Nearly $58 million in USDC has been frozen in connection with the LIBRA memecoin scandal, deepening the legal and political fallout from one of this year’s biggest crypto scandals.
On May 29, blockchain analytics firm Arkham reported that Circle, the issuer of USD Coin (USDC), froze two Solana (SOL) wallets tied to the LIBRA deployer and project team. The wallets held a combined $57.65 million in USDC, which is now immobile. The action was carried out by Circle’s multisig freeze authority.
The freeze is part of an ongoing class-action lawsuit filed in March in the Southern District of New York. Hundreds of LIBRA investors are suing Kelsier Ventures, a cryptocurrency venture firm, and its co-founders, Gideon, Thomas, and Hayden Davis. The lawsuit was filed by New York-based law firm Burwick.
Benjamin Chow, a co-founder of Meteora, Julian Peh of KIP Protocol, and other organizations purportedly involved in the development and marketing of the LIBRA token are among the other defendants.
The LIBRA token quickly gained popularity after its February 2025 launch with the help of Argentine President Javier Milei’s social media promotion. It was advertised as a way to fund small businesses in Argentina. In under an hour, the token’s value surged from a few cents to over $5, and its market value surpassed $4 billion.
However, insiders who supposedly controlled 70% of the supply dumped significant amounts within hours, sending the price plunging over 90%. Insiders allegedly made more than $150 million, while investors lost over $250 million.
The scandal sparked political outrage in Argentina. Calls for impeachment followed President Milei’s removal of his posts and denial of any involvement. A government task force was established to look into the matter, but Milei disbanded it in May 19.
The asset freeze implies that American courts may be prepared to take immediate action to prevent further losses and ensure potential compensation for victims. If the case is successful, it might set a precedent for holding crypto founders and promoters accountable for deceiving the public and exploiting hype cycles.
