A U.S. federal judge has released over $57 million in USDC linked to the investigation of the Libra token scandal.
Summary
- A U.S. judge has unblocked $57.6 million in USDC associated with the Libra token scandal.
- Judge Jennifer L. Rochon determined that Davis and Chow had adhered to the proceedings and posed no risk of concealing or transferring the assets.
- Investors worldwide faced significant losses when the Libra token failed.
The funds were initially frozen in May by Judge Jennifer L. Rochon of the Southern District of New York and were contained in two wallets connected to memecoin promoter Hayden Davis and former CEO of Meteora exchange, Ben Chow.
The assets were frozen during a class-action lawsuit where investors are pursuing over $100 million in damages linked to the collapse of Libra.
On Tuesday, Judge Rochon informed the court that she no longer perceives Davis and Chow as likely to mismanage the assets. She noted that Davis and Chow adhered to the rules of the case and did not attempt to transfer or hide the funds during the freeze.
“It is evident that monetary damages would be available for class compensation,” Rochon stated, emphasizing that the plaintiffs had not demonstrated any “irreparable harm” that would justify maintaining the freeze.
Rochon made it clear that the defendants did not act as “evasive actors,” which significantly influenced her decision to unfreeze the assets.
Nevertheless, the judge clarified that the case is still in its early stages. She expressed doubt about the likelihood of a successful outcome for the class-action lawsuit, yet she refrained from outright dismissing the matter.
Chow’s attorney, Samson Enzer of Cahill Gordon & Reindel LLP, echoed this sentiment, labeling the plaintiffs’ claims as “unproven and baseless” and hinted at an upcoming motion to dismiss the case.
Launched in February, Libra was supported by Davis’ Kelsier Labs and the infrastructure from Chow’s Meteora exchange.
It quickly achieved a market capitalization exceeding $4.56 billion, especially after Argentine President Javier Milei promoted the token on social media as a means to aid small businesses in Argentina.
Traders interpreted Milei’s X post as an endorsement, which propelled LIBRA to an all-time high of over $4 after its launch.
However, within 24 hours, Libra lost nearly 97% of its value and its market cap plummeted. Investors began accusing Davis and Chow of executing one of the most infamous rug pulls in recent history, with some critics attributing Milei’s initial endorsement as a significant reason for traders believing the Argentine government supported the token.
Milei promptly deleted his post backing Libra and distanced himself from the project, asserting he had no knowledge of its structure or the associated risks.
He described his promotion as merely a casual social media share, yet this rationale couldn’t prevent a congressional ethics investigation.
A congressional ethics probe was initiated against Milei, prompting lawmakers to advocate for impeachment proceedings. However, Milei eventually terminated the inquiry and disbanded the task force.
Fallout and Aftermath
Davis became the central figure of the scandal as the project unraveled. He subsequently launched a media campaign portraying himself as the guardian of Libra’s funds and even an advisor to Milei, but these claims only fueled the backlash against him.
Meanwhile, Chow had to step down from his position at the decentralized exchange Meteora, with his pseudonymous co-founder “Meow” attributing poor judgment in trusting Davis at that time.
Currently, Judge Rochon’s decision to unfreeze the funds provides the defendants with some relief in court, yet the ramifications of the Libra crash continue to loom over investors seeking recompense.
