Court Freezes $57M USDC in LIBRA Token Legal Clash—DeFi’s Regulatory Reckoning Continues

A US court just slammed the brakes on $57 million worth of USDC—adding fuel to the LIBRA token controversy. Here’s why it matters.

When stablecoins collide with regulators, nobody wins. This latest freeze proves even ’compliant’ crypto isn’t immune to legal crossfire.

Bonus jab: At least the lawyers are getting paid in stablecoins—volatility-free billing hours.

Background on the Lawsuit

The LIBRA memecoin attracted attention after a post on X by Argentinian President Javier Milei on 14 February 2025. The token was advertised as a means to fund small businesses in Argentina.

Within an hour of Milei’s advertisement on X, the LIBRA token’s value surged from a few cents to $5, and its market cap surged to $4 billion, only to crash by 94% within hours.

Reportedly, insiders controlling more than 70% of the supply dumped large amounts, sending the LIBRA token’s value spiralling downwards.

This sparked a political outrage in Argentina, with members of the opposition calling for Milei’s impeachment. Although the movement failed to gather momentum, a poll conducted in March 2025 by Zuban Córdoba suggested that the scandal harmed Milei’s approval rating and public image.

Burwick filed the lawsuit on 17 March 2025, alleging that the defendants launched the LIBRA cryptocurrency and deceived investors, ultimately misappropriating over $150 million while investors lost over $250 million.

Solscan, a blockchain explorer for Solana, disclosed data showcasing that the authorities froze approximately $44.59 million in stablecoins at the address 3Fwr…ZQpK, while someone locked more than $13 million from the wallet 3nHw…xNgH.

The asset freeze indicates that the US courts are ready to intervene to mitigate further losses and to ensure potential compensation for the victims. If successful, this case could set a new precedent and hold crypto founders and promoters accountable for misleading investors and fueling speculative HYPE cycles.

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Milei Shuts Down LIBRA Token Investigation

On 19 May 2025, Milei signed a decree to disband the investigative task force probing the LIBRA scandal. Notably, authorities have not brought any charges against Milei or any other Argentinian officials linked to the controversy.

Itai Hagman, a member of the Chamber of Deputies of Argentina, said, “It was always a fake, they never dared to investigate anything at all, and they’re covering each other up because they’re completely up to their necks in it.”

So far, the only explanation provided by the authorities for disbanding the task force is that it had fulfilled its assigned function.

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Key Takeaways

• A U.S. federal court has frozen $57.65M in USDC amid a class action lawsuit over the LIBRA token scam
• The funds stay frozen until June 9th, pending a hearing on whether the freeze continues during the lawsuit
• LIBRA investors are suing Kelsier Ventures, a crypto firm, along with its co-founders, Gideon, Thomas, and Hayden Davis