Circle Freezes $58 Million Related to LIBRA Memecoin Scam

Early this morning, USDC issuer Circle froze nearly $58 million in USDC linked to the LIBRA memecoin scam, reportedly as a result of an ongoing lawsuit led by the controversial law firm, Burwick Law.

The lawsuit not only includes Hayden Davis and Kelsier Ventures, but also mentions Solana decentralized exchange Meteora, its co-founder Ben Chow, Kip Protocol, and other members of the Davis family.

“Burwick Law’s international class action over the $LIBRA token on Solana is progressing in the Southern District of New York. We represent hundreds of Libra holders pursuing recovery from Ben Chow, Meteora, Julian Peh, Kip Protocol, Hayden Davis, CT Davis, Gideon Davis, and Kelsier after the token’s price collapsed more than 90 percent,” Burwick posted on X today.

This post came less than 12 hours after Circle froze USDC accounts linked directly to the LIBRA deployment.

The circumstances surrounding Circle’s token freeze remain murky, as the company has not commented publicly on the matter.

A man named Martin Romeo claims the freeze request was made through the Argentinian judicial system. Burwick Law refutes these claims and says the U.S. District Court in the Southern District of New York (SDNY) “granted Burwick Law’s emergency TRO, supported by co-counsel Tim Treanor, freezing ≈ $57.65 M USDC held at Circle.”

Regardless of the catalyst, the $58 million is now under Circle’s control, which may provide some relief to those involved in the legal proceedings against Kelsier Ventures.

Circle has been criticized in the past for not freezing maliciously acquired funds quickly enough, particularly after the $1.5 billion Bybit hack in February.

Onchain sleuth ZachXBT publicly addressed Circle CEO Jeremy Allaire via X, where he said, “How about you tell the entire community why Circle has yet to freeze 115K USDC directly tied to the Bybit hack by DPRK with zero obfuscation after 5 hours? Meanwhile, Tether already froze 106K USDT multiple hours ago. How many more examples will people have to show until the space understands Circle is a bad actor?”

Tether has been known to freeze funds when asked to do so by law enforcement agencies, with one of its largest interventions taking place in November 2022, when it froze nearly $47 million worth of USDT on Tron that belonged to FTX.

While this is not the first time funds have been frozen in the midst of legal proceedings, some observers are questioning the move.

A trader known as Newsy Johnson posted on X, "Insane precedent here. I hate Hayden/Libra as much as anything else, BUT 1. He’s currently not on warrant for arrest 2. He never exploited or hacked anyone 3. Everyone willingly bought the token. So Circle freezes 50m. Where does that money go? Do they keep it? Do victims get a refund? How are they justifying freezing the assets?”