Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the news of $57.6m worth of USDC, linked to the $LIBRA memecoin scandal, being frozen on Solana by Circle.
$57.6m of USDC linked to LIBRA Frozen on Solana
News has broken of almost $58 million worth of USDC being frozen on the Solana blockchain by Circle. The stablecoin issuer is capable of “blacklisting” tokens when requested by regulators or if there’s suspicion of criminal activity and the rumours are circulating that the frozen assets are linked to the $Libra memecoin fiasco.
The $Libra memecoin was promoted by the President of Argentina, Javier Milei, before its value plummeted soon after his endorsement. The collapse of the coin caused millions of dollars in losses as multiple individuals lost out and the President was investigated for his involvement in the matter. The $Libra coin had been launched on Solana and Milei's endorsement had seen its market cap soar to $4 billion before its more than 90% collapse.
According to on-chain data shared by Arkham Intelligence and later confirmed by legal filings, two Solana-based wallets were frozen. The wallets were linked to $Libra and contained $44.6 million in one wallet and $13 million in the other. The wallets were frozen on May 28 following a United States federal court order.
The freeze happened as a class-action lawsuit filed in the Southern District of New York is under way. The lawsuit claims that crypto venture firm Kelsier Ventures and its co-founders were involved in orchestrating a fraudulent scheme involving the $Libra token. It has been alleged that more than $100 million was siphoned from investors through deceptive liquidity pools. The Manhattan court granted a temporary restraining order at the request of Burwick Law, the firm representing the plaintiffs, with a hearing scheduled June 9 to decide whether the freeze will be extended.
Meanwhile, in Argentina, lawyer Martin Romeo confirmed that their local justice system have also initiated proceedings. Legal experts in the crypto space argue that this type of coordinated action could set an important precedent for future global investigations as the fallout from the $Libra scandal continues.
Solana were required to comply with freezing the USDC as for them to embrace the stablecoin they must adhere to the requirements imposed by Circle, including giving them the right to freeze assets at their discretion. This does raise questions over decentralised network and how autonomous they really are, but if these tokens are involved in the scandal and could potentially be used to reimburse those with losses then it can only be a positive outcome.
As for President Milei, he distanced himself from the project and claimed he had no prior knowledge of its mechanics and denying any intent to promote investment. The CEO of Kelsier Ventures, Hayden Davis, claims otherwise and stated that Milei had required his sister to be paid before any public endorsement would be given. Davis also claimed to be an advisor to the president, a statement now under scrutiny, as a photo of him with Milei which was originally posted on the president’s X account in January has been deleted.
The YouTube investigator Coffeezilla did an interview with Davis who admitted he was holding over $110 million from the token’s launch—$100 million in stablecoins and $13 million in liquidity provider fees. There were public outcries for an investigation in Milei from opposition lawmakers but the Presidents administration have disbanded the investigation task force assigned to probe the Libra case. This happened on May 19 and there were no formal charges brought against Milei or government officials involved. Critics accuse the government of burying the investigation and of protecting each other, stating there was never a real investigation.
https://x.com/SolanaFloor/status/1927817327761895682
Have a great day.
Peace. CryptoGod-1.
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