Cryptocurrency promoted in January by US First Lady Melania Trump was part of a sophisticated fraud that “exploited celebrity associations and ‘borrowed fame’ to sell the ID card to unsuspecting investors,” a recent legal filing said.
In April, cryptocurrency investors filed a federal class action lawsuit against Benjamin Chow, co-founder of cryptocurrency exchange Meteora, and Hayden Davis, co-founder of crypto firm Kelsier Labs, among other defendants, accusing them of a multimillion-dollar fraud involving a single memecoin worth M3M3 dollars.
The plaintiffs then filed an amended complaint expanding the allegations to include racketeering activities. They alleged that the pair conspired to rig the market for the dollar-valued LIBRA coin promoted by Javier Mileipresident of Argentina, whose value dropped shortly after launch.
On Tuesday, the plaintiffs asked the court for permission to file another amended complaint based on alleged information provided by an anonymous whistleblower. With Chow acting as “in command,” the pair released, pumped and dumped at least 15 cryptocurrencies, the proposed second amended complaint alleges, including $MELANIA. The scheme allegedly caused multi-million-dollar losses to unwitting investors.
Trump, who is not a named defendant in the lawsuit, was used as “window dressing for the crime orchestrated by Meteora and Kelsier,” the proposed second amended complaint alleges. The lawsuit further states that the plaintiffs do not allege that Trump or Milei “directed this scheme.”
“This case may clarify underlying expectations around token launches and disclosures in the U.S. We understand that many in the cryptocurrency industry and regulatory community are following this situation closely,” says Max Burwick, senior managing partner at Burwick Law, the law firm representing the plaintiffs.
The White House, Chow and Davis did not immediately respond to requests for comment.
Before Chow and Davis launched $MELANIA in January, they had perfected a “repeatable, six-step ‘playbook’ for pump-and-dump scams,” investors say.
According to the proposed second amended complaint, Meteora controls the technical infrastructure, while Kelsier provides the necessary capital and organizes the promotional campaign, relying largely on borrowed credibility from public figures or brands. The filing alleges that together they effectively control a network of “sniper” crypto wallets that capture immense amounts of coins at artificially depressed prices and then dump them into the market as regular investors flow in.
“I’m going to try and tell all my buddies beforehand,” Davis told a friend ahead of the release of $MELANIA in a private exchange that, in redacted form, is an exhibit in the lawsuit. “I’m about to launch the biggest token ever, lol.” (It’s unclear whether Davis was allegedly referring to $MELANIA or $LIBRA.)