On the other hand, insiders walked away with millions in profits. Blockchain research firm Nansen revealed that 86% of traders who exited positions lost money. Legal action is already in motion, with Burwick Law preparing a case against those behind the token’s launch. The scandal also reignited debates over meme coin legitimacy, with Nic Carter declaring the sector “dead” due to rampant manipulation. Others, like Coinbase CEO Brian Armstrong, argue that meme coins could still play a key role in blockchain’s evolution.
Retail Investors Lost Millions in Libra Collapse
A recent on-chain analysis of the Libra (LIBRA) meme coin pump and dump scheme revealed staggering losses for retail investors. In fact, some of the hardest-hit traders lost a combined $251 million.
Blockchain research firm Nansen reported that out of 15,430 wallets that exited their positions with either a profit or loss of over $1,000, a staggering 86% of them suffered losses. In total, these wallets saw a combined loss of $251 million, while the 2,101 profitable wallets managed to secure approximately $180 million in realized gains.
(Source: Nansen)
Nansen’s report was published on Feb. 19, and shared details about how insiders benefited while retail investors bore the brunt of the fallout. It pointed out that select wallets walked away with millions, while the majority of traders faced major losses. Among those who were affected, 1,478 wallets recorded losses ranging from $1,000 to $10,000, accumulating a total loss of $4.8 million. Another 2,800 wallets lost between $10,000 and $100,000, amounting to $82.4 million in total losses, while 392 wallets suffered losses of between $100,000 and $1 million, combining for $96.5 million. Meanwhile, 23 wallets recorded losses of more than $1 million each, with their cumulative losses reaching $40.9 million.
(Source: Nansen)
The 15 worst-affected wallets accounted for a staggering $33.7 million in losses, with one of these wallets still holding 57% of its initial balance. Nansen pointed out that the single largest realized loss came from Barstool Sports founder Dave Portnoy, who saw his wallet drop by $6.3 million. Portnoy was identified as one of the project’s insiders, and received 6 million LIBRA tokens as payment for promoting the meme coin but later returned them to Hayden Davis, who is CEO of Kelsier Ventures.
Legal repercussions are already taking shape. Burwick Law, the firm currently suing Pump.fun and the creators of the Hawk Tuah (HAWK) meme coin, is now also preparing a case against the parties behind LIBRA. The firm has already been contacted by hundreds of investors who suffered losses and is exploring legal avenues for financial recovery.
The LIBRA token’s launch was spearheaded by Hayden Davis and KIP Protocol CEO Julian Peh. The meme coin’s meteoric rise and subsequent collapse seem to have been driven by a now-deleted social media post from Argentine President Javier Milei. La Nacion, a local media outlet, reported on leaked messages that allegedly suggest Milei’s sister, Karina Milei, may have also played a role in the affair. Davis, however, denied sending any such messages.
So far, Davis and Kelsier Ventures are some of the biggest financial winners of the LIBRA launch after they claimed to have generated approximately $100 million. Davis, however, has denied directly owning the tokens and insists he had no intention of selling them. President Milei also tried to distance himself from the controversy by arguing that he did not “promote” LIBRA as alleged in fraud lawsuits but merely shared information about it. Despite his denial, Argentina’s opposition party is now pushing for his impeachment over the scandal.
Nic Carter Declares Meme Coins Dead
Nic Carter, a partner at Castle Island Ventures, recently declared that the era of meme coins is “unquestionably over” after the LIBRA scandal linked to Argentine President Javier Milei. In a post on X, Carter said that the so-called "Libragate" controversy exposed the deeper flaws of the meme coin sector, which he believes is rife with corruption.
(Source: X)
Carter explained that meme coins gained traction primarily as an alternative to high fully diluted valuation (FDV) coins backed by venture capital firms. He acknowledged that meme coins were often little more than a form of gambling, he argued that they were at least originally launched in a way that allowed retail investors to participate fairly.
However, he also claimed that recent high-profile launches, including those associated with LIBRA, US President Donald Trump, viral influencer Hailey Welch, and other celebrities, have proven to be fundamentally skewed. He said that these token launches were not merely unfavorable to retail investors but “wildly unfair and botted,” and compared the industry to a casino where “the house had a 90/10 advantage.”
Despite Carter’s strong stance against meme coins, not everyone in the industry shares his perspective. Armani Ferrante, the founder of Backpack, took a more optimistic view by suggesting that meme coins serve a crucial role in the broader crypto ecosystem.
In a recent interview, Ferrante described them as a large-scale “stress test” for the future of blockchain-based financial systems. He also argued that while crypto is fundamentally a technology for transaction processing, finance itself has little intrinsic meaning unless real-world goods and services are being tracked on-chain. He compared meme coins to the early days of innovation in various industries, where major breakthroughs often begin as seemingly trivial experiments before turning into something a lot more impactful.
Additionally, Ferrante compared the evolution of blockchain technology to the way many revolutionary advancements first appear as “toys” before finally proving their true potential. He suggested that meme coins, despite their speculative nature, could be laying the groundwork for a broader movement where global value is seamlessly transferred on trust-minimized, decentralized networks.
Coinbase CEO Brian Armstrong also weighed in on the debate, and urged the industry to stay “open-minded” about the future of meme coins. He drew a parallel between the current skepticism toward meme coins and the early internet era, where features like animated GIFs were initially dismissed as novelties before evolving into fundamental components of online culture and communication. Armstrong suggested that while many meme coins today may seem frivolous, offensive, or even fraudulent, they could ultimately serve as an indicator that the tokenization of all assets is inevitable.
Regulators Blamed for Libra Scandal
The collapse of the Libra token also reignited discussions about the need for stronger regulatory oversight of meme coins. Nic Puckrin, co-founder and CEO of The Coin Bureau, placed the blame on regulators, and argued that the rise of fraudulent celebrity and political meme coins is a direct result of the lack of intervention by authorities like the US Securities and Exchange Commission (SEC). According to Puckrin, regulators are the only ones capable of preventing future pump-and-dump schemes like Libra as the crypto industry cannot regulate itself.
Hester Peirce, head of the SEC’s crypto task force, previously stated that meme coin regulation does not fall under the agency’s jurisdiction, which left the responsibility to Congress and agencies like the Commodity Futures Trading Commission (CFTC). However, Puckrin warned that meme coins cannot stay an “unregulated Wild West” and called for a structured framework to ensure fair and transparent token launches.
As a supporter of the original model of initial coin offerings, Puckrin lamented that the SEC’s enforcement actions have largely sidelined this method of fundraising. He also criticized the agency for distancing itself from meme coin oversight, and argued that if no regulatory body steps in, the industry will continue to experience scandals like the Libra fiasco.
