A federal court in Manhattan has allowed the co-founders of the LIBRA memecoin — Hayden Davis and Ben Chow, who is also one of the founders of the decentralized exchange Meteora — to regain access to $57.6 million in USDC stablecoins. These assets were previously frozen as part of the investigation into the collapse of LIBRA.
This is reported by Business • Media
Details of the LIBRA Scandal
LIBRA is a memecoin that was launched in February and gained widespread popularity due to promotion by Argentine President Javier Milei. The coin rapidly reached a market capitalization of $1.17 billion but lost 99% of its value within a day. Following this, Circle froze $57.65 million in USDC in accounts linked to the LIBRA team.
Judge Jennifer L. Rochon, who had previously ordered the asset freeze, has now changed her position. She stated that she does not consider Davis and Chow to be “evasive players,” and the plaintiffs did not provide sufficient evidence to maintain the freeze on the crypto assets.
“It is clear that monetary compensation is available to cover potential losses. The plaintiffs did not provide sufficient evidence of irreparable harm.”
Details of the Court Case and Reactions from the Parties
The main claims from investors relate to allegations that Davis and Chow used President Milei’s social media post to legitimize the token and attract funds. After a wave of criticism, Milei deleted the post, and the value of LIBRA plummeted. Davis publicly stated that he was an advisor to the Argentine president and a custodian of funds related to LIBRA, yet he became embroiled in the scandal that caused investors to incur losses.
The situation forced Ben Chow to resign from Meteora following accusations of poor judgment in collaborating with Davis. Both co-founders have been fighting in court for six months to regain access to their assets.
Judge Rochon also expressed doubt about the plaintiffs’ prospects, who are seeking over $100 million in damages, noting that the case is still in its early stages.
“This ruling confirms what we have said from the beginning — this case is baseless. Despite the opportunity to provide evidence, there has been no confirmation that our client did anything wrong or caused any damages. Today’s hearing and ruling reveal the true nature of this case,” said Davis’s lead attorney Mazin Sbaiti, founder of Sbaiti & Company PLLC.
Ben Chow’s attorney, Samson Enzer from Cahill Gordon & Reindel LLP, described the investors’ claims as unverified and unfounded. The defense team plans to file a motion to dismiss the case soon.
Meanwhile, in July, Davis had already approached the U.S. federal court requesting to dismiss the class action lawsuit regarding LIBRA due to lack of jurisdiction.
The restoration of access to the crypto assets marks the first significant step for Davis and Chow in their efforts to protect their reputation following the LIBRA scandal.