The Libra token controversy is now under examination by the New York Supreme Court, following a recently initiated class-action lawsuit that charges its developers with deceiving investors and extracting over $100 million from disproportionately structured liquidity pools.
The legal action was brought forth on March 17 by Burwick Law, representing its clients against Kelsier Ventures, KIP Protocol, and Meteora, alleging that they released the Libra (LIBRA) token in a manner that was “deceptive, manipulative, and fundamentally unfair.” This token was subsequently endorsed by Argentine President Javier Milei on a social media platform as a means to encourage private-sector investment in the nation.
The law firm criticized the crypto infrastructure and launchpad companies responsible for LIBRA—KIP and Meteora—for employing a “predatory” one-sided liquidity pool to artificially enhance the memecoin’s value, thereby enabling insiders to profit while ordinary investors faced the losses.
Within a matter of hours, insiders reportedly “quickly drained approximately $107 million from the liquidity pools,” resulting in a staggering 94% decline in LIBRA’s market value, as stated by Burwick Law in a filing dated March 17.
While President Milei is mentioned in the lawsuit, he is not listed as a defendant.
Burwick accused the defendants of exploiting Milei’s influence to aggressively advertise the token, intentionally fostering a false impression of legitimacy and misleading investors regarding its economic prospects.
At the time of launch, around 85% of LIBRA’s tokens were held back, and the alleged “predatory infrastructure techniques” utilized by the defendants were not disclosed to investors, according to Burwick.
“Such tactics, coupled with the failure to provide accurate information about the genuine liquidity structures, deprived investors of critical insights.”
Burwick is pursuing compensatory and punitive damages, the return of “unjustly acquired” profits, and injunctive measures to prevent additional fraudulent token launches.
Research from a blockchain analytics firm revealed that of the 15,430 largest Libra wallets analyzed, over 86% experienced losses, totaling $251 million. Only 2,101 wallets managed to achieve profitability, collectively generating $180 million in gains, as indicated in a February 19 report.
The venture capital firm backing the LIBRA token, Kelsier Ventures, along with its CEO, Hayden Davis, appeared to have been among the primary beneficiaries of the token’s launch, claiming profits of around $100 million.
Davis, who is now under the threat of a possible Interpol red notice due to a request from an Argentine lawyer, stated on February 17 that he did not personally own the tokens and would not sell them.
Conversely, Milei has attempted to distance himself from the memecoin, contending that he did not “promote” the LIBRA token as alleged in the fraud lawsuits against him, but merely “spread the word” about it.
Argentina’s opposition party has called for Milei’s impeachment, although with limited success thus far.