Court Clears $57M for Libra's Promoters, Defying Scam Claims

A U.S. federal court in Manhattan has unfrozen $57.6 million in USDC stablecoins tied to the Libra token scandal, granting access to Hayden Davis and Ben Chow, central figures in the incident. The decision, issued by Judge Jennifer L. Rochon on August 19, came after plaintiffs failed to demonstrate that the defendants would dissipate the funds. The assets, previously frozen in June as part of a class-action lawsuit seeking over $100 million in damages, remain in the same wallets but are now available for use by Davis and Chow, who have been deemed cooperative throughout the proceedings.

The ruling reflects Rochon’s skepticism about the strength of the plaintiffs’ case, despite its early stage. She noted that plaintiffs had not proven the existence of "irreparable harm" and questioned whether the class-action lawsuit, led by Burwick Law, would succeed. Legal representatives for both defendants have dismissed the lawsuit as baseless. Mazin Sbaiti, counsel for Davis, stated that the plaintiffs failed to provide evidence of wrongdoing, while Samson Enzer, representing Chow, described the claims as "untested and meritless." The court’s decision was also supported by the absence of any movement from the defendants regarding the frozen assets, with $13.06 million and $44.59 million remaining in two separate wallets.

The Libra token, a Solana-based meme coin launched in February, initially garnered significant attention after Argentine President Javier Milei endorsed it on social media. It briefly achieved a $1.17 billion market capitalization before collapsing within 24 hours to $33 million. The rapid decline, attributed to a "rug pull" by Davis, led to widespread investor losses and triggered multiple legal actions. The plaintiffs allege that Davis and Chow misled investors by leveraging Milei’s endorsement to create a false impression of legitimacy around the token. These claims have prompted investigations and congressional inquiries into Milei’s involvement, though he has since denied any connection and dissolved the investigative task force without public disclosure of findings.

The case is part of a broader pattern of legal challenges in the cryptocurrency space, particularly involving high-profile figures and rapid market fluctuations. Similar incidents, such as the rug pull of a Central African Republic-backed token and a U.S. president’s official meme coin, have drawn regulatory and public scrutiny. While the Libra incident is among the most significant in terms of financial impact, it highlights the ongoing volatility and legal uncertainty in the meme coin sector. Analysts have pointed to the lack of regulatory oversight as a contributing factor to such events, though no official forecasts or predictions from the provided material have been cited.

Despite the court's unfreezing of assets, the legal proceedings remain active, with both parties continuing to prepare for potential further action. The plaintiffs, represented by Burwick Law, have yet to respond to the decision, while the defendants have emphasized their commitment to clearing their names. The case continues to unfold amid a broader shift in investor sentiment toward greater caution, particularly in the fast-moving and often unregulated world of meme-based cryptocurrencies.

Source:

[1] Judge unfreezes $57M in stablecoins linked to Libra token scandal (https://cointelegraph.com/news/judge-unfreezes-over-57m-stablecoins-libra-token-scandal)

[2] Libra Promoters Regain Access to $57.6 Million in Crypto After Judge Unfreezes Funds (https://finance.yahoo.com/news/libra-promoters-regain-access-57-191944299.html)

[3] Cahill Defeats Plaintiffs' Bid to Freeze Assets in High-Profile "Libra Gate" Class Action (https://www.cahill.com/news/firm-news/2025-08-19-cahill-defeats-plaintiffs-bid-to-freeze-assets-in-high-profile-libra-gate-class-action)

[4] Judge deals blow to Libra victims after unfreezing seized assets (https://www.cryptopolitan.com/judge-unfreeze-57m-libra-plaintiffs-case/)