Key Highlights
- Hayden Davis files a motion in New York to have the LIBRA cryptocurrency token lawsuit dismissed.
- He argues the token was globally promoted, not New York-specific.
- Court allowed temporary freeze of $57.65M in USDC assets in May.
LIBRA Token at Center of Jurisdiction Dispute
In a new twist to the ongoing crypto controversy surrounding the LIBRA token, its creator Hayden Davis is seeking to dismiss a class-action lawsuit filed in New York.
According to Davis, the federal court lacks jurisdiction because the crypto token was never specifically marketed to New York residents.
Davis Challenges Court’s Authority Based on Lack of Local Ties
Davis, who co-founded Kelsier Ventures, filed a motion on Wednesday stating that he has no personal or business ties to New York.
He does not live in the state, has never operated a business there, and did not target New York investors.
“Davis does not reside in New York, does not transact business in New York, and made no specific effort to advertise to or serve the New York market,” his motion reads.
Moreover, Davis emphasized that the LIBRA crypto token was offered globally.
Therefore, he believes it’s unfair and unconstitutional to hold him accountable under New York jurisdiction.
The Meteoric Rise and Fall of LIBRA Crypto
The LIBRA crypto token experienced a wild ride earlier this year.
At one point, it soared to a $4.6 billion market cap. However, it plummeted by 94% shortly after, leaving many investors at a loss.
Much of its popularity stemmed from a social media endorsement by Argentine President Javier Milei.
As a result, a class-action lawsuit was filed in March by investor Omar Hurlock and others.
They claim Davis and his brothers, Gideon and Thomas, also co-founders of Kelsier Ventures, misled the public by saying the token would help Argentina’s economy.
In contrast, the plaintiffs allege the real intention was to siphon more than $100 million from liquidity pools.
Furthermore, the suit includes several other crypto industry figures and firms, such as Julian Peh of KIP Protocol and Benjamin Chow of crypto platform Meteora.
Davis Asserts Website Was Passive, Not Targeted at New Yorkers
The legal filing also notes that the LIBRA project’s website did not actively target U.S. users.
Rather, it was designed to collect business applications in Argentina.
Therefore, Davis argues that it cannot be used as evidence of doing business in New York.
Although the lawsuit references public promises made by Davis like a potential token buyback it fails to prove those statements were made in or directed toward New York.
“The project was conceived of in Argentina and never aimed at any specific U.S. state,” Davis noted.
Constitutional Arguments Against New York Jurisdiction
In addition to his factual claims, Davis also raised a constitutional defense.
He argued that allowing the case to proceed in New York would violate his right to due process.
The lawsuit, he contests elections, does not establish personal jurisdiction on him.
Moreover, while Meteora’s ties to New York are mentioned in the complaint, there are no similar allegations against Davis.
Thus, extending the court’s reach to him, he says, would be unjustified.
Class-Action Group Won Asset Freeze in May
Meanwhile, the plaintiffs scored a temporary legal victory back in May.
The court granted a freeze on approximately $57.65 million in USDC, which they claim is connected to the LIBRA crypto token.
The order was issued to stablecoin issuer Circle, who complied with the directive.
Still, the plaintiffs must now prove that Davis’s actions were specifically tied to New York to continue their legal fight in that venue.
Political Ramifications in Argentina But No Charges Filed
The LIBRA crypto controversy spilled into Argentine politics as well.
Opposition parties called for Milei’s impeachment due to her involvement.
However, following an investigation, Milei was exonerated of any wrongdoing by Argentina’s anti-corruption watchdog.
Unlike Davis’ face legal consequences, Milli has avoided any formal action so far.
Possible Refiling If Case Is Dismissed
Crucially, Davis is asking for the action to be dropped without causing any harm.
This implies that the plaintiffs would have the option to reopen the action in a more suitable jurisdiction, maybe the one where Davis lives or works.
As a result, even if this case is dropped in New York, legal trouble for Davis and other LIBRA team members may not be over.
Conclusion: The outcome of a cryptocurrency lawsuit may depend on jurisdiction.
In summary, Libra Crypto’s case has become a high-profile example of how to do or break the cases of investors in the decentralized world of Crypto.
The case may be dismissed if the court rules in favor of Davis, or it may be restarted at a different location.
Right now, both investors and regulators are keeping a close eye on things.
