LIBRA lawsuit dismissed, but $250 million collapse was never tried

New York federal judge rejects class action lawsuit between LIBRA and M3M3 investors

A federal judge in New York dismissed a class action lawsuit against LIBRA and M3M3 investors "with prejudice"(i.e. no further action). The ruling was based on flaws in legal theory rather than a factual finding as to whether the so-called liquidity withdrawal occurred. The court held that the plaintiff had failed to prove that Meteora was an actionable subject. Meanwhile, a separate criminal investigation into LIBRA is still ongoing in Argentina.

On September 29, 2026, Judge Jennifer L. Rochon of the U.S. District Court for the Southern District of New York Rochon) dismissed the plaintiff's revised indictment and ruled that the case was closed. This decision means that the claim cannot be refiled in the court. In her 81-page opinion in Hurlock v. Kelsier Ventures, Judge Rochon refused to allow the plaintiff to file a second revised indictment. The decision ended the main U.S. civil lawsuit surrounding the token LIBRA. Previously, LIBRA briefly reached a market valuation of about US$4 billion after Argentine President Javier Milei released relevant content. However, the ruling did not make any determination as to whether insiders drained the liquidity pool as alleged.

The court examines the indictment, not blockchain evidence

奥马尔·赫洛克（Omar Hurlock）和阿努杰·梅塔（Anuj Mehta）代表拟议的集体成员提起诉讼，被告方包括交易名为Kelsier Ventures的Kelsier Labs、海登·戴维斯（Hayden Davis）、吉迪恩·戴维斯（Gideon Davis）、查尔斯·托马斯·戴维斯（Charles Thomas Davis）、周本杰明（Benjamin Chow）以及Meteora本身。原告指控存在欺诈、共谋欺诈、违反民事RICO法案、违反纽约州消费者保护法以及不当得利。

罗雄法官用一个问题来检验这些索赔：即起诉书所述行为，在法律上是否允许这些原告在该法院提起诉讼。她得出结论，不能。判决书中未声明LIBRA或M3M3是合法的启动项目，也未排除投资者描述的内幕活动。起诉书核心的区块链交易从未作为证据接受测试。

六个月的 alleged 活动不符合RICO法案两年基准

The Civil RICO Act requires the existence of a "pattern of extortion activity," which the Second Circuit Court of Appeals interprets as either related conduct over a considerable period of time or a persistent threat of crime. The plaintiff fixed the suspected corporate activity as at least six months from October 2024 to March 17, 2025. "Six months is not enough to demonstrate a 'considerable period of time'," Justice Roxion wrote. She pointed out that the Second Circuit Court of Appeals has never accepted periods shorter than two years as substantive periods, citing previous precedents of rejecting periods of six, seven and sixteen months. She also claimed that the suspected behavior was a plan executed by a small group with a common goal, with wire transfer fraud as the underlying behavior, so the number of transactions and the number of potential victims could not make up for the short time span.

The proposed second revised indictment seeks to expand the scope by adding MELANIA, ENRON and TRUST to the alleged plan, adding another plaintiff, more defendants and more documents. The judge believed that the amendment would be futile. Even the expanded timeline only covers about seven months.

Why 4-of-7 multi-signature did not make Meteora a defendant

判决书中与加密货币相关的部分涉及Meteora。Dynamic Labs辩称，Meteora是软件，而非具有独立法律存在的非法人协会或合伙企业。原告反驳称其拥有首席执行官、团队、治理流程以及控制程序开发和部署的人员，并指向一个4-of-7多重签名钱包，即七名密钥持有者中任意四人即可授权程序更改的共享钱包。罗雄法官裁定，起诉书未能根据纽约州或联邦法律充分陈述这是一个非法人协会。在她的解读中，通过多重签名控制软件不等于成员共同经营协会业务。她引用纽约州法院的话补充道：“称一个组织为合伙关系并不使其成为合伙关系。”在其他DeFi纠纷的诉讼中，每当协议由代码、开发人员和签名者组成时，诉讼各方都面临同样的障碍。

针对周的欺诈索赔适用《联邦民事诉讼规则》第9(b)条规定的较高标准。原告依赖其在M3M3启动中的作用、规划文档以及涵盖质押、代币经济学和流动性指标的计算模板，将其呈现为提取策略的设计。法院发现这些材料同样符合帮助Kelsier使用Meteora软件的行为。仅有经济动机并不能确立欺诈意图。

Jurisdiction solves the remaining issues. Once the federal RICO claim failed, the plaintiffs needed to provide defendants Kelsier with connections to New York State and cited U.S. validators, exchanges, investors and national promotions as the basis. The judge ruled that national infrastructure did not show that the activity was purposefully targeted at New York State.

