The LIBRA memecoin scandal that engulfed Argentine President Javier Milei and wiped out millions of dollars from retail traders has just ended with a whimper in a New York courtroom — and the dismissal sets an uncomfortable precedent for anyone hoping to hold DeFi infrastructure accountable in the United States.
By Raj Patel | October 2, 2026
The Hook: Dismissed With Prejudice
In a September 29 opinion and order from the U.S. District Court for the Southern District of New York, Judge Jennifer L. Rochon granted motions to dismiss filed by Benjamin Chow — Meteora’s co-founder and former CEO — and the Kelsier defendants, while Dynamic Labs secured dismissal of the claims brought against the Meteora protocol itself. The amended complaint was dismissed with prejudice, plaintiffs were denied permission to file a second amended complaint, and the clerk was directed to close the case, according to court documents reviewed by crypto.news.
The class action, filed in March 2025 by plaintiffs Omar Hurlock and Anuj Mehta, had accused Kelsier Labs, Hayden Davis, Gideon Davis, Thomas Davis, Meteora and Chow of fraud, conspiracy to defraud, violations of the Racketeer Influenced and Corrupt Organizations Act, violations of New York consumer protection law and unjust enrichment. Every one of those theories failed.
The Core Conflict: Can You Even Sue a Protocol?
The most consequential part of the ruling concerns Meteora’s legal status. Dynamic Labs argued that Meteora was software rather than an unincorporated association or partnership. Plaintiffs countered by describing Meteora as an association made up of Chow and several other people and entities involved in developing and operating its programs on Solana.
Judge Rochon sided with the defense. Plaintiffs pointed to Meteora’s team, governance arrangements, job postings and the multisignature process used to modify its software — but the court found those allegations did not establish the type of coordinated membership and common purpose required for an association under New York or federal law. The court similarly rejected the argument that Meteora could be treated as a partnership, leaving the plaintiffs unable to establish that the protocol had the legal existence required to be sued at all.
Chow Cleared, Kelsier Untouchable
Claims against Chow were dismissed separately under Rule 12(b)(6), which allows a court to toss claims that fail to state a legally sufficient case. Plaintiffs had alleged he worked with Kelsier on the M3M5 platform, provided technical support around token launches and assisted with Meteora’s liquidity infrastructure before LIBRA went live. The court found that his knowledge of the launch, his technical assistance and the fees earned through the protocol were not enough to plausibly show fraudulent intent.
Chow had long maintained that Meteora’s involvement in LIBRA was limited to technical support — comments on its liquidity curve and assistance verifying the token after launch — and acknowledged referring projects seeking deployment services to Kelsier while denying any role in LIBRA’s development. He resigned from Meteora in February 2025 after questions emerged over the relationship, but the court’s ruling now stands as a formal rejection of the fraud allegations against him.
The RICO claims against the Kelsier defendants failed on continuity grounds. The court found that the alleged activity, spanning roughly six months across M3M5 and LIBRA, did not satisfy the closed-ended or open-ended continuity required for a pattern of racketeering. Remaining state law claims against the Kelsier defendants were dismissed because the court concluded it lacked personal jurisdiction over them.
A Quick Refresher on the LIBRA Collapse
- February 14, 2025 — LIBRA launches on Solana.
- Same day — Argentine President Javier Milei posts about the project on X, linking to the Viva La Libertad website with the token’s contract address. The price collapses hours later after a rush of trading.
- March 2025 — The class action is filed, alleging insiders withheld a large portion of LIBRA’s supply and extracted funds after trading opened.
- May 2025 — Circle freezes roughly 57 million USDC linked to wallets at issue in the litigation.
- Later in 2025 — A U.S. court lifts the asset freeze after defendants agree not to move the disputed funds and plaintiffs withdraw their preliminary injunction request.
- September 29, 2026 — Judge Rochon dismisses the amended complaint with prejudice and closes the case.
Market Implications: The Argentina Thread Continues
The dismissal resolves the U.S. case, but not the wider LIBRA saga. Argentine authorities have continued examining the movement of funds connected to the launch, and in August 2026 a federal proceeding there remained ongoing. Milei deleted his original post hours after publishing it and said he had not known the project’s details — an explanation that satisfied the court of public opinion in some quarters and infuriated it in others, but which now has little legal relevance in the United States.
