A class action lawsuit has been initiated in New York against Kelsier Ventures, KIP Protocol, and Meteora, alleging that they conducted a misleading launch tied to the LIBRA token controversy.
The lawsuit, submitted on March 18, claims that the developers of the token covertly manipulated liquidity to swindle retail traders out of countless dollars while luring investors with deceptive assurances.
Marketed as a project to stimulate Argentina’s economy, the LIBRA token even received backing from President Javier Milei. However, it is alleged that the developers artificially inflated prices through a lopsided liquidity pool, rather than pursuing a transparent launch.
To maintain control over the token’s market value, they retained 85% of its total supply. Allegedly, insiders withdrew $107 million at the time of trading’s commencement, leading to a staggering 94% price drop. Court filings suggest that this enabled insiders to “silently and systematically extract stable assets” from naive purchasers.
Apart from seeking compensation for affected investors, the law firm aims to prevent future fraudulent schemes of this sort. Similarly, on March 12, an Argentine lawyer requested an Interpol Red Notice for Hayden Davis, the CEO of Kelsier, on the grounds that his substantial wealth posed an escape risk.
An Interpol Red Notice is essentially a request for law enforcement worldwide to locate and provisionally arrest an individual pending their extradition.
The LIBRA token debuted on Solana (SOL) on February 14, rapidly achieving a market capitalization of $4.4 billion before plummeting, erasing over $280 million in value for approximately 75,000 traders. Dubbed “Cryptogate,” this scandal has led to numerous claims of insider trading and market manipulation.
A report from March 14 indicated that insiders, including Kelsier Ventures, accessed LIBRA tokens prior to the public launch, reaping over $100 million through early trading and liquidity contributions.
Beyond the legal ramifications, the LIBRA memecoin debacle has attracted political scrutiny. Opposition politicians in Argentina have urged for the impeachment of Milei, citing allegations of fraud. Analysts warn that this crisis may damage Milei’s reputation as a leader dedicated to economic recovery and anti-corruption efforts as the midterm elections near later this year.