Meteora faces class-action lawsuit over fraudulent $M3M3 token launch, with investors seeking damages and securities classification - IcoHolder.

Solana-based decentralized exchange Meteora is facing a class-action lawsuit alleging that it orchestrated a fraudulent launch of the $M3M3 token, leading to significant losses for investors. The lawsuit, filed on April 21 in the US District Court for the Southern District of New York, accuses Meteora, its CEO Benjamin Chow, venture firm Kelsier Labs, and executives Hayden, Gideon, and Charles Thomas Davis of misleading the public about the token launch and manipulating its price to profit at investors' expense.

The complaint details how insiders behind the project allegedly secured up to 95% of the $M3M3 token supply through a network of more than 150 wallets. They then restricted access to public buyers during the early trading window, artificially inflating the token's price with internal trades. Once the price surged, the insiders were accused of dumping their holdings on the market, causing a sharp crash within days.

The lawsuit claims that the project, initially promoted as a solution to the "pump-and-dump" culture plaguing meme coins, was misleadingly presented by Chow as a safe, stake-backed token with long-term value. Investors were told that the launch would be transparent, with staking rewards derived from transaction fees on the Meteora platform—claims that plaintiffs argue were deliberately deceptive.

The class-action suit alleges that this coordinated scheme led to over $69 million in damages, as retail investors were lured into buying the token, only to see its value plummet. The price drop reportedly began on December 6, just days after the token's launch on December 4, when insiders offloaded their holdings.

Further claims in the lawsuit suggest that the defendants attempted to restore investor confidence by artificially re-inflating the token's value, but these efforts failed to maintain long-term stability. The plaintiffs also argue that the defendants concealed their identities and affiliations during the offering, creating the illusion of a fair, community-driven launch.

Meteora and Kelsier Labs have previously faced controversy, including their involvement in the LIBRA token crash that led to millions in losses. The same individuals were linked to the failed MELANIA memecoin launch, which similarly ended in losses for retail investors. Chow resigned from his role at Meteora amid allegations that he privately received or managed LIBRA tokens.

The lawsuit seeks to have stake-based meme tokens like $M3M3 officially classified as securities and calls for the appointment of a receiver to oversee Meteora’s operations and safeguard its remaining assets. According to Max Burwick of Burwick Law, one of the attorneys representing the investors, the case could influence how celebrity or political tokens are brought to market on platforms like Solana.