In a year marked by spectacular rises and equally dramatic crashes, the world of celebrity-backed cryptocurrencies has come under intense scrutiny. Two cases, in particular, have seized headlines and sent shockwaves through investors and regulators alike: the collapse of the Libra token, once promoted by Argentina’s President Javier Milei, and the meteoric—then plummeting—trajectory of the YZY memecoin, launched by rapper Kanye West (now known as Ye). Both stories, unfolding on the Solana blockchain, reveal a crypto landscape where hype, insider control, and regulatory uncertainty collide, often at great cost to ordinary investors.
On August 19, 2025, Judge Jennifer L. Rochon of the Southern District of New York ordered the unfreezing of $57.6 million in stablecoins linked to the Libra token scandal. This decision, as reported by Cointelegraph, granted controversial memecoin promoter Hayden Davis and former decentralized exchange head Ben Chow renewed access to funds previously locked by the court. The ruling came after Rochon determined that the defendants had cooperated fully with court requirements and made no attempt to transfer or hide assets, distinguishing them from the “evasive actors” so often seen in crypto frauds.
The unfreezing of assets marks only the latest twist in a saga that began in February 2025, when the Libra token burst onto the scene. Marketed as a memecoin to support Argentina’s small businesses, Libra’s fortunes soared after President Milei promoted it on social media. In a matter of hours, the token reached a staggering $4 billion market capitalization, only to collapse by over 94% shortly thereafter. According to Cointelegraph, allegations soon surfaced that insiders had dumped more than 70% of the supply, trapping retail investors and causing estimated losses of over $250 million. Claims of misappropriation soared, with more than $150 million allegedly siphoned off by those behind the scenes.
The fallout was immediate and far-reaching. President Milei, facing a political firestorm, quickly distanced himself from the project, insisting he had “no connection” beyond a routine social media post. Despite this denial, a congressional ethics investigation was launched to probe his role. While the task force eventually closed without findings against Milei, opposition leaders accused him of covering up ties to the project’s backers and his approval ratings took a noticeable hit, underscoring the scandal’s impact on Argentina’s volatile political landscape.
Legal action soon followed. In March 2025, Burwick Law filed a class-action lawsuit in New York on behalf of investors. The lead plaintiff, Omar Hurlock, accused Davis, Chow, and others of deliberately misleading investors by exploiting Milei’s apparent endorsement to create a veneer of legitimacy. The suit alleged that 85% of the token’s supply was withheld from the public and that the defendants used predatory tactics to extract more than $100 million from liquidity pools. Judge Rochon’s initial freeze of $57.65 million in USDC was a response to these serious allegations, but her recent reversal signaled skepticism about the plaintiffs’ ability to prove “irreparable harm.” As she emphasized in her ruling, the frozen funds remained secure and available, ensuring potential compensation if the lawsuit ultimately succeeds.
Yet, the Libra scandal was only the beginning. In late March, the crypto world watched as Kanye West’s YZY memecoin launched on Solana and rocketed to a $3 billion market cap within just 40 minutes, according to data from Nansen. The excitement was short-lived. By August 21, YZY’s market cap had tumbled below $1.05 billion, a precipitous drop that fueled speculation about insider trading and market manipulation. On-chain analytics firm Lookonchain revealed that the YZY liquidity pool included only YZY tokens, giving developers unchecked power to sell at will. Even more troubling, 94% of the token’s supply was held by insiders, with a single multisig wallet controlling 87% prior to distribution.
To deter opportunistic traders, the YZY team deployed a so-called anti-sniping mechanism, launching 25 contract addresses and only selecting one as the official token. But this elaborate setup did little to prevent insider trading and front-running. One unlucky investor reportedly lost $710,000 after buying the wrong token—a stark reminder of the risks inherent in these fast-moving, lightly regulated markets.
The parallels to the Libra debacle did not go unnoticed. Analysts quickly linked the YZY token to the $21 million LIBRA extraction scheme, highlighting a pattern of celebrity-backed memecoins that rise on hype, only to leave retail investors holding the bag. As CryptoBriefing and Cointelegraph detailed, the YZY and Libra cases have become cautionary tales in a space where social media influence can create—and destroy—fortunes almost overnight.
Despite the controversies, some prominent crypto traders have continued to invest in YZY. James Wynn, for example, cited the success of other celebrity tokens like TRUMP, which reportedly quadrupled in value in just 28 hours, as a reason to buy in. But such endorsements have done little to allay broader concerns. As the stories of Libra and YZY demonstrate, celebrity and political backing can amplify a token’s value, but they can also accelerate its collapse when the winds shift.
Regulators and market participants are taking note. The ability of centralized stablecoin issuers like Circle to freeze and unfreeze assets, as seen in the Libra case, has sparked debate about the true nature of decentralization in crypto. Critics argue that this power undermines one of the core tenets of blockchain technology, while supporters counter that such controls are necessary to protect investors in cases of suspected fraud.
Legal experts suggest that Judge Rochon’s ruling may set a precedent for how U.S. courts handle asset freezes in future crypto fraud cases. The challenge, they say, lies in balancing the need to safeguard investor funds with the rights of defendants, all while navigating an industry that often moves faster than the law can keep up. As one analyst put it, “Transparency and due diligence are paramount. The Libra and YZY scandals show just how quickly hype and opacity can devastate markets.”
Investor confidence, for now, remains fragile. The twin implosions of Libra and YZY have prompted calls for stricter regulatory oversight, more robust disclosure requirements, and greater accountability for those who wield outsize influence over these speculative assets. Whether the industry will heed these warnings—or simply move on to the next big thing—remains to be seen. But for those who lost fortunes chasing the promise of easy gains, the lessons of 2025 are unlikely to be forgotten anytime soon.
As the dust settles on these scandals, one thing is clear: the intersection of celebrity, politics, and crypto remains as volatile and unpredictable as ever. For investors and regulators alike, vigilance is not just a virtue—it’s a necessity.
