Libra token scandal leads to $107M class action loss

A class-action lawsuit has been filed by Burwick Law against Kelsier Ventures, KIP Protocol, and Meteora over the allegedly deceptive launch of the LIBRA (CRYPTO:LIBRA) token.

The lawsuit claims that these parties orchestrated a manipulative token launch, misleading investors and causing significant financial losses for retail buyers.

The LIBRA token was marketed as a project to support Argentina's economy, with President Javier Milei endorsing it, which helped create a false sense of legitimacy.

However, the lawsuit alleges that the defendants used a single-sided liquidity pool strategy to artificially inflate the token's price, withholding about 85% of the supply to maintain control over its valuation.

Insiders allegedly withdrew around $107 million from liquidity pools shortly after trading began, leading to a 94% collapse in the token's value.

This rapid withdrawal of funds resulted in substantial losses for retail investors, who were not informed about the true liquidity structures or insider control of the token supply.

Burwick Law is seeking compensatory and punitive damages for affected investors and aims to prevent similar fraudulent practices in future token launches.

The lawsuit highlights the need for transparency and fair practices in cryptocurrency launches to protect retail investors from such scams.

In a broader context, this case underscores the challenges faced by the cryptocurrency industry in maintaining trust and integrity, especially when political figures are involved in promoting tokens.

The ongoing investigations and legal actions may help clarify the extent of misconduct and potentially lead to reforms in how crypto projects are launched and regulated.