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Nearly $58 million in USDC has been frozen due to its connection with the LIBRA memecoin scandal, intensifying the legal and political consequences of one of the most significant cryptocurrency controversies of the year.

USDC Freeze Linked to LIBRA Token

On May 29, blockchain analytics firm Arkham revealed that Circle, the issuer of USD Coin (USDC), froze two Solana wallets associated with the LIBRA deployer and project team. These wallets contained a combined total of $57.65 million in USDC, which is now inaccessible. This action was executed using Circle’s multisig freeze authority.

“Two LIBRA accounts have been frozen by Circle, including the deployer wallet holding $57M in USDC.”

Legal Actions Against LIBRA Developers

The freeze is tied to an ongoing class-action lawsuit filed in March in the Southern District of New York. Hundreds of LIBRA investors are suing Kelsier Ventures, a cryptocurrency venture firm, along with its co-founders Gideon, Thomas, and Hayden Davis. The lawsuit is being managed by the New York-based law firm Burwick.

Other defendants include Benjamin Chow, co-founder of Meteora, Julian Peh of KIP Protocol, and other entities allegedly involved in the creation and marketing of the LIBRA token.

LIBRA Token’s Rise and Collapse

The LIBRA token gained rapid popularity following its launch in February 2025, partly due to promotional efforts by Argentine President Javier Milei. Marketed as a tool to support small businesses in Argentina, the token’s value soared from just a few cents to over $5 in under an hour. Its market capitalization exceeded $4 billion during this period.

However, insiders allegedly controlling 70% of the token’s supply orchestrated a massive sell-off within hours. This caused the price to collapse by over 90%, resulting in insider profits of over $150 million while investors collectively lost more than $250 million.

Political Fallout in Argentina

The LIBRA scandal triggered widespread political outrage in Argentina. Calls for impeachment followed President Milei’s removal of promotional posts and his denial of involvement. Although a government task force was initially formed to investigate the matter, it was disbanded on May 19.

Implications of the USDC Freeze

The asset freeze suggests that U.S. courts are willing to take swift action to safeguard potential compensation for victims and prevent further financial losses. If the lawsuit succeeds, it could establish a precedent for holding cryptocurrency founders and promoters accountable for misleading investors and leveraging hype cycles to their advantage.

Key Takeaways for Crypto Investors:

  • Always conduct thorough research before investing in new tokens, especially those heavily promoted by public figures.
  • Be cautious of tokens with a high concentration of supply controlled by insiders.
  • Monitor legal developments in cryptocurrency cases, as they can impact market sentiment and regulations.

The LIBRA case serves as a reminder of the risks associated with speculative investments in the cryptocurrency market. Stay informed and make decisions based on reliable data to navigate this volatile industry effectively.

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