Court Unfreezes $57M in Libra-Linked Crypto Amid Legal Skepticism

U.S. District Judge Jennifer L. Rochon has released a $57.6 million holding of USDC stablecoins that had been frozen in June as part of a class-action lawsuit tied to the Libra token scandal. The funds, located in wallets controlled by Hayden Davis and Ben Chow—prominent figures in the crypto space—were previously subject to a freeze ordered by the court in May amid legal proceedings involving allegations of misleading investors. The decision to unblock the assets came after Rochon determined that the defendants had demonstrated compliance with court processes and had not attempted to move the funds, rendering fears of asset depletion unfounded [1].

The judge’s ruling was based on an assessment of the plaintiffs’ inability to prove “irreparable” harm from the freeze. Rochon emphasized that the assets remained available to compensate victims should a favorable court decision emerge, and she expressed skepticism about the plaintiffs’ chances of success given the early stage of the litigation. The two wallets, holding $13.06 million and $44.59 million respectively, have not seen any movement since the freeze was initially imposed [2].

The Libra token, a Solana-based meme coin promoted in February, saw a dramatic rise and fall, peaking at a market capitalization of $1.17 billion before plummeting to $33 million within 24 hours. The token was initially endorsed by Argentine President Javier Milei, who later disavowed any connection to the project, citing a lack of awareness regarding its fundamentals. The collapse sparked a wave of investor backlash, leading to class-action lawsuits and an ethics investigation into Milei. However, the president terminated the inquiry without public findings or charges, a move that drew criticism from lawmakers and raised concerns about political interference [3].

Davis, CEO of Kelsier Labs LLC, and Chow, founder of decentralized exchange Meteora, are central to the legal battle. The plaintiffs allege that the two used Milei’s endorsement to lend legitimacy to the token, misleading investors about its potential. Both defendants have denied wrongdoing and are seeking to have the lawsuit dismissed, arguing that the claims are baseless and lack evidentiary support. Their legal teams have highlighted the plaintiffs’ failure to demonstrate actionable misconduct during court proceedings [2].

The case has broader implications for the regulatory and legal landscape of the crypto industry. The rapid rise and collapse of Libra underscore the volatility and risks inherent in meme coin markets, where social media influence can play a pivotal role in price movements. The ruling by Judge Rochon reflects a growing judicial trend of caution in freezing assets without clear evidence of flight risk or irreparable harm to plaintiffs. This approach balances investor protection with the rights of defendants to access their assets during litigation [1].

Source: [1] Judge unfreezes over $57M in stablecoins linked to Libra ... (https://cointelegraph.com/news/judge-unfreezes-over-57m-stablecoins-libra-token-scandal) [2] Libra Promoters Regain Access to $57.6 Million in Crypto After ... (https://finance.yahoo.com/news/libra-promoters-regain-access-57-191944299.html) [3] Judge deals blow to Libra victims after unfreezing seized ... (https://www.cryptopolitan.com/judge-unfreeze-57m-libra-plaintiffs-case/)