Libra-linked USDC Wallets Frozen Amid Legal Scrutiny

Circle, the issuer of the USDC stablecoin, took action this week by freezing two Solana-based wallets associated with the Libra meme coin team. The wallets, which contained approximately $44.59 million and $13.06 million in USDC respectively, were rendered immovable following a temporary restraining order issued by a federal court in the Southern District of New York. The freeze, initiated by the Multisig Freeze Authority at 3:15 a.m. and 3:18 a.m. UTC, was a result of a court order obtained at the request of Burwick Law, a firm involved in a class-action lawsuit related to the Libra token. A hearing to determine whether the assets will remain frozen is scheduled for June 9.

The controversy surrounding the Libra token began in February when Argentine President Javier Milei posted on his X account that he supported the token. Following the post, the token’s market cap peaked at $4 billion but then dropped more than 90% almost immediately, leading to widespread accusations of a pump-and-dump scheme. Plaintiffs in the U.S.-based lawsuit claim that executives at Kelsier Ventures and its affiliates—Gideon, Thomas, and Hayden Davis—created the token to siphon over $100 million from investors. Additional defendants include blockchain infrastructure firm KIP Protocol, its CEO Julian Peh, and Meteora’s co-founder Benjamin Chow. The class-action complaint accuses the creators of manipulating liquidity pools and cashing out significant profits. The named defendants have yet to issue a comment.

On May 19, President Javier Milei officially disbanded the investigative task force assigned to examine his involvement in the Libra token launch. Government documents published that day confirm the closure, citing that the investigation had concluded. However, no final report or findings were made public. Milei had faced criminal fraud charges in connection with the Libra token, although Argentine authorities took no further action. Critics, including economists and Argentine lawmaker Itai Hagman, claimed the task force never conducted a genuine inquiry and accused officials of concealing misconduct.

The freeze of the Libra-linked USDC wallets and the ongoing investigations highlight the regulatory scrutiny and legal challenges facing the cryptocurrency industry. The actions taken by Circle and the court underscore the importance of compliance and transparency in the digital asset space. As the legal proceedings continue, the outcome will likely have significant implications for the future of the Libra token and similar projects. The situation also serves as a reminder of the risks associated with investing in meme coins and the need for thorough due diligence.