A class-action lawsuit filed in a U.S. federal court alleges that First Lady Melania Trump and Argentine President Javier Milei were used as “window dressing” in a sophisticated memecoin fraud scheme, which left investors with millions in losses and is now shining a spotlight on the risks within the crypto industry.
The Alleged Fraud Scheme
The legal complaint, filed in the Southern District of New York, accuses a group of crypto developers, including Meteora co-founder Benjamin Chow and leaders at marketing group Kelsier Ventures, of orchestrating a coordinated “pump-and-dump” scheme. The alleged playbook involved launching multiple memecoins, such as $MELANIA and $LIBRA, and using a six-step process to artificially inflate their value before the insiders sold off their holdings, causing the prices to collapse.
The lawsuit claims the figures of Melania Trump and Javier Milei were central to the scheme, lending an air of credibility and legitimacy that helped draw in a wider pool of investors beyond typical crypto traders. The plaintiffs state that neither public figure is accused of operating the scheme, but rather that their reputations were exploited without their knowledge to make the fraudulent ventures appear trustworthy.
A Trail of Losses and Collapsed Tokens
The lawsuit points to the dramatic price history of the tokens as evidence of the alleged fraud. The $MELANIA memecoin, launched in January 2025 and promoted as the First Lady’s official token, saw its market capitalization peak at over $2 billion before plummeting, losing more than 50% of its value within days and over 95% from its peak. At the time of the reports, its market cap had fallen to approximately $85 million.
The $LIBRA token, promoted by Argentine President Javier Milei in February 2025 as a patriotic initiative, experienced an even more violent swing. Its market cap surged before insiders allegedly withdrew over $110 million in liquidity, causing its value to crash by over 90% within hours. The lawsuit alleges that insider wallets connected to the scheme made an estimated $10 million from the $MELANIA collapse and offloaded over $107 million during the $LIBRA crash.
Legal Reckoning and Industry Implications
The defendants, including Benjamin Chow and Kelsier Ventures CEO Hayden Davis, face charges including fraud, conspiracy to defraud, and violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act. The plaintiffs are seeking the disgorgement of all profits and the appointment of an independent receiver over Meteora’s smart-contract programs.
This case is seen as a critical test for how U.S. securities laws apply to fraudulent activities in the decentralized finance (DeFi) space. A victory for the plaintiffs could set a clear precedent for treating such memecoin operations as fraud under existing federal statutes, potentially influencing pending legislation aimed at imposing stricter rules on the crypto industry.
