Circle, the issuer of USD Coin (USDC), froze approximately $57.65 million in USDC held in two Solana-based wallets linked to the LIBRA memecoin scandal. The freeze was executed following a temporary restraining order issued by a federal court in the Southern District of New York, prompted by Burwick Law, which is representing hundreds of LIBRA investors in a class-action lawsuit filed in March 2025.
The lawsuit targets Kelsier Ventures and its co-founders—Gideon, Thomas, and Hayden Davis—along with others like Meteora and KIP Protocol, alleging they orchestrated a pump-and-dump scheme. The LIBRA token, promoted by Argentine President Javier Milei, surged to a $4 billion market cap in February 2025 before crashing over 90%, leading to accusations of market manipulation and insider trading. A hearing is scheduled for June 9, 2025, to determine if the funds will remain frozen.
There’s debate over whether the freeze was also influenced by an Argentine investigation, with plaintiff Martin Romeo claiming involvement, though Burwick Law attributes it solely to the U.S. court order. The freeze, prompted by Burwick Law’s class-action lawsuit and a U.S. federal court order, signals growing judicial willingness to intervene in crypto markets, especially in cases of alleged fraud like the LIBRA pump-and-dump.
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This could set a precedent for holding crypto issuers, promoters, and platforms accountable, potentially increasing regulatory scrutiny on memecoins and decentralized finance (DeFi) projects. The action may bolster investor confidence by showing that legal recourse is possible in crypto scams, where recovery of funds is often difficult. However, it also highlights the risks of unregulated tokens, potentially deterring retail investors from speculative assets like memecoins.
Circle’s compliance with the court order demonstrates the centralized control stablecoin issuers wield, which could spark debate about the balance between regulatory compliance and the ethos of decentralization. It may push users toward fully decentralized alternatives or raise questions about stablecoin vulnerabilities to legal interventions. The freeze affects wallets on Solana, implicating platforms like Meteora and KIP Protocol named in the lawsuit.
This could lead to reputational damage and reduced trust in Solana-based DeFi ecosystems. It may also pressure exchanges and protocols to enhance due diligence to avoid similar scandals. The involvement of Argentine President Javier Milei and claims of an Argentine investigation add geopolitical complexity. If Argentina’s government is pursuing parallel actions, it could complicate cross-border legal efforts, especially given crypto’s global nature and varying jurisdictional regulations.
Circle’s ability to freeze $57M in USDC underscores the centralized control over stablecoins, clashing with the decentralized ideals of many crypto advocates. Critics may argue this undermines the promise of financial sovereignty, while supporters of the freeze see it as necessary to combat fraud. The lawsuit alleges insider trading and market manipulation by Kelsier Ventures and affiliates, pitting retail investors—who suffered massive losses after LIBRA’s 90% crash—against well-connected insiders who allegedly profited.
This fuels distrust in memecoin projects often driven by hype and influencer endorsements. The U.S. court’s swift action contrasts with slower or less defined regulatory responses in other jurisdictions, like Argentina. This divide could lead to a fragmented global crypto regulatory landscape, where outcomes depend heavily on where legal action is pursued.
On platforms like X, sentiment is split. Some users praise the freeze as justice for defrauded investors, while others view it as overreach, arguing it punishes the broader crypto ecosystem and stifles innovation. Posts on X also reflect skepticism about Milei’s role, with some calling it political posturing, while others defend his libertarian stance. The upcoming June 9, 2025, hearing will be critical in determining whether the freeze holds, potentially shaping the trajectory of these divides and influencing future crypto litigation and regulation.
