US Court Blocks $57M in USDC Amid LIBRA Token Controversy

A US federal court has frozen approximately $57.65 million worth of USDC stablecoins in connection with a class action lawsuit linked to the LIBRA token scam that took place a couple of months ago.

On 28 May 2025, the US District Court for the Southern District of New York issued a Temporary Restraining Order that froze the assets. The amount will remain frozen till June 9th, when a hearing is scheduled to determine if the freeze will remain in effect while the lawsuit proceeds.

Circle’s multi-sig freeze authority froze two Solana wallets in connection with the LIBRA deployer and project team as part of the ongoing lawsuit filed by the New York-based law firm Burwick.

As a part of the lawsuit, numerous LIBRA investors are suing Kelsier Ventures, a crypto firm, along with its co-founders, Gideon, Thomas, and Hayden Davis.

ALERT: $57M OF USDC ASSOCIATED WITH LIBRA FROZEN BY CIRCLE

Two Libra accounts have just been frozen by Circle, including the Libra deployer wallet.

These accounts contained a combined $57M in USDC which is now immobile. pic.twitter.com/HpmaM5HwVJ

— Arkham (@arkham) May 28, 2025

Other defendants in this case include Benjamin Chow, the co-founder of Meteora, a Solana-based DeFi platform; Julian Peh of KIP Protocol, a decentralised AI framework focused on digital property rights; and other organisations involved in the marketing of the LIBRA token.

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Background on the Lawsuit

The LIBRA memecoin attracted attention after a post on X by Argentinian President Javier Milei on 14 February 2025. The token was advertised as a means to fund small businesses in Argentina.

Within an hour of Milei’s advertisement on X, the LIBRA token’s value surged from a few cents to $5, and its market cap surged to $4 billion, only to crash by 94% within hours.

Reportedly, insiders controlling more than 70% of the supply dumped large amounts, sending the LIBRA token’s value spiralling downwards.

This sparked a political outrage in Argentina, with members of the opposition calling for Milei’s impeachment. Although the movement failed to gather momentum, a poll conducted in March 2025 by Zuban Córdoba suggested that the scandal harmed Milei’s approval rating and public image.

Burwick filed the lawsuit on 17 March 2025, alleging that the defendants launched the LIBRA cryptocurrency and deceived investors, ultimately misappropriating over $150 million while investors lost over $250 million.

Solscan, a blockchain explorer for Solana, disclosed data showcasing that the authorities froze approximately $44.59 million in stablecoins at the address 3Fwr…ZQpK, while someone locked more than $13 million from the wallet 3nHw…xNgH.

The asset freeze indicates that the US courts are ready to intervene to mitigate further losses and to ensure potential compensation for the victims. If successful, this case could set a new precedent and hold crypto founders and promoters accountable for misleading investors and fueling speculative hype cycles.

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Milei Shuts Down LIBRA Token Investigation

On 19 May 2025, Milei signed a decree to disband the investigative task force probing the LIBRA scandal. Notably, authorities have not brought any charges against Milei or any other Argentinian officials linked to the controversy.

Itai Hagman, a member of the Chamber of Deputies of Argentina, said, “It was always a fake, they never dared to investigate anything at all, and they’re covering each other up because they’re completely up to their necks in it.”

So far, the only explanation provided by the authorities for disbanding the task force is that it had fulfilled its assigned function.

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Key Takeaways

A U.S. federal court has frozen $57.65M in USDC amid a class action lawsuit over the LIBRA token scam
The funds stay frozen until June 9th, pending a hearing on whether the freeze continues during the lawsuit
LIBRA investors are suing Kelsier Ventures, a crypto firm, along with its co-founders, Gideon, Thomas, and Hayden Davis

The post US Court Blocks $57M in USDC Amid LIBRA Token Controversy appeared first on 99Bitcoins.

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