Critical LIBRA Token Lawsuit: Creator Fights Jurisdiction in New York Court

A significant legal battle is unfolding in the cryptocurrency space. The creator behind the controversial LIBRA token is challenging a lawsuit in a New York court, arguing the case doesn’t belong there. This development highlights the complexities of jurisdiction in the era of global digital asset offerings and sets the stage for a key legal test in the ongoing LIBRA token lawsuit.

The LIBRA Token Lawsuit in Focus

Hayden Davis, identified as a co-founder of Kelsier Ventures and linked to the creation of the LIBRA token, is seeking to have a crypto class action lawsuit against him dismissed. The suit, filed in New York by a group of LIBRA buyers, alleges that Davis and others misled investors about the token’s purpose, claiming it was intended to boost Argentina’s economy while allegedly siphoning off significant funds through one-sided liquidity pools. The LIBRA token saw a dramatic rise and fall in February, attracting attention partly due to an endorsement from Argentine President Javier Milei.

The lawsuit names multiple defendants, including:

• Hayden Davis
• Gideon and Thomas Davis (Kelsier Ventures co-founders)
• KIP Protocol and its CEO, Julian Peh
• Meteora and its co-founder, Benjamin Chow

The plaintiffs’ core claim centers on alleged misrepresentation and financial harm suffered by investors.

Jurisdiction Argument: Why Davis Says New York Isn’t the Place

Hayden Davis’s primary defense hinges on a lack of jurisdiction. He argues that the New York court does not have the authority to hear the case because his actions related to the LIBRA token were not specifically directed at New York or its residents. His legal filing states that he does not reside or transact business in New York and was not physically present there when the alleged misconduct occurred.

The defense emphasizes that the offering of $LIBRA meme coins was a worldwide endeavor, not targeting any specific state market. This jurisdiction argument is central to his motion to dismiss the case.

Legal Defense Highlights: Due Process and Global Promotion

Davis contends that allowing the lawsuit to proceed in New York without alleging specific contact with the state would violate constitutional due process. He points out that while the complaint mentions potential ties of other defendants, like Meteora, to New York (citing an office and business activities), it makes no such assertions regarding his own personal jurisdiction.

He reinforces that the LIBRA tokens were available to any buyer globally and that promotional efforts were not aimed at New York residents. Statements he made, such as a promise to repurchase tokens, were not made while physically in New York, nor were they specifically directed at the state or its residents, according to his argument. Davis’s filing suggests the project was conceived in Argentina and did not target New York or any specific individual there. He describes a project website as ‘passive,’ designed primarily to collect applications from businesses in Argentina, not knowingly transmitting goods or services to users in other states.

Broader Implications: Asset Freeze and Political Context

While the Hayden Davis legal team pushes for dismissal, the class group has already secured a victory in the New York court. In May, they obtained a temporary order directing stablecoin issuer Circle to freeze approximately $57.65 million in USDC allegedly linked to the LIBRA project. This indicates the court is taking the allegations seriously, at least to the extent of preserving potential assets.

The LIBRA saga also had political repercussions in Argentina. The token’s association with President Milei led to calls for his impeachment, although the country’s corruption watchdog later cleared him of wrongdoing related to the token promotion.

The class group now faces the challenge of demonstrating sufficient ties between their claims against Davis and the state of New York. Davis seeks dismissal without prejudice, which would allow the claims to be refiled in a different jurisdiction.

What’s Next in the Crypto Class Action

The outcome of Davis’s motion to dismiss will be a key moment in the LIBRA token lawsuit. The court’s decision on the jurisdiction argument could set a precedent for how lawsuits involving globally offered cryptocurrencies are handled, particularly in the United States. As this crypto class action proceeds, investors and legal experts will be watching closely to see if the plaintiffs can successfully tie Hayden Davis‘s alleged actions to the New York court‘s authority.