Nikolas Sargeant
Hayden Davis, the controversial creator behind the LIBRA token, is mounting a legal defense against a New York class-action lawsuit by challenging the court's jurisdiction. The Kelsier Ventures co-founder argues that since the cryptocurrency was offered globally rather than specifically targeting New York residents, the state court lacks authority to hear the case.
The legal battle stems from LIBRA's dramatic collapse in February, when the token plummeted 94% from its peak $4.6 billion market capitalization. The meme coin initially gained traction after Argentine President Javier Milei praised it on social media, contributing to its meteoric rise before the eventual crash.
Davis Claims Due Process Violations in Jurisdiction Challenge
In his motion to dismiss filed Wednesday, Davis contends that proceeding with the lawsuit in New York would violate constitutional due process rights. His legal team emphasizes that Davis doesn't reside in New York, conduct business there, or make specific efforts to advertise to New York markets during the worldwide LIBRA offering.
The defendant's filing states he was not physically present in New York when the alleged misconduct occurred and made no targeted efforts to serve the New York cryptocurrency market. This jurisdictional argument forms the cornerstone of Davis's defense strategy against the fraud allegations.
Global Token Distribution Strategy Cited as Defense
Davis's legal team argues that LIBRA tokens were made available to buyers worldwide without geographic restrictions or targeted marketing toward New York residents. The motion emphasizes that promotional activities were conducted globally, with the project allegedly conceived in Argentina rather than targeting specific U.S. states.
The defense characterizes the project's website as "passive," designed primarily to collect applications from Argentine businesses rather than actively soliciting New York investors. This global approach, according to Davis, undermines the plaintiffs' claims of New York-specific targeting.
Class Action Secures Asset Freeze Amid Ongoing Litigation
The class-action group, led by Omar Hurlock, achieved a significant victory in May by securing a temporary asset freeze. A court order directed stablecoin issuer Circle to freeze approximately $57.65 million worth of USDC allegedly connected to the LIBRA project.
The lawsuit names multiple defendants beyond Davis, including blockchain infrastructure companies KIP Protocol and CEO Julian Peh, plus crypto platform Meteora and co-founder Benjamin Chow. Plaintiffs allege the defendants orchestrated a scheme to mislead investors about LIBRA's purpose in boosting Argentina's economy while siphoning over $100 million from liquidity pools.
The LIBRA controversy also sparked political turmoil in Argentina, with opposition parties calling for President Milei's impeachment over his social media endorsement. However, Argentina's corruption watchdog ultimately cleared Milei of any wrongdoing related to the token promotion.
Moving forward, the class-action group must demonstrate that their allegations against Davis have sufficient ties to New York to establish jurisdiction. Davis has requested dismissal without prejudice, potentially allowing plaintiffs to refile their claims in another court with proper jurisdiction.