Summary of Key Points of Judgment

• Rejecting civil RICO: The suspected business lasted approximately six months. The Second Circuit Court of Appeals has no precedent for accepting a limit of less than two years.
• Meteora is not actionable: Not sufficiently stated as an association of illegal persons. Multi-signature control is not sufficient to constitute an element.
• Failure to meet Rule 9(b) criteria: Allegations of fraud against Benjamin Chow. The content of the document is consistent with the legal technical assistance provided to Kelsier.
• No jurisdiction: State law claim against Kelsier. U.S. validators, exchanges and national promotions did not show behavior against New York State.
• Fruitless: Second amended indictment. The addition of MELANIA, ENRON and TRUST only extends the timeline to approximately seven months.

US$251 million in trader losses that were not reviewed by the court

LIBRA was minted on February 14, 2025, with a supply of 1 billion tokens. According to the indictment outlined in the verdict, 20% went to treasury addresses, 50% was used for "Argentine growth" allocations, and 30% was used for liquidity. Millay released the project about 23 minutes later. The token lost about 95% of its value before the price rose to about $4.50.

Key LIBRA Data

• US$4 billion: Peak implied market capitalization
• -95%: Down from peak
• 86%: Traders loss (Nansen data)
• US$251 million: Realized losses (Nansen data)
• US$99 million: Extracted from eight associated wallets (Chainalysis data)

Independent analysts measured the extent of damage. Chainalysis told Reuters that eight wallets linked to the creator of LIBRA withdrew about $99 million from the liquidity pool, although its controller could not be determined. Nansen calculations show that 86% of traders who made a profit or lost more than $1000 lost money, realizing a loss of approximately $251 million, while the profitable wallet made a profit of approximately $180 million.

The plaintiff's own numbers are still accusations. They claimed that approximately 13.06 million USDC was withdrawn from the LIBRA/USDC pool in a single wallet in the first 107 minutes, and that between February 14 and February 16, the intermediate wallet withdrew a cumulative 44.59 million USDC, with similar movements in the LIBRA/SOL pool.

M3M3 first: 22 months from activation to rejection

M3M3 provides the first half of the plaintiff's theory. The token was launched on Meteora on December 4, 2024, as the first "pledged interest-bearing" meme coin. Two days later, its fully diluted valuation exceeded US$150 million, and then fell more than 90%. Benjamin Zhou resigned from Meteora in February 2025, denied leaking information or handling Libra tokens, and admitted that he asked Kelsier to launch M3M3, and later recommended the company to other projects, including MELANIA. He said Meteora knew about the possibility of LIBRA weeks ago, but limited its role to technical support.

• December 4, 2024: M3M3 was launched on Meteora as the first pledged interest-bearing meme.
• February 14, 2025:LIBRA was cast, peaked at nearly US$4 billion, and then collapsed by about 95%.
• February 2025: Benjamin Zhou resigns from Meteora.
• March-May 2025: Investors filed a lawsuit in New York State Court on March 17. The case was transferred to federal court in May, when approximately 57.65 million USDC were temporarily frozen.
• August 2025: The court dismissed the preliminary injunction and lifted the freeze.
• October 2025: The plaintiffs seek to add MELANIA, ENRON and TRUST to the indictment.
• September 29, 2026: The revised indictment was rejected and could not be pursued again, and the case was closed.

Decision narrows three litigation paths for token plaintiffs

The opinion narrowed down the three paths the plaintiffs 'lawyers used to combat token launches. The RICO bill is not well suited to plans that start and end in a few weeks because continuity is measured over the years. Now listing the agreement as a requirement for the defendant to state who its members are and how they jointly run the business, which cannot be proved by multiple signatures alone. The federal forum in New York needs to target the state's behavior, not deals through U.S. infrastructure.

Funds are already difficult to recover. The 57.65 million USDC related to LIBRA's gains were released in August 2025, when Judge Rochon dismissed the preliminary injunction after expressing doubts about the plaintiff's chances of winning. Lawyers representing Zhou at the law firm Cahill Gordon & Reindel described the result as a complete rejection by the client. Plaintiffs can still appeal to the Second Circuit Court of Appeals, where federal appeals rules give them 30 days from the date the decision was entered.

The Taiano investigation in Buenos Aires is still tracking Davis 'transfers

Davis' remaining exposure risks are in Argentina, where a criminal investigation led by prosecutor Eduardo Taiano continues. Argentina reported in August that investigators traced more than $5 million in digital asset transfers Davis made after meeting with Millay on January 30, 2005, to accounts associated with lobbyist Mauricio Novelli. Materials recovered from the Novelli phone mention an alleged $5 million arrangement related to the promotion of LIBRA. Neither of these constitutes a finding of misconduct by Davis or Millay.

A June 2026 federal police cybercrime report could not determine who controlled the wallet that was created and first funded the token. A month later, at Taiano's request, Judge Marcelo Martínez de Giorgi froze 25 wallets on Binance, Bybit, OKX, CoinEx, Bitfinex and FixedFloat and ordered the exchange to identify their holders. In September, the court was still dealing with forensic analysis and disputes over whether investors could join the case as formal complainants.