A U.S. federal judge has unblocked over $57 million in USDC linked to the Libra token investigation. The funds, originally frozen in May by Judge Jennifer L. Rochon of the Southern District of New York, were held in two wallets connected to memecoin promoter Hayden Davis and former Meteora exchange CEO Ben Chow.
The assets were initially frozen as part of a class-action lawsuit in which investors are seeking more than $100 million in damages following the Libra collapse.
On Tuesday, Judge Rochon stated she no longer considers Davis and Chow likely to misuse the funds. According to the judge, both defendants have complied with court rules and did not attempt to move or conceal the assets while they were frozen.
“It is plain that money damages would be available to compensate the class,” Rochon wrote, adding that the plaintiffs had not demonstrated any “irreparable harm” that would justify maintaining the freeze.
The judge emphasized that the defendants were not acting as “evasive actors,” a key factor in her decision to release the funds.
However, Rochon noted that the case remains in its early stages. She expressed doubt over the likelihood of the class-action lawsuit succeeding but stopped short of dismissing it entirely.
Chow’s attorney, Samson Enzer of Cahill Gordon & Reindel LLP, echoed this view, describing the plaintiffs’ claims as “untested and meritless” and indicating plans to file a motion to dismiss the case.
The Libra Token Scandal
Libra was launched in February this year, backed by Davis’ Kelsier Labs and built on infrastructure provided by Chow’s Meteora exchange. The cryptocurrency quickly gained attention, reaching a market capitalization of over $4.56 billion—spurred in part by Argentine President Javier Milei promoting the token on social media as a tool to support small businesses in the country.
Traders interpreted Milei’s post as an endorsement, driving LIBRA to an all-time high of over $4 shortly after its launch.
However, within 24 hours, Libra had lost nearly 97% of its value, causing its market capitalization to plummet. Investors accused Davis and Chow of orchestrating one of the most infamous rug pulls in recent memory, while critics argued that Milei’s initial promotion misled traders into believing the Argentine government backed the token.
Milei quickly deleted his post and distanced himself from the project, claiming he had no understanding of its structure or associated risks. He described his promotion as a routine social media share, but the explanation did little to halt a congressional ethics investigation.
Lawmakers also pushed for impeachment proceedings, though Milei ultimately ended the investigation and disbanded the task force.
Fallout and Aftermath
Davis became the public face of the scandal as the project unraveled. He launched a media campaign portraying himself as the custodian of Libra’s funds and even as an advisor to Milei, but the claims only fueled further criticism.
Meanwhile, Chow resigned from his position at the decentralized exchange Meteora, with his pseudonymous co-founder, “Meow,” citing poor judgment in trusting Davis at the time.
Judge Rochon’s recent decision to unfreeze the funds provides the defendants some breathing room in court, but the fallout from the Libra crash continues to loom over investors seeking restitution.
