How did Kelsier, Jupiter, and Meteora allegedly use LIBRA’s liquidity to money out on the high whereas on a regular basis merchants misplaced billions within the largest Solana scandal since FTX?
A sudden scandal
On Feb. 14, what ought to have been simply one other day within the crypto markets became one in all Solana’s (SOL) largest scandals for the reason that FTX (FTT) collapse.
A newly minted meme coin, LIBRA, appeared out of nowhere and was all of a sudden on the middle of a monetary storm. Inside minutes of its creation, Argentina’s President, Javier Milei, publicly endorsed it, triggering a frenzy.
The worth skyrocketed to a multi-billion greenback market cap — solely to break down simply as quick, leaving retail buyers wrecked whereas insiders made off with thousands and thousands.
Because the mud settled, the dimensions of the catastrophe turned clear. This wasn’t simply one other pump-and-dump. It was one thing far larger, involving highly effective figures in each politics and crypto.
On the coronary heart of the scandal was Kelsier Ventures, led by Hayden Davis, a determine now broadly accused of orchestrating liquidity manipulation schemes.
However Kelsier wasn’t performing alone. The scandal’s attain prolonged deep into the Solana ecosystem, pulling in two of its most outstanding tasks — Meteora and Jupiter (JUP).
Meteora, a significant liquidity supplier, performed a vital function in facilitating trades that allowed insiders to exit with thousands and thousands earlier than retail buyers might react.
In the meantime, Jupiter, Solana’s dominant decentralized alternate, is now dealing with scrutiny over whether or not its infrastructure was used for these trades — and whether or not insiders inside its ecosystem had prior data of the manipulation.
Was this simply one other reckless meme coin craze spiraling uncontrolled, or was the complete ecosystem — Meteora, Jupiter, and Kelsier — a part of a coordinated operation designed to complement insiders on the public’s expense?
Let’s dig in.
The genesis of the LIBRA token
The origins of LIBRA are as murky because the scandal itself. Not like most meme coin launches pushed by grassroots hype, this one had the transient however highly effective backing of a sitting president.
On Feb. 14, at precisely 21:38 UTC, the token was minted on the Solana blockchain. Lower than half-hour later, Argentina’s President, Javier Milei, took to social media to publicly endorse it.
His put up linked to a web site — vivalalibertadproject.com — a reputation strikingly much like his marketing campaign slogan and political get together, La Libertad Avanza. Whether or not this was a calculated scheme or a reckless mistake stays unclear, however the fallout was instant.
The second Milei hit “post,” chaos erupted. Snipers — crypto merchants who specialise in early entries — pounced. Inside an hour, LIBRA’s value surged to $4.55, pushing its market cap previous $4 billion.
However this wasn’t natural development. Blockchain analysts later revealed that wallets linked to insiders had already stockpiled large quantities of LIBRA earlier than the general public had an opportunity.
Then got here the crash. Simply as quick because it had risen, LIBRA plummeted, nosediving 95% inside hours. Retail buyers, drawn in by the hype, have been left with nugatory tokens, whereas these on the within had already cashed out, draining over $251 million from the ecosystem.
In complete, lower than 14% of merchants escaped with a revenue. Probably the most profitable pockets walked away with $6.5 million. The remaining have been worn out.
After which, as abruptly as he had endorsed LIBRA, Milei deleted his put up. He now insisted he had no actual connection to the venture, claiming he was merely “spreading the word” a couple of non-public enterprise.
The political backlash was swift. Argentina’s opposition accused Milei of orchestrating a monetary rip-off, with requires his impeachment rising louder.
Former president Cristina Fernández de Kirchner condemned the incident, stating, “Thousands who trusted him lost millions, while a select few made fortunes due to privileged information.”
The Kelsier connection
Because the mud settled on LIBRA’s spectacular collapse, all eyes turned to Hayden Davis, the self-proclaimed crypto strategist and CEO of Kelsier Ventures. If anybody stood to realize essentially the most from this debacle, it was him.
Till now, Davis was a relative unknown within the broader crypto area. However inside Solana’s meme coin growth, he had rigorously positioned himself as a key participant — although not one who impressed confidence.
With ties to a number of questionable token launches, together with MELANIA and M3M3, Davis had constructed a popularity for orchestrating high-profile, high-volume, and extremely rigged pump-and-dump schemes.
For LIBRA, Kelsier’s function was essential. Blockchain knowledge confirmed that wallets linked to Kelsier have been among the many earliest accumulators of LIBRA tokens, properly earlier than Milei’s endorsement.
These wallets dumped their holdings on the peak, leaving the general public scrambling to promote earlier than the crash.
Whereas Davis denied any direct wrongdoing, his explanations did little to persuade skeptics. He admitted to controlling over $100 million tied to the venture however insisted it wasn’t his. “It’s Argentina’s,” he stated in an interview.
Then got here one other revelation — Davis had personally launched Kelsier to Meteora. That’s when issues acquired much more sophisticated.
Meteora’s function — facilitator or confederate?
Meteora had lengthy been a revered title in Solana’s DeFi ecosystem, identified for offering liquidity options that helped new tasks launch easily. However when LIBRA collapsed, its deep involvement within the token’s liquidity mechanics turned the main target of scrutiny.
