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Update March 18, 6:42am: This article has been updated to reflect that Cointelegraph reached out to KIP Protocol and Meteora.
The Libra token scandal is set to be reviewed by the Supreme Court of New York after a newly filed class-action lawsuit accused its creators of misleading investors and siphoning over $100 million from one-sided liquidity pools.
Burwick Law filed the suit on behalf of its clients against Kelsier Ventures, KIP Protocol and Meteora on March 17 for launching the Libra (LIBRA) token in a “deceptive, manipulative and fundamentally unfair” manner. The token was then promoted by Argentine President Javier Milei on X as an economic initiative to stimulate private-sector funding in the country.
The law firm slammed the two crypto infrastructure and launchpad firms behind LIBRA — KIP and Meteora — claiming that they used a “predatory” one-sided liquidity pool to artificially inflate the memecoin’s price, allowing insiders to profit while “everyday buyers bore the losses.”
Within hours, the insiders “rapidly siphoned approximately $107 million from the liquidity pools,” causing a 94% crash in LIBRA’s market value, Burwick Law said in a March 17 filing shared on X.
President Milei was mentioned in the lawsuit but wasn’t named a defendant.
Burwick accused the defendants of leveraging Milei’s influence to aggressively promote the token, deliberately creating a false sense of legitimacy and misleading investors about its economic potential.
Approximately 85% of LIBRA’s tokens were withheld at launch and the “predatory infrastructure techniques” allegedly used by the defendants weren’t disclosed to investors, Burwick said.
Burwick is seeking compensatory and punitive damages, the disgorgement of “unjustly obtained” profits and injunctive relief to prevent further fraudulent token offerings.
Cointelegraph reached out to KIP Protocol and Meteora but didn’t receive an immediate response.
Related: Law firm demands Pump.fun remove over 200 memecoins using its IP
Data from blockchain research firm Nansen found that of the 15,430 largest Libra wallets it examined, over 86% of those sold at a loss, combining for $251 million in losses.
Only 2,101 profitable wallets were able to take home a combined $180 million in profit, Nansen noted in a Feb. 19 report.
The venture capital firm behind the LIBRA token, Kelsier Ventures, and its CEO, Hayden Davis, were apparently two of the biggest winners from the token launch. They claim to have netted around $100 million.
Davis, who is now facing a potential Interpol red notice following an Argentine lawyer’s request, said on Feb. 17 that he didn’t directly own the tokens and wouldn’t sell them.
Meanwhile, Milei has distanced himself from the memecoin, arguing he didn’t “promote” the LIBRA token — as fraud lawsuits filed against him have alleged — and instead merely “spread the word” about it.
Argentina’s opposition party called for Milei’s impeachment but has had limited success thus far.
Magazine: Meet lawyer Max Burwick — ‘The ambulance chaser of crypto’
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