A new legal filing alleges that a cryptocurrency promoted in January by U.S. First Lady Melania Trump was part of a sophisticated scheme that used celebrity association to lend legitimacy to token launches, according to Wired.
The allegations appear in a proposed second amended complaint in a federal class action brought by crypto investors against Benjamin Chow, cofounder of the exchange Meteora, and Hayden Davis, cofounder of venture firm Kelsier Labs, among other defendants.
Investors originally sued in April, accusing the defendants of a multimillion-dollar fraud tied to the memecoin $M3M3. They later amended the complaint to add racketeering claims and to allege market-rigging involving $LIBRA, a coin promoted by Argentina’s president Javier Milei that fell sharply after launch, the news outlet reported.
On Tuesday, the plaintiffs sought permission to file another amended complaint, citing information they say came from an anonymous whistleblower. The new filing alleges that, with Chow acting as “commander,” the defendants launched, pumped, and dumped at least 15 tokens, including $MELANIA, causing millions of dollars in losses.
The filing states that Trump is not named as a defendant and that the plaintiffs do not allege she or Milei operated the scheme. Rather, it describes Trump’s involvement as “window dressing,” asserting her name and likeness were used to confer credibility to the scheme, Wired said.
According to the proposed second amended complaint cited by the news outlet, Meteora controls the technical infrastructure for token launches, while Kelsier supplies capital and coordinates promotions that draw on public figures and brands. The filing alleges that the defendants control a network of “sniper” wallets that acquire large quantities of tokens at discounted prices before public trading, then sell into demand once marketing takes effect.
Before $MELANIA’s debut, Davis allegedly organized a synchronized influencer campaign presenting the token as a “fair launch” and “community-led.” After trading began, the filing says, the price rose twelve-fold and briefly implied a paper valuation of $1.6 billion, before losing 95 percent from its peak, Wired said.
The complaint claims wallets controlled by Meteora and Kelsier had accumulated nearly a third of the total $MELANIA supply before public access, and that as the price climbed these wallets sold, realizing millions of dollars within hours and contributing to a collapse that left late buyers with steep losses.
Read more at Wired