Following the LIBRA token scandal, the Meteora exchange is back in the spotlight due to alleged fraud surrounding the M3M3 token, resulting in significant financial losses for investors.
Allegations Against Meteora
On April 21, a class action suit was filed in the U.S. District Court for the Southern District of New York, claiming that Meteora, its CEO Benjamin Chow and other involved parties misled the public about the M3M3 token launch, leading to investor losses. The complaint states that insiders behind the project used a network of over 150 wallets to secure as much as 95% of the token supply.
Mechanics of the M3M3 Token Launch
The M3M3 token was pitched as a solution to the 'pump-and-dump' culture associated with meme coins. However, investors were allegedly misled regarding the transparency of the launch and the size of staking rewards, which the plaintiffs now argue were inaccurate. It is claimed that access for retail investors was restricted, allowing insiders to manipulate the price.
Financial Consequences and Actions by Affected Investors
The lawsuit states that this coordinated scheme resulted in over $69 million in damages, as the value of the token crashed shortly after trading began. Plaintiffs are seeking a receiver to oversee Meteora's operations and safeguard remaining assets, along with an official classification of stakes-based meme tokens like $M3M3 as securities.
The situation concerning Meteora and the M3M3 token highlights the need for better investor protection in the cryptocurrency space and the necessity for stricter regulations regarding staking-related tokens.
