- Burwick Law files a lawsuit accusing Kelsier Ventures and partners of defrauding investors in LIBRA’s launch through liquidity manipulation and misleading promotional tactics
- The LIBRA token, promoted as a tool to boost Argentina’s economy, saw its value collapse by 94%, wiping out $280 million and affecting 75,000 traders within hours
- Allegations against LIBRA’s developers include withholding 85% of supply, inflating prices, and insiders withdrawing $107 million before the market crash, prompting calls for stricter crypto oversight
Burwick Law, a New York-based law firm that specializes in digital asset cases, has officially filed a class action lawsuit against Kelsier Ventures, KIP Protocol, and Meteora.
The complaint in the Supreme Court of New York accuses the companies of orchestrating an illicit cryptocurrency token launch, misleading buyers, and ultimately harming the investors involved in the initial coin offering.
Moreover, the filing also attacks the promotional aspect of the launch, stating that the defendants willingly promoted $LIBRA as a meaningful economic initiative, promising to drive economic growth in Argentina.
The token launch gained significant repercussions after Argentina’s president, Javier Milei, publicly promoted the new crypto project on social media to his millions of followers. This unfortunately added a sense of legitimacy to the project, which ultimately ended up crumbling merely hours after its launch.
Single-Sided Liquidity Pool Issue
The lawsuit also states that the structure behind LIBRA may have been purposefully ‘simplified’ in order to allegedly artificially inflate the price of the token, creating an illusion of stability and value.
Typically, decentralized finance structures rely on a two-way liquidity model, generally paired with stable assets like USDT. However, Libra was built under a single-sided liquidity model. In this setup, liquidity providers deposit a single asset into the pool, and the platform manages the conversion or balancing of liquidity as needed.
While this model decreases the complexity of managing paired assets, it does create a leeway for more centralized control of the liquidity, allowing ill-intended developers to manipulate the price of the asset.
The Libra token was launched on February 14, 2025, and quickly gained significant traction, reaching a market capitalization of over $4.4 billion in a matter of hours. A short time after its peak the token went crashing down, erasing over $280 million at the cost of over 75,000 investors.
Earlier this week, Gregorio Dalbón, an Argentine lawyer representing several victims of the Libra token debacle, formally requested that Interpol issue a Red Notice for Hayden Davis, Kelsier Ventures CEO.
In addition, Javier Milei is also suffering extreme pressure, and could potentially be the target of investigations regarding the failed token launch.
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