$57 Million USDC Frozen by Court Over Libra Cryptocurrency Case
A Manhattan federal court has ordered a freeze on approximately $57.65 million worth of the stablecoin USDC amid an ongoing class-action lawsuit tied to the controversial Libra project. This legal move is part of an effort to stop alleged financial misconduct connected to the Libra cryptocurrency.
What Happened?
On May 28, a court in the Southern District of New York (SDNY) issued a Temporary Restraining Order to freeze USDC tokens held by Circle, the issuer of USDC. This decision came after a request from the plaintiffs in a class-action case accusing several crypto firms and individuals of creating the Libra cryptocurrency and misleading investors.
Max Burwick, the lawyer representing the class, confirmed that the court froze nearly $57.65 million in USDC stablecoins stored in two Solana wallets. These wallets hold $44.59 million and $13 million respectively. The freeze was carried out by the Multisig Freeze Authority on the Solana blockchain.
Who Is Behind the Lawsuit?
The lawsuit was filed by Omar Hurlock and other investors claiming to be defrauded by the crypto venture firm Kelsier Ventures and its co-founders Gideon, Thomas, and Hayden Davis. The plaintiffs allege that the group misled investors by creating the Libra cryptocurrency and siphoning over $100 million from liquidity pools that heavily favored insiders.
In addition to Kelsier Ventures, the lawsuit names several other defendants, including blockchain infrastructure companies KIP Protocol, its CEO Julian Peh, and Meteora with its co-founder Benjamin Chow.
Background on the Libra Scandal
Libra gained massive attention early this year when it reached a market cap of $4 billion after an endorsement from Argentine President Javier Milei on social media in February. However, the cryptocurrency crashed dramatically by 94% within hours, widespread criticism and controversy.
The incident turned into a political scandal in Argentina, with opposition members calling for President Milei’s impeachment. However, no official investigations or charges have been made against Milei or other Argentine officials tied to the Libra scandal.
The Aftermath in Argentina
Despite the uproar, President Milei closed the investigation task force on May 19, effectively ending the official inquiry into the Libra scandal in Argentina. Critics argue that the investigation was never serious and accused authorities of covering up the matter to protect those involved.
Economist and Argentine lawmaker Itai Hagman openly criticized the government, calling the investigation a “fake” and accusing officials of shielding themselves from accountability.
Why Is This Freeze Important?
The freezing of $57 million worth of USDC represents a significant step in the legal battle to hold those behind the Libra scandal accountable. By freezing these funds, the court aims to prevent the defendants from moving or spending the assets while the lawsuit continues.
The case also highlights the challenges regulators and courts face in handling crypto-related fraud and scams, especially when involving stablecoins like USDC and decentralized blockchain networks such as Solana.
What Is USDC?
USDC is a widely used stablecoin pegged to the US dollar, meaning its value remains close to $1. It is popular in the crypto market for trading, lending, and other financial services. The freezing of such a large amount of USDC signals how stablecoins can become involved in legal disputes related to crypto scams and fraud.
What’s Next?
The court will hold a hearing on June 9 to decide whether to keep the freeze in place as the lawsuit moves forward. Meanwhile, the case continues to draw attention from the crypto community and regulators alike.
If the freeze remains, it could help protect investors’ funds and serve as a warning to others engaging in questionable crypto activities. It also underscores the importance of transparency and regulation in the rapidly growing digital asset space.
Final Thoughts
The freezing of $57 million USDC by a US court is a major development in the ongoing Libra controversy. It marks a critical moment in a complex case involving alleged investor deception and significant financial losses.
As the case progresses, it will be important to watch how courts and regulators balance innovation with investor protection in the evolving cryptocurrency landscape. For now, the frozen USDC serves as a reminder that even stablecoins are not immune to legal scrutiny in cases of fraud.
Post Views: 1