LIBRA Token Creator Seeks Dismissal of $100 Million Fraud Lawsuit

Hayden Davis, the creator of the LIBRA token and co-founder of Kelsier Ventures, has filed a motion in a federal court in New York seeking the dismissal of a class-action lawsuit. The lawsuit, initiated by a group of LIBRA token buyers led by Omar Hurlock, alleges that Davis and his co-founders, Gideon and Thomas Davis, misled investors about the token's purpose and siphoned over $100 million from the project. The plaintiffs claim that the token was marketed as a means to economically support Argentina, but the real intent was to drain money from one-sided liquidity pools and move funds into wallets controlled by the Davis family and their associates.

Davis's defense argues that the court lacks jurisdiction over the case. In his filing, Davis stated that he does not reside in New York, does not transact business in New York, and was not physically present in the state when the allegedly tortious conduct occurred. He also claimed that the LIBRA initiative had no direct connection to New York and was offered to any buyer worldwide, not marketed to any specific jurisdiction. The motion further describes the project’s website as “passive” and asserts that it does not knowingly transmit goods or services to users in other states, limiting its function to collecting applications from businesses in Argentina.

The plaintiffs, however, allege that Davis and his brothers made public statements that helped build trust around the token, including a promise to repurchase certain LIBRA tokens to support their value. Davis countered these allegations by stating that such statements were not directed specifically at New York residents and that the complaint does not allege that he was physically present in New York when he made any such statements.

In May, the plaintiffs secured a temporary court order requiring Circle, the issuer of the USDC stablecoin, to freeze approximately $57.65 million in assets allegedly tied to the LIBRA project. At its peak, LIBRA had a market cap of $4.6 billion before crashing by 94%, leaving thousands of investors in the red. The class-action suit also names other entities believed to be linked to the LIBRA operation, including blockchain company KIP Protocol and its CEO Julian Peh, and crypto platform Meteora, alongside its co-founder Benjamin Chow.

In addition to the legal battle, blockchain forensics sleuth Fernando Molina testified before Congress about large transfers from wallets linked to Davis. Molina mentioned several transactions timed around certain points in the LIBRA scandal and its political ties in Argentina. On January 30, the same day Davis met with Argentine President Javier Milei at the Casa Rosada, Davis transferred $507,500 via the Bitget exchange just 40 minutes after Milei posted a photo with Davis on X. Another suspicious transaction took place on February 13, a day before LIBRA’s launch, when Davis sent $1.275 million to an exchange platform he does not usually use. On February 3, Davis made another large transaction of $1.991 million to a different wallet. The following day, trader Mauricio Novelli, supposedly Davis’s connection to Milei, opened two safe deposit boxes at Banco Galicia’s Martínez branch. Molina asserted that these boxes “would later have been emptied by his mother and sister.”

The ongoing legal proceedings and the suspicious transactions highlight the complex nature of the LIBRA token scandal and the broader implications for the cryptocurrency industry. The outcome of the lawsuit and the investigation into the suspicious transactions will be closely watched by investors and regulators alike. Davis's motion to dismiss the lawsuit on jurisdictional grounds underscores the global nature of cryptocurrency projects and the challenges in regulating them within specific jurisdictions. The case also raises questions about the transparency and accountability of cryptocurrency creators and the potential for misuse of investor funds. As the legal battle unfolds, it will set important precedents for how similar cases are handled in the future, shaping the regulatory landscape for the cryptocurrency industry.