influence as a promotional tool, falsely boosting the token’s legitimacy, and misleading investors about its economic value.
Burwick stated that the defendants secretly withheld roughly 85% of LIBRA tokens at launch while failing to disclose their purportedly “predatory infrastructure techniques“ to investors.
“These tactics, combined with omissions about the true liquidity structures, deprived investors of material information.”
In the legal action filed by Burwick, they demanded monetary damages, the surrender of illicit profits, and an injunction to halt any future deceptive token launches.
Blockchain research firm Nansen revealed that more than 86% of the 15,430 largest Libra wallets it reviewed sold at a loss, collectively losing $251 million.
In a February 19 report, Nansen indicated that only 2,101 wallets made a profit, collectively pocketing $180 million.
Kelsier Ventures and its CEO, Hayden Davis, who were responsible for LIBRA, appeared to have been two of the launch’s primary beneficiaries.
Reports stated that they generated roughly $100 million in gains.
On February 17, Davis, now potentially facing an Interpol red notice after an Argentine lawyer’s appeal, declared that he was not the direct owner of the tokens and would not sell them.
Amid legal accusations, Milei has refuted claims that he actively endorsed the LIBRA token, maintaining that he only “spread the word” rather than promoting it.
Argentina’s opposition has attempted to impeach Milei, but their efforts have seen limited success.
As the creator of the memecoin launchpad Pump.fun pushes for protective measures in light of the “Libragate” debacle, Nic Carter of Castle Island Ventures argues that the libra controversy serves as undeniable evidence of a market that has always been rigged against retail traders. Declaring that “memecoins are cooked,” he hinted that Libra may spell the demise of memecoins in the cryptocurrency ecosystem.
