Circle Freezes $57.65 Million in USDC Linked to LIBRA Scandal

Circle, the issuer of USD Coin (USDC), has frozen approximately $57.65 million in USDC linked to the LIBRA memecoin scandal. This action, carried out by Circle’s multisig freeze authority, targeted two Solana (SOL) wallets associated with the LIBRA deployer and project team. The freeze comes as part of an ongoing class-action lawsuit filed in March in the Southern District of New York, where hundreds of LIBRA investors are suing Kelsier Ventures and its co-founders, Gideon, Thomas, and Hayden Davis, along with other defendants including Benjamin Chow, a co-founder of Meteora, and Julian Peh of KIP Protocol.

The LIBRA token, launched in February 2025, quickly gained traction with the help of Argentine President Javier Milei’s social media promotion. Advertised as a means to fund small businesses in Argentina, the token’s value surged from a few cents to over $5 within an hour, reaching a market value of over $4 billion. However, insiders allegedly controlling 70% of the supply dumped significant amounts within hours, causing the price to plummet by over 90%. This resulted in insiders making more than $150 million while investors lost over $250 million.

The scandal has sparked political outrage in Argentina, with calls for impeachment following Milei’s removal of his posts and denial of any involvement. A government task force was established to investigate the matter, but it was disbanded in May 19. The asset freeze by Circle suggests that American courts may be prepared to take immediate action to prevent further losses and ensure potential compensation for victims. If the case is successful, it could set a precedent for holding crypto founders and promoters accountable for deceiving the public and exploiting hype cycles.

This development underscores the increasing scrutiny that cryptocurrencies and related financial activities are facing. Authorities are working to protect investors and maintain the integrity of the financial system. The action taken by Circle highlights the importance of regulatory compliance and the potential risks associated with memecoins and other speculative digital assets. The freeze of $57.65 million in USDC is a significant step in addressing the alleged scam and ensuring compliance with applicable regulations.