Hayden Davis and Ben Chow Regain $57M in Frozen Libra-Linked Funds

A U.S. federal judge has lifted a freeze on over $57 million in USDC stablecoins tied to the $LIBRA token scandal, allowing memecoin promoter Hayden Davis and former Meteora decentralized exchange CEO Ben Chow access to the funds. The decision, made by Judge Jennifer L. Rochon of the U.S. District Court, followed a class-action lawsuit filed against Davis, Chow, KIP Protocol, and KIP co-founder Julian Peh in May. Rochon ruled that the defendants had not shown “irreparable harm” because the frozen funds remained accessible for potential reimbursement to victims. Additionally, there was no evidence the funds had been moved, further justifying the unfreeze [3].

The $LIBRA token, promoted on social media by Argentinian President Javier Milei in February, crashed hours after its launch, causing widespread losses and sparking a $107 million rug pull. Milei initially endorsed the token but later distanced himself, claiming no prior knowledge of its fundamentals. This led to calls for congressional investigations and potential impeachment proceedings in Argentina. However, Milei’s administration reportedly closed the investigation and disbanded the task force without any charges brought against the president or his office, fueling accusations of a politically motivated cover-up [3].

The unfreeze comes amid broader legal challenges surrounding the $LIBRA token. In the U.S., the class-action lawsuit remains active, though Rochon expressed doubts about its chances of success. The case against Davis, Chow, and others is part of an ongoing pattern of legal scrutiny in the crypto space. Meanwhile, in Argentina, opposition lawmakers have pushed to reinvigorate the investigation, unblocking a commission that was previously stalled over leadership disputes. The commission is expected to submit its report by November 10, with potential consequences for Milei’s presidency remaining unclear [4].

The $LIBRA incident has drawn attention beyond legal proceedings, with concerns about the influence of political figures on crypto markets. The token’s rapid rise and fall highlighted the vulnerability of investors to high-profile promotions on social media. Milei’s involvement, in particular, has raised questions about ethical boundaries for public officials engaging with digital assets. In an interview, former Foreign Minister Diana Mondino suggested that Milei either lacked understanding of the risks or was complicit in a corrupt scheme. Such statements underscore the political ramifications of the case and the broader debate over the regulation of crypto-related activities [4].

New evidence has emerged in recent weeks, including on-chain transactions and off-chain records, that point to Milei’s close advisors as key players in the token launch. These findings could broaden the scope of the investigation, potentially implicating individuals higher up in the administration. Both U.S. and Argentine authorities are separately examining the case, though legal processes tend to lag behind the speed of such financial crimes. The dual investigations may eventually converge, offering a more comprehensive understanding of the scandal’s scope and its implications for accountability in the crypto sector [4].

The decision to unfreeze the funds marks a pivotal moment in the $LIBRA case, signaling a shift in the legal landscape for digital assets. As courts grapple with the complexities of regulating crypto markets, the outcome of these proceedings could set important precedents. Investors and regulators alike are watching closely, with the hope that transparency and accountability will emerge from the chaos. The $LIBRA scandal has already reshaped public perceptions of digital currencies, reinforcing calls for stricter oversight and clearer legal frameworks to protect investors from similar incidents in the future [3].

Source:

[1] Moche, Milei and the scales of Justice (https://www.batimes.com.ar/news/opinion-and-analysis/moche-milei-and-the-scales-of-justice.phtml)

[2] Crypto Policy: How Regulations Are Impacting Digital Assets (https://www.theblock.co/category/policy/99)

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

[4] Lingering $LIBRA - BowTiedMara - Argentina & Geoarbitrage (https://www.bowtiedmara.io/p/lingering-libra)