The Supreme Court of New York is preparing to review a class-action lawsuit against the developers of the Libra (LIBRA) token, following claims that they deceived investors and extracted over $100 million from liquidity pools structured in a one-sided manner.

Burwick Law filed the lawsuit on March 17 on behalf of its clients against Kelsier Ventures, KIP Protocol, and Meteora, alleging that the firms orchestrated the token launch in a way that was "deceptive, manipulative, and fundamentally unfair." The case asserts that LIBRA's price was artificially inflated through “exploitative” liquidity pool strategies, allowing insiders to capitalize while retail investors suffered heavy financial losses.

Investor Losses and Insider Gains

The lawsuit states that the firms behind LIBRA withdrew around $107 million from these liquidity pools in a short period, leading to a 94% decline in the token’s market value. Research conducted by blockchain analytics firm Nansen indicates that out of 15,430 wallets examined, more than 86% incurred losses totaling $251 million. 

In contrast, only 2,101 wallets were profitable, with combined earnings of $180 million. The lawsuit suggests that Kelsier Ventures and its CEO, Hayden Davis, were among the primary beneficiaries, allegedly pocketing around $100 million from the launch.

Davis is now facing legal scrutiny and may be subject to an Interpol red notice, following a request from an Argentine lawyer. He has denied personally owning the tokens or engaging in their sale.

Milei’s Involvement and Political Repercussions

The lawsuit also references Argentine President Javier Milei, who mentioned the token on X (formerly Twitter) as part of an initiative to encourage private-sector investment. Burwick Law claims the defendants leveraged Milei’s influence to create a misleading impression of legitimacy, drawing in investors under false pretenses.

Milei has since distanced himself from the matter, asserting that he did not actively “promote” the LIBRA token but simply shared information about it. Despite this, political opponents in Argentina have called for his impeachment, though their efforts have made little headway.

Burwick Law is pursuing compensatory and punitive damages, the recovery of alleged illicit profits, and a court order preventing further fraudulent token launches. 

More on the Byteline: $4.6B to $200M: How $LIBRA became the fastest crypto collapse