In a dramatic legal development, a federal court in Manhattan has frozen approximately $57.65 million worth of the stablecoin USDC, connected to the notorious Libra memecoin controversy. This freeze stems from an ongoing class-action lawsuit that alleges fraudulent activity tied to the creation and promotion of the Libra token.
According to onchain data obtained by Cointelegraph from Max Burwick, the attorney representing the plaintiffs, the court issued a Temporary Restraining Order on May 28, halting the movement of these assets held at Circle, the issuer of USDC. Burwick explained that the court is set to conduct a hearing on June 9 to decide whether the freeze will be extended while the legal proceedings continue.
Burwick is leading a class-action case filed on March 17 against Kelsier Ventures, a crypto venture firm, and its three co-founders—Gideon, Thomas, and Hayden Davis. The lawsuit claims these individuals orchestrated the creation of the Libra cryptocurrency and duped investors, diverting over $100 million from what they describe as “one-sided liquidity pools.” The case also implicates other entities, including blockchain infrastructure firm KIP Protocol and its CEO Julian Peh, as well as Meteora and co-founder Benjamin Chow.
Requests for comment from Kelsier Ventures, KIP Protocol, and Chow’s legal representation have so far gone unanswered.
The Libra token gained widespread attention after an unexpected surge to a $4 billion market capitalization, triggered by an X (formerly Twitter) post from Argentine President Javier Milei on February 14. However, this rally was short-lived as the token’s value plummeted by 94% within hours. The event stirred political controversy in Argentina, with opposition lawmakers pushing for Milei’s impeachment, although these efforts did not gain significant momentum.
Further polling data from Zuban Córdoba in March indicated that the Libra scandal had a negative impact on Milei’s public image and his administration’s approval ratings, suggesting the fallout extended beyond the crypto world into national politics.
On May 28, two Solana blockchain wallets, which collectively held the frozen USDC worth $57.65 million, were locked down by the Multisig Freeze Authority, as confirmed by Solana’s blockchain explorer Solscan. The wallet identified by address “3Fwr…ZQpK” had $44.59 million frozen, while another wallet, “3nHw…xNgH,” saw just over $13 million immobilized.
Meanwhile, back in Argentina, President Milei took steps to end official scrutiny into the Libra affair by signing a decree on May 19 to dissolve the special task force established to investigate the scandal. This move effectively closed the investigation without any charges or formal actions taken against Milei or other Argentine officials allegedly connected to the case.
Critics, however, remain skeptical about the thoroughness and legitimacy of the investigation. Itai Hagman, an Argentine economist and member of the country’s Chamber of Deputies, voiced sharp criticism on social media. He accused the authorities of conducting a “fake” investigation and suggested that officials involved were protecting one another to avoid accountability.
The Libra memecoin saga highlights the increasingly complex intersections of cryptocurrency projects, political figures, and legal challenges. While the freeze of such a substantial amount of USDC marks a significant step in the ongoing litigation, the broader ramifications for the crypto community and political landscape continue to unfold. The upcoming court hearings and any further legal moves will be closely watched by both crypto enthusiasts and regulators alike.
