A significant class-action lawsuit targets the Solana-based decentralized exchange (DEX) Meteora and associated figures, alleging a fraudulent scheme surrounding the M3M3 token launch that purportedly cost investors millions.
The legal action, initiated on April 21 in New York’s Southern District Court, claims that Meteora, its CEO Benjamin Chow, venture partner Kelsier Labs, and executives Hayden, Gideon, and Charles Thomas Davis deceived investors regarding the M3M3 token.
Filed on behalf of affected investors, the complaint outlines allegations that insiders connected to the project covertly amassed up to 95% of the M3M3 supply using more than 150 coordinated digital wallets.
Plaintiffs contend that these insiders deliberately limited public buying access during the initial trading phase. This tactic allegedly allowed them to inflate the token’s price through controlled internal trades while retail participants were sidelined.
Following the price surge, the insiders are accused of orchestrating a mass sell-off of their holdings, causing the M3M3 token’s value to plummet dramatically just days after its December 4 launch.
The lawsuit highlights that M3M3 was marketed as an antidote to the speculative risks common with meme coins. Chow allegedly promoted it as a secure, stake-backed digital asset designed for long-term holding, promising transparency and staking rewards funded by Meteora’s transaction fees—claims now labelled as intentionally false.
This alleged manipulation led to investor damages exceeding $69 million, according to the filing. Many bought into the promoted potential only to witness the token’s collapse starting around December 6, coinciding with the alleged insider dump.
The complaint further alleges that the defendants attempted damage control by artificially boosting the token’s price post-crash to regain confidence, but these efforts did not lead to sustained recovery.
Moreover, the lawsuit asserts that the defendants obscured their identities and affiliations during the token offering process to project the image of a decentralized, community-led initiative.
Notably, Meteora and Kelsier Labs were previously implicated in controversies surrounding the LIBRA token crash earlier this year, which also resulted in significant losses for investors.
Accusations during the LIBRA incident involved insiders leveraging private liquidity mechanisms to exit positions profitably before a market downturn, catching ordinary traders unaware. The same entities were also reportedly linked to MELANIA, another meme coin launch facing scrutiny.
Benjamin Chow subsequently resigned from his leadership position at Meteora amid claims regarding his involvement with LIBRA tokens.
The current lawsuit posits that the M3M3 launch mirrored the alleged deceptive strategies used previously. Consequently, the plaintiffs are seeking the court’s intervention to appoint a receiver to manage Meteora’s operations and protect any remaining assets.
A crucial aspect of the lawsuit is the request for the court to classify stake-based meme tokens like M3M3 as securities. Max Burwick of Burwick Law, representing the investors, noted this could set a precedent affecting future token launches on the Solana blockchain.
Burwick Law had previously filed a separate class-action suit on March 18 against Kelsier Ventures, KIP Protocol, and Meteora concerning their alleged roles in the LIBRA token affair.