Solana-based decentralized alternate Meteora is dealing with a class-action lawsuit over pump-and-dump claims surrounding the M3M3 meme coin launch.
The criticism alleges this led to losses of no less than $69 million between December 2024 and February 2025.
Rug Pull Allegations
Within the April 21 submitting with the U.S. District Courtroom for the Southern District of New York, the plaintiffs accused Meteora and its founder, Benjamin Chow, of deceptive buyers. It additionally named enterprise agency Kelsier Labs and a number of other of its executives, together with Chairman Thomas Davis and his sons Hayden and Gideon, in claims of manipulating the value of the Solana-based token to revenue on the expense of the general public.
“Collectively, defendants covertly orchestrated the purportedly public launch of M3M3 on Meteora to restrict preliminary gross sales to defendants and a tightly-controlled group of insiders,” legal professionals for the petitioners wrote.
In line with the criticism, insiders behind the M3M3 venture quietly acquired as a lot as 95% of the token provide inside 20 minutes of launch utilizing over 150 wallets. Throughout this era, entry to public patrons was allegedly restricted, which allowed them to inflate the token’s worth by way of inner trades artificially.
As soon as the worth spiked, they bought their holdings, resulting in a pointy market crash simply days after the rollout. The accusers argue that the defendants then made calculated efforts to reinflate the token’s worth in an try to revive investor belief, however this didn’t deliver long-term stability.
The go well with additionally claims the alleged offenders hid their identities and affiliations all through the method, deceptive the general public into believing the coin was launched pretty.
Stake-Based mostly Cash Needs to be Securities
A weblog post printed in December 2024 launched Meteora’s platform as a direct response to the “pump-and-dump” points affecting meme coin markets. On the time, Chow is claimed to have promoted M3M3 as a safe, stake-backed asset designed to supply long-term worth.
Traders had been additionally reportedly assured that the launch can be totally clear and accessible to the general public, with staking rewards generated from transaction charges on the Meteora platform.
Nonetheless, the April go well with claims that these statements had been deliberately misleading. The submitting additional seeks regulatory readability by calling for stake-based meme cash like M3M3 to be formally categorized as securities. Burwick Legislation notes that such classification may affect how any new celeb or political token is dropped at market on Solana.
In the meantime, Kelsier Ventures, KIP Protocol, and Meteora are additionally dealing with a separate class-action case lodged in March over the collapse of the LIBRA token. Throughout that incident, insiders had been accused of exploiting non-public liquidity mechanisms to promote at peak costs, leaving bizarre merchants uncovered to losses.
Chow has since resigned from his management place in Meteora amid suspicions of insider buying and selling and monetary misconduct linked to the LIBRA fallout.
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