The Supreme Court of New York is set to review the Libra (LIBRA) token scandal following a class-action lawsuit accusing its creators of misleading investors and siphoning over $100 million through deceptive liquidity pools.
On March 17, Burwick Law filed a lawsuit against Kelsier Ventures, KIP Protocol, and Meteora, accusing them of launching the Libra token in a manner that manipulated and harmed retail investors. The firm claims the project’s backers artificially inflated the token’s price through a one-sided liquidity pool, allowing insiders to profit while others incurred significant losses. The lawsuit also references Argentine President Javier Milei, who promoted LIBRA on X as a legitimate economic initiative, although he is not named as a defendant. Burwick Law argues that his involvement misled investors into thinking the market was legitimate.
Burwick Law’s filing alleges that insiders drained around $107 million shortly after LIBRA’s launch from liquidity pools, resulting in a 94% drop in the token’s market value. It also claims that 85% of LIBRA’s total supply was withheld at the launch, and investors were not informed about the token’s liquidity structure.
“These tactics deprived investors of material information,”
Burwick stated, seeking damages, return of unlawfully gained profits, and an injunction against fraudulent token launches.
Blockchain research firm Nansen found that of the 15,430 largest LIBRA wallets analyzed, 86% recorded losses, amounting to a combined $251 million. In contrast, only 2,101 wallets turned a profit, netting $180 million.
Kelsier Ventures and CEO Hayden Davis benefited significantly from the launch of LIBRA tokens, reportedly securing around $100 million. Davis has denied directly owning or selling the tokens and is facing potential legal action, including an Argentine lawyer’s request for an Interpol red notice against him.
President Milei has distanced himself from the controversy, claiming he only “spread the word” about the project and not actively promoted it. Meanwhile, Argentina’s opposition party is pushing for his impeachment, though efforts have been largely ineffective.
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