18/03/25

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The Supreme Court of New York is set to evaluate a class-action lawsuit surrounding the controversial Libra token, which alleges that its creators misled investors and extracted over $100 million through a manipulative liquidity pool structure. The lawsuit, initiated by Burwick Law on March 17, targets Kelsier Ventures, KIP Protocol, and Meteora, claiming that the introduction of the Libra (LIBRA) token was executed in an unfair and deceptive manner. This token was notably endorsed by Argentina’s President Javier Milei on social media as part of an initiative aimed at invigorating private-sector investment in Argentina.

According to the legal filing, KIP and Meteora, the firms behind the LIBRA project, employed deceptive tactics by establishing a one-sided liquidity pool that artificially inflated the token’s price. This approach allowed insiders to profit significantly at the expense of ordinary investors, who faced substantial losses as the token’s value plummeted. The insiders reportedly withdrew approximately $107 million from the liquidity pool shortly after the token’s launch, resulting in a dramatic 94% decrease in market value.

The lawsuit highlights that about 85% of the LIBRA tokens were retained during the launch, raising concerns about the lack of transparency regarding the liquidity structures that the defendants allegedly used. Burwick Law contends that these techniques and the omission of critical information deprived investors of essential insights into the risks associated with the investment.

The firm is seeking financial restitution, including compensatory and punitive damages, and aims to halt any further fraudulent offerings of tokens. Research indicates that more than 86% of the largest Libra wallets have realized losses, totaling approximately $251 million, while only a small fraction were able to profit from the venture.

Kelsier Ventures and its CEO, Hayden Davis, reportedly emerged as significant beneficiaries from the token’s launch, claiming to have made close to $100 million. In the wake of ongoing legal challenges, including potential international implications for Davis, handling the situation remains critical for all parties involved. Meanwhile, President Milei has attempted to dissociate himself from the controversies surrounding the LIBRA token, asserting that his role was merely to raise awareness of the project.