Hayden Davis and Ben Chow Win Back $57.6M in USDC Frozen in Libra Scandal Lawsuit, But Will Investors Ever See Justice?

USDC Funds Released After Libra Token Scandal Draws Legal Scrutiny

A U.S. federal judge has lifted a freeze on $57.6 million in USDC stablecoins connected to the Libra token scandal, granting memecoin promoter Hayden Davis and former Meteora exchange CEO Ben Chow access to the funds.

Judge Jennifer L. Rochon of the U.S. District Court ruled that the defendants had not demonstrated “irreparable harm,” noting that the frozen assets were still available to compensate victims and that no attempt had been made to move the funds.

Class-Action Lawsuit Against Crypto Figures Continues

The decision comes amid an ongoing class-action suit targeting Davis, Chow, blockchain infrastructure company KIP Protocol, and its co-founder Julian Peh.

In July, Davis sought to dismiss the case, but the motion was rejected as “moot” by the court.

Despite the unfreeze, Judge Rochon expressed doubts over the lawsuit’s likelihood of success, reflecting the challenges of pursuing legal action in fast-moving crypto disputes.

Libra Token Collapse Sparks $107 Million Loss

The Libra token, promoted on social media by Argentine President Javier Milei, collapsed within hours of its February launch, triggering what has been described as a $107 million rug pull.

Milei initially supported the project, tweeting on 14 February, “A few hours ago, I posted a tweet, like so many other countless times, supporting a supposed private venture with which I obviously have no connection,” before distancing himself from the token.

The collapse prompted congressional inquiries and calls for potential impeachment, though the investigation was later closed without charges, raising concerns of political influence.

Regulatory And Market Implications For Crypto

The unfreezing of the stablecoins is expected to affect liquidity in cryptocurrency markets, particularly in decentralised finance sectors.

However, the case highlights the persistent uncertainty around regulation, as U.S. and Argentine authorities continue to examine the actions of the token’s promoters and political affiliates.

Recent on-chain and off-chain evidence points to Milei’s close advisors as key figures in the token launch, potentially broadening the scope of scrutiny.

Questions About Political Influence And Investor Risk

The scandal has reignited debate over the role of political figures in crypto promotion and the ethical boundaries surrounding their involvement.

Former Argentine Foreign Minister Diana Mondino suggested that Milei either “lacked understanding of the risks or was complicit in a corrupt scheme,” reflecting wider concerns about accountability.

The swift collapse of Libra demonstrated how quickly investors could be exposed to losses when high-profile endorsements intersect with unregulated digital assets.

Ongoing Legal Battles Could Shape Crypto Oversight

While the class-action lawsuit continues, the broader legal and political repercussions of the Libra token incident remain unresolved.

Courts in both the U.S. and Argentina are examining the case, and dual investigations may eventually converge, offering a clearer picture of responsibility and the regulatory gaps that allowed the scandal to unfold.

Investors Watch Closely As Funds Are Freed

With $57.6 million now accessible, attention is turning to how the funds will be handled and whether restitution to affected investors will follow.

While the court insists the funds remain available for victim reimbursement, history in crypto lawsuits shows that investors often end up last in line, fighting through years of legal red tape.

If political figures can walk away unscathed and promoters regain access to millions, the question becomes whether justice in crypto truly serves the everyday investor, or if the system is tilted to protect those with power, connections, and influence.