$57.6M USDC Unfrozen by Federal Court for LIBRA Memecoin Founders Davis & Chow

A federal court in Manhattan has delivered a pivotal decision in the volatile arena of memecoins, ordering the unfreezing of approximately $57.6 million in USDC stablecoin previously linked to the collapsed LIBRA token. This ruling establishes a significant precedent concerning investor claims and the burden of proof in complex cryptocurrency litigation, particularly in cases involving rapid market collapses and projects backed by public figures. The decision restores access to these substantial digital assets for Hayden Davis, founder of the LIBRA memecoin, and Ben Chow, co-founder of the decentralized exchange Meteora, following months of intense legal dispute.

The LIBRA token, launched in February, quickly gained momentum after being promoted by Argentinian President Javier Milei. Its market capitalization soared to an estimated $1.17 billion. However, this rapid ascent was fleeting, as the token crashed by 99% within a mere 24 hours, resulting in substantial investor losses and prompting the subsequent legal challenge. In May, Circle had initiated the freeze of $57.65 million in USDC across two crypto wallets associated with the LIBRA team, which ultimately led to the current judicial review.

• A federal court in Manhattan has unfrozen approximately $57.6 million in USDC stablecoin.
• The funds were linked to the collapsed LIBRA memecoin and are now accessible to founders Hayden Davis and Ben Chow.
• LIBRA’s market capitalization surged to $1.17 billion after promotion by Argentinian President Javier Milei.
• The token subsequently plummeted by 99% within 24 hours, causing significant investor losses.
• Circle had initially frozen $57.65 million in USDC across two wallets associated with the LIBRA team in May.
• This ruling sets an important precedent regarding investor claims and the burden of proof in cryptocurrency litigation.

Judicial Scrutiny and Rationale

U.S. District Judge Jennifer L. Rochon, who initially issued the asset freeze order, re-evaluated the arguments presented by the plaintiffs. Her decision to unfreeze the funds was primarily based on a perceived insufficiency of evidence from the plaintiffs to demonstrate irreparable harm. Judge Rochon articulated her reasoning, stating, “It is clear that monetary compensation is available to cover possible losses. Plaintiffs have not provided sufficient evidence of irreparable harm.” Furthermore, she expressed reservations about the plaintiffs’ overall prospects, who are seeking more than $100 million in damages, noting that the case remains in its preliminary stages. The judge also clarified a shift in her assessment, no longer considering Davis and Chow to be “evasive players,” a change that significantly influenced the reversal.

Legal representatives for the defendants promptly applauded the court’s decision. Mazin Sbaiti, lead counsel for Hayden Davis and founder of Sbaiti & Company PLLC, stated that the ruling validates their consistent position that “this case is baseless.” He underscored the absence of any confirmed wrongdoing or damage attributable to his client, despite ample opportunity for the presentation of evidence. Similarly, Samson Enzer of Cahill Gordon & Reindel LLP, representing Ben Chow, characterized the plaintiffs’ demands as “unverified and baseless,” indicating plans to file a motion for the case’s dismissal.

Allegations and Reputational Fallout

The plaintiffs’ lawsuit alleges that Davis and Chow deliberately misled investors, leveraging President Milei’s social media endorsement to falsely legitimize the token. Following widespread public criticism, President Milei deleted the promotional post, an action that coincided with LIBRA’s sharp decline. Davis had publicly asserted a role as an advisor to the Argentine president and a custodian of LIBRA-related funds, thereby positioning himself at the epicenter of the controversy. The scandal also triggered internal discord at Meteora, with co-founder “Meow” publicly accusing Ben Chow of “lack of due judgment” in his association with Davis, ultimately leading to Chow’s resignation from the exchange.

This unfreezing order, issued after six months of intensive legal battles, represents a crucial initial step for Davis and Chow in their broader efforts to restore their professional reputations within the cryptocurrency sector. It highlights the inherent challenges faced by both investors and project founders in the rapidly evolving and often unregulated digital asset landscape, particularly when navigating the significant financial and reputational risks associated with memecoin projects. Hayden Davis had previously sought the dismissal of the class-action lawsuit in July, signaling a prolonged legal strategy to contest these allegations.