Solana’s Meteora Faces Legal Action Amid Claims of Meme Coin Fraud

Meteora, a decentralized exchange running on the Solana network, is currently embroiled in a class-action lawsuit linked to allegations of price manipulation concerning the launch of the M3M3 meme coin.

The lawsuit claims that investors suffered losses totaling at least $69 million during the period from December 2024 to February 2025.

Rug Pull Claims

The legal action, filed on April 21 in the U.S. District Court for the Southern District of New York, accuses Meteora and its founder, Benjamin Chow, of deceiving investors. The complaint also involves Kelsier Labs and several executives, including Chairman Thomas Davis and his sons, Hayden and Gideon, alleging that they manipulated the token’s price for their own gain at the public’s expense.

“The defendants coordinated the seemingly public launch of M3M3 on Meteora to restrict initial trading to themselves and a limited group of insiders,” stated the attorneys representing the plaintiffs.

The allegations detail that insiders behind the M3M3 project swiftly obtained up to 95% of the token’s supply within 20 minutes of its launch, utilizing over 150 wallets. This maneuver reportedly restricted access for public buyers, enabling them to artificially drive up the token’s price through internal transactions.

Once the value surged, they sold off their holdings, causing a significant market drop shortly after the launch. The plaintiffs argue that the defendants then made calculated attempts to boost the token’s price again to regain investor confidence, but these measures did not achieve lasting stability.

The lawsuit further asserts that the accused individuals obscured their identities and connections throughout the entire process, misleading the public into thinking the coin had been launched in a fair manner.

Regulatory Implications for Stake-Based Tokens

A blog post from December 2024 presented Meteora’s platform as a response to rampant “pump-and-dump” schemes in the meme coin sector. At that time, Chow allegedly marketed M3M3 as a secure, stake-backed asset aimed at providing lasting value.

Investors were reportedly promised a fully transparent launch open to the public, with staking rewards generated from transaction fees on the Meteora platform.

However, the April lawsuit contends that these assurances were deliberately misleading. It also calls for regulatory clarification by advocating for stake-based meme coins like M3M3 to be classified as securities. Legal experts suggest that such a classification could shape the future introduction of any celebrity or political token on the Solana network.

Additionally, Kelsier Ventures, KIP Protocol, and Meteora are facing a different class-action suit filed in March related to the downfall of the LIBRA token. This case accuses insiders of taking advantage of private liquidity options to sell at peak market prices, leaving everyday traders vulnerable to losses.

Chow has since stepped down from his position at Meteora amid allegations of insider trading and financial misconduct in relation to the LIBRA issue.