Not like typical meme cash, the place builders present their very own liquidity, Meteora actively managed LIBRA’s liquidity swimming pools. This gave it direct management over the token’s market habits.
The primary cracks appeared on Feb. 17, when DefiTuna founder Moty Povolotsky publicly confronted Meteora’s co-founder, Ben Chow. He accused Meteora of making a system that allowed insiders and influencers to money out at peak costs whereas leaving retail merchants with nothing.
Furthermore, allegedly surfaced chats painted a fair uglier image. The liquidity construction of LIBRA resembled that of MELANIA, one other token the place Meteora had taken a 1% lower from its peak $100 million liquidity pool.
In response, Chow has denied any involvement in insider buying and selling. In a Feb. 17 assertion, he insisted:
“Meteora and I personally have never received or managed any tokens on the side, do not receive knowledge or get involved with any off-chain dealings.”
However, whereas rejecting accusations of economic misconduct, Chow admitted that he had personally referred Davis and Kelsier Ventures to different tasks, together with MELANIA and LIBRA.
On Feb. 18, Chow introduced his resignation. In line with Meow, co-founder of each Jupiter and Meteora, the choice was made as a result of Chow had proven “a lack of judgment and care” in dealing with Meteora’s operations.
Meow defended Chow’s character, stating:
“Ben has been an extremely helpful and kind participant in the ecosystem for a while now, as many people can attest. I ask everyone not to jump to conclusions and be as kind to him as possible as he seeks to clear his name.”
However by this level, the injury to Meteora’s popularity was irreversible.
Jupiter’s silence raises questions
Not like Meteora, Jupiter didn’t straight handle LIBRA’s liquidity swimming pools. However as the first venue for LIBRA buying and selling, its infrastructure had facilitated a lot of the market motion.
Then there was the problem of management. Jupiter and Meteora shared a co-founder—Meow. Regardless of working as separate entities for over a yr, this connection raised issues.
If Meteora had insider liquidity mechanics in place, was Jupiter conscious? Did anybody at Jupiter use their data of the liquidity setup to realize an unfair benefit?
Meow broke his silence on Feb. 18, stating:
“I’d like to reiterate my confidence that no one at Jupiter or Meteora committed any insider trading or financial wrongdoing, or received any tokens inappropriately.”
He insisted that whereas Meteora had been working independently, Chow had made critical errors in judgment, which led to his resignation.
However not everybody was satisfied. On Feb. 17, a pockets linked to a Jupiter worker was flagged for making small trades on LIBRA earlier than the crash.
The transactions have been minor — starting from $10 to $250 — however advised that somebody inside Jupiter might have had early data of the token’s liquidity construction.
Jupiter’s management responded to all of the allegations by saying an impartial authorized evaluation of the LIBRA controversy. However the agency they chose — Fenwick & West — instantly drew criticism.
Fenwick & West had beforehand been linked to FTX’s authorized dealings, particularly in serving to Sam Bankman-Fried blur the strains between FTX and Alameda Analysis.
Many within the Solana neighborhood noticed this as an try to regulate the narrative fairly than uncover the reality.
After backlash, Meow admitted that Jupiter would possibly rethink its selection of authorized counsel. However by then, the injury was already executed.
Silence from Solana’s management
The collapse of LIBRA despatched shockwaves by way of the Solana ecosystem, triggering a pointy sell-off in SOL.
From its Feb. 14 excessive of $205, SOL plummeted to a low of $161 by Feb. 18 — a staggering 21% drop in simply 4 days. As of this writing, it has rebounded to $172.
Past value motion, the scandal has raised deeper issues about Solana’s decentralized finance ecosystem, significantly how sure tokens are launched, verified, and promoted.
“Radio silence from Solana leadership as their community gets scammed multiple times a day in the Mass Extraction Olympics sponsored by Jupiter, Meteora, and PumpFun,” one person famous, echoing the rising frustration.
Jupiter and Meteora have additionally confronted intense scrutiny. “This team did the Melania and Trump launch, too. Melania was bad, and people lost big, but since nothing was deleted, Jupiter never had to come back to justify,” one dealer identified. “This is crime season, and Jupiter etc. are all part of the crime.”
“It’s all unraveling so quickly,” one other business insider remarked. “Jupiter owner Meow is the real owner of Meteora. Ben lied about having no involvement with LIBRA and other Kelsier launches and was fired from Meteora. Gotta imagine Solana and its execs knew this the whole time.”
The LIBRA fallout extends past simply these platforms. With the dimensions of economic actions concerned and high-profile figures related to the launch, questions on potential authorized penalties have emerged.
“Ain’t no way these people aren’t going to prison,” one observer commented. “Running 9-figure scams using heads of state as bait.” However, as of now, no official regulatory motion has been introduced.
Regardless of mounting public scrutiny, Solana’s management has remained largely silent, providing no formal assertion on the controversy.
Thus far, crypto.information has been unable to make contact with anybody from Solana, Jupiter, or Meteora concerning their roles within the LIBRA launch or the occasions that adopted.
