The Supreme Court of New York is set to review the Libra token case after a class-action lawsuit was filed against its creators. The lawsuit claims the creators misled investors and took over $100 million from its one-sided liquidity pools. The case is gaining attention as it could have significant implications for how crypto projects handle investors’ money.
Burwick Law filed a lawsuit on behalf of its clients on March 17 against Kelsier Ventures, KIP Protocol, and Meteora for launching the Libra (LIBRA) token in a deceptive and unfair way. The token was then promoted by Argentine President Javier Milei on X as a way to boost private-sector funding in the country.
$107M Drained from Pools
The law firm criticized KIP and Meteora, the two companies behind LIBRA, for using a “predatory” one-sided liquidity pool to artificially raise the price of the token. This allowed insiders to profit while ordinary buyers took the losses. Burwick Law claims that within hours, insiders drained about $107 million from the pools, causing LIBRA’s value to crash by 94%.
While President Milei was mentioned in the lawsuit, he was not named as a defendant. Burwick accused the companies of using Milei’s influence to aggressively promote LIBRA, creating a false sense of legitimacy and misleading investors about its potential. Approximately 85% of LIBRA’s tokens were held back at launch, and the “predatory tactics” used by the companies were not disclosed to investors.
Burwick Seeks Compensation
Burwick is seeking financial compensation for damages, punishment for wrongdoing, the return of profits made unfairly, and a court order to prevent future fraud in token offerings. A blockchain research firm, Nansen, found that more than 86% of the largest 15,430 Libra wallets sold at a loss, losing a total of $251 million. Only 2,101 wallets made a profit, totaling $180 million.
Kelsier Ventures and CEO Made $100M
Kelsier Ventures, the company behind the LIBRA token, and its CEO, Hayden Davis, were among the biggest winners, making around $100 million. Davis, now facing a potential Interpol red notice, said that he didn’t directly own or sell the tokens.
Meanwhile, Argentina’s president-elect, Milei, has said he didn’t promote the LIBRA token, only “spread the word,” despite lawsuits claiming otherwise. Argentina’s opposition has called for his impeachment, but they haven’t been successful so far.
