In a significant development, a Manhattan federal judge has ordered the unfreezing of $57.6 million in USDC linked to the controversial Libra meme coin scandal. This decision comes in the wake of the February launch of the Libra meme coin, which was heavily endorsed by Argentine President Javier Milei, only to experience a rapid decline shortly after its debut. The judge expressed doubts regarding the plaintiffs’ chances of success in their legal pursuit against defendants Hayden Davis and Ben Chow.
### Court’s Ruling on Libra Token Assets
Assets tied to the notorious Libra token, which was introduced in February with backing from President Milei, have been released by the judge on Tuesday. The ruling signifies a shift in the judge’s stance, as she now believes the defendants have not shown intentions to abscond with the funds, given their cooperation throughout the legal process. Previously, Judge Jennifer L. Rochon had imposed a freeze on $57.6 million of USDC in June during ongoing litigation where plaintiffs are seeking damages exceeding $100 million.
During the court session, Judge Rochon noted that Davis, the CEO of Kelsier Labs LLC, and Chow, the founder of decentralized exchange Meteora, were not behaving as “evasive actors” due to their compliance with the legal proceedings thus far. “It is clear that monetary compensation would be available to address the claims of the potential class,” she remarked, adding that the plaintiffs had not adequately demonstrated any irreparable harm, leading to her decision to lift the asset freeze.
### Legal Implications and Skepticism
Following this ruling, the judge conveyed her skepticism regarding the plaintiffs’ ability to prevail in their lawsuit, which is being represented by Burwick Law. Although she acknowledged that the case remains in its early stages, her comments suggest a challenging road ahead for the plaintiffs. Mazin Sbaiti, the lead attorney for Davis, described the ruling as a validation of their stance that the case lacks merit. According to him, the plaintiffs had the opportunity to present their evidence but failed to show that Davis had engaged in any wrongdoing or caused financial losses.
The plaintiffs’ case hinges on allegations that Davis and Chow misled investors regarding the Solana meme coin Libra (LIBRA), leveraging President Milei’s social media endorsement to lend credibility to the token. Chow’s attorney, Samson Enzer, characterized the plaintiffs’ claims as “untested and meritless,” and expressed eagerness to file a motion seeking dismissal of the lawsuit.
### Background on the Libra Meme Coin Scandal
The ongoing legal saga is rooted in the tumultuous history of the LIBRA token, which briefly achieved a market capitalization of $1.17 billion before plummeting by 97% to just $33 million within a single day, according to DEX Screener. Initially promoted as a financial resource for small businesses in Argentina, the LIBRA token was mistaken by many traders as the country’s official cryptocurrency. This misunderstanding was exacerbated by the simultaneous launch of other national meme coins, including one from the Central African Republic that same week.
Despite its promotion, LIBRA was never an official token of Argentina. As allegations of insider trading surfaced, Milei deleted his promotional post, which contributed to the token’s swift downfall. Amid the chaos, Davis engaged in a media campaign to clarify the situation, ultimately becoming the focal point of the scandal, with many investors holding him responsible for the token’s failure. He claimed a role as an advisor to President Milei and asserted that his responsibility with Libra was to safeguard the associated funds, which left him facing significant financial liabilities.
Further complicating matters, it was discovered that Chow had referred various projects to Davis’ Kelsier Labs, which included the official meme coin of First Lady Melania Trump. The infrastructure of Meteora was instrumental in the launch of Libra, and recent findings from on-chain analytics firm Bubblemaps indicated connections between the wallets used for the Melania and Libra token launches. The fallout from this scandal prompted Chow to resign from Meteora, with his fellow co-founder criticizing his judgment in trusting Davis. Now, six months post-scandal, both Chow and Davis appear to be making strides in rehabilitating their reputations.
