Two men behind a range of cryptocurrencies promoted by the likes of First Lady Melania Trump and Argentine President Javier Milei have been accused of engaging in fraud and exploiting “celebrity association and ‘borrowed fame’ to sell legitimacy to unsuspecting investors,” according to a new legal filing.
A federal class action lawsuit was first brought against Benjamin Chow and Hayden Davis, co-founders of the crypto exchange Meteora and the venture capital firm Kelsier Labs, respectively, in April this year, reports Wired.
The duo was initially accused of a multimillion-dollar scam involving a single memecoin, $M3M3, but an amended complaint from the same plaintiffs later expanded the allegations to include racketeering practices, accusing them of rigging the market to benefit $LIBRA, a coin promoted by Milei, which plummeted in value soon after launch.
The latest proposed version of the complaint, submitted to court on Tuesday, drags in the first lady, accusing Chow and Davis of pumping and dumping at least 15 crypto coins, one of which was $MELANIA.
Melania Trump posted a promotion for the coin on X on January 19 this year, the day before her husband Donald Trump’s second inauguration, in which she directed her followers to its website and wrote: “The Official Melania Meme is live! You can buy $MELANIA now.”
She is not named as a defendant in the lawsuit, which instead claims she was used as “window dressing for a crime engineered by Meteora and Kelsier.”
The Independent has contacted the White House for comment.
Chow and Davis had developed a “repeatable six-step ‘playbook’ for pump-and-dump fraud” by the time they came to launch $MELANIA in January, the plaintiffs claim in the proposed amendment.
They allege that Meteora was responsible for the technical infrastructure used in the creation of the coins, while Kelsier supplied the start-up capital and handled promotions. In the case of $MELANIA, the latter allegedly recruited a network of crypto influencers to promote the coin on social media for a fee.
The immediate response to its January launch was highly positive, with the coin’s value increasing 12-fold to a peak of $1.6 billion, although it has reportedly since lost 95 percent of its worth.
“Investors reasonably interpreted the use of Melania Trump’s name and likeness as evidence of legitimacy and due diligence – trusting that no one of her stature would knowingly associate with a fraudulent venture,” the latest version of the complaint contends.
But, in fact, crypto wallets controlled by Meteora and Kelsier had accumulated almost a third of the entire $MELANIA supply, the lawsuit states, meaning: “Insiders had already cornered the market before a single public buyer could act.”
Those wallets duly sold off their coins once their price began to climb, earning millions of dollars. This ultimately caused $MELANIA’s value to tumble, leaving any outsiders who had bought in facing considerable losses.
“The misuse of Melania Trump’s name magnified the harm,” the amended complaint concludes.
“It corrupted public trust and injected an element of political and cultural credibility into what was, in reality, a standard pump-and-dump.”
