Burwick Law has filed a class-action lawsuit against Kelsier Ventures, KIP Protocol, Meteora, and other associated parties in the Supreme Court of New York regarding the highly debated $LIBRA token launch.
The complaint accuses that the defendants engaged in a scheme to deceive investors and to launch a token that was unfair to investors and financially damaging.
According to the lawsuit the defendants promoted the $LIBRA token as an effort to boost the Argentinian economy through funding small businesses, start-ups, and educational projects.
They even received attention through the support of the Argentina’s President, Javier Milei. However, the lawsuit argues that this was a falsehood because the token launch was aimed at enriching insiders at the expense of the general public.
The complaint outlines how the defendants employed a one-sided liquidity model on the Meteora DeFi platform, which is different from other DeFi platforms. This was said to have led to manipulation of the token’s price to give an impression of stability and value.
Also, at the initial stage, 85% of the token’s supply was kept in reserve, which means that insiders can control its price and float. This led to a sharp decline in the value of the token by 94% in the first few hours of trading as insiders withdrew around $107 million worth of stable coins such as USDC and SOL.
According to Burwick Law, the defendants did not reveal the facts about the liquidity structure and insider control, thus denying investors this important information. This lawsuit is for compensatory and punitive damages as well as injunctions against future token sales frauds.
As the investigation is still ongoing, Burwick Law emphasizes the need to punish those who deceive and defraud retail investors in the crypto market. It is believed that the case will influence future crypto fraud litigation in a big way.