The Verdict: A Warning for Retail Investors
For regular investors, the ruling delivers a sobering message: when a token launch goes wrong, the legal system may struggle to attach liability to decentralized infrastructure at all. If a protocol cannot easily be sued as an entity, and if individual defendants can defeat fraud claims by characterizing their role as “technical support,” the practical protection available to buyers of a collapsed memecoin may be close to zero — regardless of how the launch was structured or who promoted it.
The courtroom is not the place to recover money lost to a hyped token with insider-heavy distribution. The only reliable defense is skepticism before you buy.
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
dismissed with prejudice and they could not even refile. hayden davis walking while retail ate the LIBRA dump, courts basically said tough luck
its not that simple. the RICO counts were badly pleaded and Kelsier is still exposed elsewhere. this is one SDNY judge, not the whole judiciary
fair that the RICO counts were weak, but you know every DeFi front-end lawyer is citing Judge Rochon by next month. this becomes the template complaint defense
Judge Rochon ruling that Meteora itself is not liable changes a lot for DeFi. rough day for anyone who bought top off Milei’s tweet and thought a class action would save them
^ agree the precedent angle is overblown, but good luck suing a protocol with no entity behind it lol
dismissed with prejudice too, so they can even refile. judge said Meteora multisig setup doesnt count as an association. basically legal cover for every DeFi front-end now
the part that stings is Milei dealing with impeachment stuff back home while NY courts just shrug. same coin, two very different accountability tracks
the multisig point is the whole case honestly. if modifying software parameters isnt common purpose, good luck ever pinning a rug on a DAO
people still arguing LIBRA was all Milei miss that the pools were seeded before his tweet ever went out. the timeline was sitting right there
pools seeded before the tweet, timeline sitting right there, and still retail gets told caveat emptor. the info was available but somehow only to people watching mempool
the info was available to anyone running an archive node and zero percent of retail does that. transparency theater for everyone except the twenty wallets that mattered
the twenty wallets line is brutal because its accurate. transparent only counts if normal people can actually read it in time
worth noting the with prejudice part cuts both ways. this complaint was the test case and its dead, the next lawyer starts from the framing Judge Rochon handed them
Worth remembering what with prejudice actually means: no refiling in SDNY. Plaintiffs lawyers will shop the theory elsewhere, but this venue is closed.
Venue shopping will land in California or state court where consumer protection statutes actually have teeth. SDNY closing doesnt end this, it just moves the courthouse
California consumer protection statutes plus a state court securities count is the obvious next filing. The plaintiffs bar never lets one dismissal end a fee opportunity
Rochon saying modifying multisig parameters is not common enterprise basically hands every dev with admin keys a roadmap. one SDNY opinion and the infrastructure layer walks
admin keys arent some magic shield tho. if the multisig moves pool params and takes a fee on the way out, that conduct is still on the table even when the protocol isnt
this is the right read. the class action was badly pleaded but that says nothing about what SEC or CFTC could do with Kelsier conduct directly
SEC had years on this and filed nothing. hard to picture a cftc that cannot even classify the token doing better with the same wallet trail
a roadmap and a magnet. every regulator watching SDNY hand the infra layer a pass is drafting the response right now. this ruling basically invites the legislation version
marta is right, and the amendment denial is the underrated part. they could not even refile a better complaint in SDNY. plaintiffs lawyers will just plead around the multisig framing next time, in a friendlier venue
roadmap only until enforcement actually runs a trial instead of answering a class action complaint. different posture, different outcome
dismissed with prejudice in NY while Milei fights impeachment at home. rough summary of the LIBRA aftermath: political accountability moves, civil suits bounce off the multisig
Kelsier walking because pools were seeded pre-tweet while retail got zero warning. the judge treated the mempool as public info, like anyone is reading mempool at 2am. brutal but on brand for this cycle
the amendment denial is what stands out. SDNY refusing to even let them refile means Judge Rochon thought the theory was unfixable, not just badly pleaded