The Supreme Court of New York is preparing to review a class-action lawsuit asserting that the creators of the Libra (LIBRA) token deceived investors and executed a fraudulent scheme that siphoned over $100 million from manipulated liquidity pools.

The lawsuit, initiated on March 17 by Burwick Law, implicates Kelsier Ventures, KIP Protocol, and Meteora, claiming they launched the token in a deceptive and fundamentally unfair manner.

The Libra token garnered significant attention after being promoted by Argentine President Javier Milei, who framed it as an economic initiative to encourage private-sector investment in Argentina.

Lawsuit Claims Insiders Rigged Libra Token Launch for Massive Gains

The lawsuit alleges that the true beneficiaries of the token launch were insiders who established a predatory liquidity structure to maximize their profits at the expense of retail investors.

According to the legal documents, KIP and Meteora—two firms involved in LIBRA—artificially inflated the token’s price utilizing one-sided liquidity pools. This strategy reportedly allowed insiders to quickly cash out, resulting in ordinary investors suffering the losses. Just hours after its launch, insiders are said to have withdrawn around $107 million, causing a 94% drop in LIBRA’s market value.

While President Milei is mentioned in the litigation, he has not been named as a defendant. However, Burwick Law contends that the defendants leveraged Milei’s influence to fabricate a false sense of legitimacy, misguiding investors into thinking LIBRA was endorsed by the government.

The lawsuit also indicates that 85% of LIBRA’s token supply was retained at launch without disclosing details of purported manipulative techniques allegedly used to influence the market.

The plaintiffs seek compensatory and punitive damages, along with the recovery of ill-gotten gains and an injunction against further fraudulent token launches.

“Tonight, our firm filed a class action complaint in the Supreme Court of New York on behalf of our client. We allege that Kelsier, KIP, Meteora, and related parties orchestrated an unfair token launch (LIBRA), misleading purchasers and harming retail investors.”
— Burwick Law (@BurwickLaw)

Analysis from blockchain research company Nansen shows that out of over 15,430 significant LIBRA wallets, more than 86% of investors liquidated at a loss totaling approximately $251 million. In contrast, only 2,101 wallets achieved profit, resulting in aggregate gains of $180 million.

Kelsier Ventures CEO Allegedly Earned $100 Million from Libra Token Scheme

Reportedly among the major beneficiaries of the scheme is Kelsier Ventures and its CEO, Hayden Davis, who is believed to have profited around $100 million from the token’s launch. Davis, now potentially facing an Interpol red notice, denies any direct ownership of the tokens and claims he never sold them.

While President Milei has attempted to distance himself from the issue, asserting he did not actively promote the LIBRA token but merely shared information, he is facing fraud-related lawsuits without immediate consequences. However, Argentina’s opposition party has called for his impeachment, though efforts have not gained significant momentum.

Key Takeaways

• The New York Supreme Court will review a lawsuit accusing the developers of the Libra token of misleading investors and executing a $100 million fraud.
• The suit claims insiders manipulated liquidity pools, which led to a 94% market crash while profiting at the expense of retail investors.
• President Milei promoted the token but denies any wrongdoing as impeachment attempts face limited success.