Update March 18, 6:42am: This article has been revised to indicate that Cointelegraph contacted KIP Protocol and Meteora.
The Libra token controversy is poised to be examined by the Supreme Court of New York after a recently submitted class-action lawsuit charged its developers with deceiving investors and extracting over $100 million from unilateral liquidity pools.
Burwick Law initiated the lawsuit on behalf of its clients against Kelsier Ventures, KIP Protocol, and Meteora on March 17 for releasing the Libra (LIBRA) token in a “misleading, manipulative, and intrinsically unjust” manner. The token was subsequently endorsed by Argentine President Javier Milei on X as a fiscal initiative aimed at boosting private-sector investment in the nation.
The law firm criticized the two cryptocurrency infrastructure and launchpad entities endorsing LIBRA — KIP and Meteora — asserting that they employed a “predatory” unilateral liquidity pool to artificially drive up the memecoin’s valuation, enabling insiders to gain profits while “ordinary purchasers suffered the losses.”
In a matter of hours, the insiders “quickly extracted approximately $107 million from the liquidity pools,” leading to a 94% decline in LIBRA’s market valuation, Burwick Law stated in a March 17 filing made public on X.
Source: Burwick Law
President Milei was referenced in the lawsuit but was not listed as a defendant.
Burwick accused the defendants of exploiting Milei’s influence to fervently advocate for the token, intentionally manufacturing a false impression of legitimacy and misguiding investors about its economic viability.
Nearly 85% of LIBRA’s tokens were withheld at the time of launch, and the “predatory infrastructure strategies” allegedly utilized by the defendants were not disclosed to investors, according to Burwick.
“These strategies, coupled with oversight regarding the true liquidity frameworks, deprived investors of significant information.”
Burwick is pursuing compensatory and punitive damages, the recovery of “unjustly acquired” profits, and injunctive relief to prevent further fraudulent token ventures.
Cointelegraph contacted KIP Protocol and Meteora but did not receive an immediate reply.
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Data from blockchain analytics firm Nansen revealed that of the 15,430 largest Libra wallets it assessed, over 86% of those were sold at a loss, accumulating $251 million in losses.
Only 2,101 profitable wallets managed to secure a combined $180 million in profit, noted Nansen in a Feb. 19 report.
The venture capital firm associated with the LIBRA token, Kelsier Ventures, and its CEO, Hayden Davis, appeared to be among the largest beneficiaries from the token’s launch. They assert to have gained approximately $100 million.
Davis, who is now facing a possible Interpol red notice following a request from an Argentine attorney, stated on Feb. 17 that he did not directly hold the tokens and would not sell them.
Meanwhile, Milei has distanced himself from the memecoin, contending he did not “endorse” the LIBRA token — contrary to fraud allegations raised against him — and instead simply “shared the information” about it.
Argentina’s opposition faction has called for Milei’s impeachment but has experienced limited success thus far.
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