US Court Freezes $57M USDC in LIBRA Memecoin Scandal

A significant development in the ongoing LIBRA memecoin scandal has seen a U.S. court freeze approximately $57 million in USDC. This action is part of a class-action lawsuit aimed at holding those responsible for the alleged scam accountable and potentially compensating investors who suffered substantial losses.

Court Orders Freeze in LIBRA Memecoin Case

A U.S. federal court has issued a temporary restraining order, leading to the freezing of roughly $57.65 million in USD Coin (USDC) linked to the controversial LIBRA memecoin. This move comes as part of a class-action lawsuit filed in the Southern District of New York.

• The freeze was executed by Circle, the issuer of USDC, on two Solana wallets associated with the LIBRA deployer and project team.

• These wallets held a combined $57.65 million in USDC, which is now immobile.

• The court is scheduled to hold a hearing on June 9 to determine if the assets will remain frozen as the lawsuit proceeds.

The LIBRA Memecoin Scandal Unfolds

The LIBRA token, launched in February 2025, quickly gained traction, partly due to social media promotion by Argentine President Javier Milei. Advertised as a funding mechanism for small businesses in Argentina, its value surged dramatically.

• Within an hour of its launch, the token's value rose from cents to over $5, pushing its market capitalization past $4 billion.

• However, insiders, allegedly controlling 70% of the supply, dumped significant amounts of the token within hours, causing a price crash of over 90%.

• This rapid decline resulted in alleged gains of over $150 million for insiders, while investors reportedly lost more than $250 million.

Legal Action and Defendants

The class-action lawsuit, initiated in March by New York-based law firm Burwick, represents hundreds of LIBRA investors. The suit targets several entities and individuals:

• Kelsier Ventures: A cryptocurrency venture firm.

• Co-founders of Kelsier Ventures: Gideon, Thomas, and Hayden Davis.

• Other Defendants:

  • Benjamin Chow, co-founder of Meteora.

  • Julian Peh, CEO of KIP Protocol.

  • Other organizations purportedly involved in the development and marketing of the LIBRA token.

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Political Fallout and Precedent

The LIBRA scandal also triggered political outrage in Argentina. President Milei faced calls for impeachment after removing his promotional posts and denying involvement. A government task force was initially established to investigate the matter but was later disbanded by Milei on May 19.

This asset freeze signifies a potential precedent for accountability in the crypto space. If successful, the case could establish a framework for holding crypto founders and promoters responsible for misleading the public and exploiting market hype cycles.

Sources

• Circle freezes 57M USDC linked to LIBRA memecoin scandal, Crypto News.

• US court freezes $57M USDC allegedly linked to LIBRA scandal, Cointelegraph.

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