Meteora Labs sued by investors over alleged M3M3 token price manipulation

A group of investors has filed a class-action lawsuit against decentralized cryptocurrency exchange Meteora, alleging the firm was involved in manipulating the launch and market price of the M3M3 token.

A group of investors has filed a class-action lawsuit against decentralized cryptocurrency exchange Meteora for allegedly manipulating the launch and market price of the M3M3 token.

In an amended complaint filed on April 21 in the US District Court for the Southern District of New York, the plaintiffs claimed that venture capital firm Kelsier Labs, Meteora and four current or former executives intentionally misrepresented information in the December 2024 M3M3 launch.

The investors said they suffered at least $69 million in losses between December 2024 and February 2025 after the parties presented “trusted leaders in the Solana ecosystem” as being behind the token launch, rather than a “blatant fraud” in which sales were manipulated to artificially inflate the price.

“This artificially-inflated valuation communicated highly misleading information to non-insider investors, who reasonably relied on Defendants’ representations that the $M3M3 launch was fully accessible to the public and conducted in a transparent manner fair to non-insider investors, and thus reasonably relied on $M3M3 market price as a meaningful measure of its value,” the complaint stated.

“The post-launch price spike also served to corroborate Defendants’ aggressively-marketed, but misleading, assertions that $M3M3 had intrinsic value and a comparatively low risk profile.”

The lawsuit is one of many involving different crypto firms that have alleged fraud through violations of US securities laws.

Though the US Securities and Exchange Commission (SEC), under acting chair Mark Uyeda since US President Donald Trump took office, has scaled back or dismissed many enforcement actions involving digital assets, the agency said in February that it still intended to pursue cases against fraudulent token projects.

The investors added:

This matter arises out of a scheme by Defendants to defraud members of the cryptocurrency investing public through the launch and sale of the M3M3 token. To further their scheme, Defendants engaged in a broad-ranging campaign of misstatements and omissions to non-insider investors.

According to the lawsuit, the parties went "to great lengths to present the M3M3 launch as being the culmination of a cooperative effort by trusted leaders in the Solana ecosystem to bring a unique and valuable token offering to the market."

However, the plaintiffs said the cooperation was "a lie" and that the parties engaged in "a blatant fraud, in which they manipulated the terms of sale to non-insider investors and used their superior knowledge of the planned trading activity to engage in economically irrational behavior that served to economically disadvantage non-insider investors."

The defendants allegedly sold the M3M3 tokens at prices lower than they were willing to buy them for at the same time, while also engaging in "a pattern of economically irrational trading behavior."

The investors said the defendants' actions were intended to "maximize losses to non-insider investors" and that they suffered at least $69 million in allocable preferred return interest.

Kelsier Capital Partners and KIP Protocol are also named as plaintiffs in the lawsuit, which alleges that the parties engaged in a conspiracy to defraud and make false statements in violation of US federal securities law.

The defendants are alleged to have misrepresented that they were attempting to launch the M3M3 token in a manner that was "transparent and accessible to all investors."

However, the plaintiffs said the defendants engaged in a "deceptive scheme" to sell the tokens to non-insider investors at prices that were economically disadvantageous to them.

The defendants are also alleged to have misrepresented the liquidity of the M3M3 tokens and that they were not engaging in any activity that would serve to economically disadvantage non-insider investors.

The plaintiffs said the defendants' actions were "material" and that they relied on them in making their investment decisions.

The investors are seeking to recover their losses, plus interest and legal fees.

News data source: kdj.com

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