Essential Insights
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A US federal court has frozen $57.65 million in USDC linked to the LIBRA meme coin amid an ongoing class-action lawsuit alleging fraud against its promoters.
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The lawsuit, initiated by Burwick Law, targets Kelsier Ventures and its co-founders for allegedly deceiving investors and draining over $100 million through manipulated liquidity pools.
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LIBRA’s brief surge to a $4 billion market cap, following an endorsement from Argentine President Javier Milei, quickly collapsed, causing a 90% drop and political fallout in Argentina.
- The ruling could set a significant precedent for crypto asset protection in legal disputes and indicate increasing regulatory scrutiny on hype-driven token launches.
Court Freezes $57.65 Million in USDC Linked to Kelsier Ventures
A U.S. federal court has taken decisive action by freezing approximately $57.65 million in USDC related to the controversial LIBRA meme coin. This freeze is part of an ongoing class-action lawsuit that alleges fraud against the project’s promoters.
The court issued a Temporary Restraining Order (TRO) on May 28. This order affects two Solana-based wallets associated with Kelsier Ventures, the company behind LIBRA’s troubled launch. Burwick Law represents the investors who claim they were misled.
The lawsuit targets Kelsier’s co-founders, including Gideon, Thomas, and Hayden Davis, along with Julian Peh from KIP Protocol and Benjamin Chow from Meteora. Plaintiffs state that these individuals crafted a deceptive scheme to attract retail investors into one-sided liquidity pools. They allege that the team drained over $100 million through coordinated token dumps.
In February, LIBRA briefly achieved a market cap of $4 billion after being endorsed by Argentine President Javier Milei. Unfortunately, the token’s value tanked by over 90% soon after, causing alarm among investors and prompting political repercussions in Argentina. Milei eventually deleted his social media statements and later disbanded a task force investigating the situation.
As the court’s ruling unfolds, it could shape future regulations regarding asset protection in cryptocurrency lawsuits. Many industry experts see it as a potential sign of stricter oversight for hype-driven token launches.
Additionally, the freezing of funds through Circle’s infrastructure raises questions about how technology can safeguard investors in the crypto space. As digital currencies evolve, such actions may pave the way for more robust consumer protections.
A hearing set for June 9 will further determine the future of these frozen assets. This case highlights the complex relationship between innovation in technology and the necessity of regulatory measures, a balance that will be essential for sustaining investor trust in the crypto market.
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