USDC and $LIBRA Frozen in Pump-and-Dump Scandal Tied to Argentine Political Endorsement
A US federal court has ordered Circle to freeze over $57 million in USDC linked to a suspected pump-and-dump scheme involving the $LIBRA token, which was promoted with public support from Argentine President Javier Milei. $LIBRA surged to a $4 billion market cap before crashing by 90%, causing major investor losses and sparking a political crisis. The class-action lawsuit, led by Burwick Law on behalf of affected investors, targets Kelsier Ventures, CEO Hayden Davis, associated family members, and platform Meteora, alleging fraudulent marketing and insider manipulation, including withholding token supply from the public. The project was marketed as supporting Argentine small businesses but investors claim over $100 million in losses after token dumps. The USDC frozen—around $57.65 million—is believed to be proceeds from the scheme. Circle complied with the court order, freezing the funds across two Solana wallets. Davis is also under investigation in Argentina for a similar saga involving $MELANIA but hasn’t been arrested. The next court hearing is set for June 9, with the possibility of continuing the freeze. This case highlights increased regulatory and legal scrutiny of meme coin launches, especially those tied to celebrities or politicians, and serves as a warning of ongoing risk for crypto traders.
Bearish
The court-ordered freeze of over $57 million in USDC, tied to a high-profile pump-and-dump scheme involving the $LIBRA token, signals severe reputational and legal risk for $LIBRA and related projects. The crash in token price following Argentine President Milei’s endorsement and subsequent investor lawsuit underscore the volatility and vulnerability of meme coins to insider manipulation and regulatory intervention. Immediate impacts include loss of liquidity for $LIBRA, continued negative sentiment, and increased likelihood of further regulatory crackdowns on similar projects, making the outlook bearish for $LIBRA in both short and long term. This event may also set a precedent for more aggressive legal actions against tokens with questionable marketing tactics.