Meteora, a prominent Solana-based DEX, is facing a new class action lawsuit in New York, accused of allegedly engineering a $69 million rug pull tied to its M3M3 meme coin launch.

Filed on behalf of plaintiffs Jonathan Clarke, Rodrigo Ferreira Da Cruz Vogt, and others, the suit alleges that Meteora and founder Benjamin Chow, alongside Kelsier Ventures and named executives, jointly developed a scheme to defraud investors via the Solana-based M3M3 token.

This led to the loss of at least $69 million among the proposed class, the suit alleges.

“Together, defendants covertly orchestrated the purportedly public launch of M3M3 on Meteora to limit initial sales to defendants and a tightly-controlled group of insiders,” lawyers for the plaintiffs wrote. 

“Defendants’ goal was to covertly dominate M3M3 token supply, artificially inflate its market value, and extract profit from unsuspecting investors.”

The M3M3 token was the first token on Meteora’s platform of the same name. 

The MEME platform was designed to encourage users to stake tokens with the hope of changing meme coin dynamics, which often involve a “race to dump,” causing prices to drop as token holders exit their positions. 

Upon staking, users could expect to receive a portion of the trading fees generated by Meteora. 

He said, she said

According to a blog post that introduced the platform in December, the M3M3 token was created by a “passionate community” of people who believed in the platform's potential.

But the suit alleges otherwise. 

“Publicly, M3M3 was presented as a Meteora project,” the suit reads. “In reality, M3M3 was a collaboration between Meteora and Chow, on the one hand, and defendant Kelsier, a venture capital firm run by the Davis defendants (a father and two sons),” adding that the defendants concealed their involvement. 

The suit further alleges that the defendants used 150 insider wallets to dominate the token supply and systematically “freeze” and “thaw” the launch pool of tokens, ultimately gaining secret control of around 95% of the tokens within 20 minutes of the launch. 

“The federal securities laws are intended to warn investors of undisclosed risks and protect them from fraud,” the suit reads. “Had defendants complied with the registration and disclosure requirements applicable to M3M3, plaintiffs and other non-insider investors would not have purchased M3M3 tokens at inflated prices or suffered the resulting losses.”

The plaintiffs are being represented by prominent crypto law firm Burwick Law and Hoppin Grinsell LPP.

Last month, Burwick filed a lawsuit against Meteora and Kelsier Ventures for their involvement in the LIBRA token launch, a meme coin scandal that shook markets and politics in February, resulting in Chow's resignation from Meteora. LIBRA was promoted by Argentine President Javier Milei before its price crash.

In March, an Argentine lawyer asked Interpol to assist in the arrest of Hayden Davis, a named defendant in that suit, due to his alleged connection to the LIBRA scandal. 

Though it had a brief spike shortly after its launch, M3M3 is down more than 98% from its all-time high of $0.186 on December 12, and is now trading at just $0.003. 

Representatives for Meteora, Kelsier, and Burwick Law did not immediately respond to Decrypt’s request for comment. 

Edited by Sebastian Sinclair

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