Solana Ecosystem Shaken: LIBRA Scandal Engulfs Key Projects and Builders

Market Manipulation, Political Fallout, and Insider Fraud

A Solana-based memecoin called LIBRA spiraled into a financial scandal after being promoted as Argentina’s “official token” following an endorsement from President Javier Milei. The token's market cap surged to $4 billion within hours, only to crash by over 90%, wiping out investor funds. 

Blockchain analysts traced the collapse to an insider-driven scheme where 82% of LIBRA’s supply was controlled by a select few wallets, fueling suspicions of a coordinated rug pull. The debacle extended beyond financial losses, triggering a political crisis that now threatens Milei’s administration.

Milei’s endorsement, posted on social media and later deleted, lent credibility to LIBRA before its dramatic fall. His office distanced him from the project, blaming KIP Protocol—a firm linked to Hayden Mark Davis, CEO of Kelsier Ventures—as the intermediary. However, the fallout was immediate. Argentina’s Anti-Corruption Office (OA) launched an investigation into potential financial misconduct, with opposition leaders calling for impeachment and fraud charges, arguing that Milei’s involvement manipulated public confidence and contributed to investor losses. 

Blockchain analytics firm Bubblemaps further exposed that a handful of wallets controlled the majority of LIBRA’s supply, intensifying accusations of market manipulation.

LIBRA’s rapid rise and fall were orchestrated through a series of calculated moves. Crypto trader Dio Casares detailed how Kelsier Ventures and Meteora insiders were aware of the token launch weeks in advance. Influencers and select traders received early access to LIBRA at a low price, while retail investors unknowingly bought in at inflated rates. 

The token’s artificial hype drove a buying frenzy before insiders strategically dumped their holdings, tanking the price. Davis of Kelsier Ventures allegedly led the crash, pocketing millions. Casares noted that such insider trading remains illegal even in crypto markets, potentially exposing key figures to criminal prosecution.

DefiTuna, a crypto research firm, revealed that LIBRA was just one of many rug pulls executed by an organized network of Kelsier Ventures, Meteora, and the M3M3 launchpad. According to DefiTuna’s founder, Moty Povolotsky, the group deployed identical tactics across multiple tokens, including MELANIA, MATES, ENRON, and AIAI. 

These coins were launched with predetermined liquidity pools controlled by insiders, allowing them to manipulate prices and extract over $200 million from retail investors. Screenshots showed insiders openly discussing ways to maximize liquidity extraction. One damning quote from Davis read, “We are trying to max extract on this one,” further reinforcing the allegations of premeditated fraud.

Among the most notorious scams linked to this network was the MELANIA token, which leveraged an endorsement from Melania Trump’s official X account. Before the launch, insiders secured 1% of the token’s supply—worth $100 million at peak—before offloading it in a carefully orchestrated dump. 

Jupiter Exchange, a major Solana trading platform, denied any direct involvement in the LIBRA launch but acknowledged that insiders within its circles were aware of the token well in advance. Following the scandal, Jupiter announced an external audit, initially hiring Fenwick & West, a law firm with past ties to the FTX-Alameda fraud case. After public backlash, the firm reconsidered its approach and is now seeking a different, independent investigator.

Meteora’s leadership was not immune to the crisis. Co-founder Ben Chow resigned following revelations that he had referred projects to Hayden Davis despite being aware of his fraudulent activities. While Chow denied personal involvement in insider trading, he admitted to poor judgment in working with Kelsier Ventures. 

Jupiter founder Meow publicly criticized Chow for maintaining ties with Davis, further fueling controversy within the Solana ecosystem. The scandal also implicated prominent crypto influencers who had access to insider information about LIBRA’s launch. A leaked conversation between DefiTuna’s Moty and Meteora’s Chow suggested that “everyone and their mother knew about it.” 

Solana influencer Threadguy denied any wrongdoing, challenging anyone with evidence to come forward. Others justified their access to early token sales as standard networking rather than market manipulation. 

However, a now-deleted statement from Frank, a well-known industry figure, reignited debate: “If you’ve been in crypto for more than four years and you’re not somewhat of an insider, you need to rethink your strategy.”

Hayden Davis, co-creator of the LIBRA meme coin and CEO of Kelsier Ventures, allegedly claimed to have influenced Argentine President Javier Milei by paying his sister, Karina Milei, to secure support for the token's launch. 

Text messages surfaced where Davis boasted about having “control” over Milei, asserting that he could dictate actions through financial connections. In response, Davis's spokesperson denied these allegations, stating that he does not recall the messages and found no evidence in phone records. The situation has been characterized as a politically motivated attack on President Milei, who is currently under scrutiny amid criminal fraud charges and an impeachment push. 

The fallout from LIBRA’s collapse has damaged Solana’s reputation, amplifying concerns that its DeFi sector is increasingly plagued by scams, insider manipulation, and opportunistic schemes that erode investor trust. 

As a result of recent memecoin crashes, Solana’s decentralized exchange (DEX) trading volume has declined for five consecutive weeks, plummeting over 60% from its recent peak. This trend reflects waning investor interest, raising questions about Solana’s ability to compete with Ethereum and BNB Chain. Liquidity shifts, shaken investor confidence, and the fallout from high-profile memecoin scams have all contributed to this downturn. 

Further uncertainty looms with a pending token unlock from the now-bankrupt exchange FTX, which is set to release approximately 11.2 million SOL tokens in March 2025. The possibility of a mass sell-off by creditors seeking to recover funds has fueled bearish sentiment, with short positions increasing as perpetual futures funding rates turn negative.

Meanwhile, Ethereum has emerged as a primary beneficiary of Solana’s turmoil. It has attracted $1.1 billion in stablecoin inflows, while Solana has lost around $772 million in liquidity. 

As the LIBRA scandal continues to shake the crypto industry, calls for regulation have intensified. Pump.fun founder Alon proposed industry-wide reforms, including transparency in token ownership, better investor education, and stricter vetting processes for token listings. 

Despite these calls, Pump.fun itself faces legal scrutiny for allegedly enabling unregulated meme coin trading. Whether regulatory measures will prevent future rug pulls remains uncertain, but for now, LIBRA stands as one of the most notorious market manipulation cases in Solana’s history.

This article has been refined and enhanced by ChatGPT.