Dismissal Is Not Exoneration: $LIBRA, RICO, and the Limits of Jurisdiction
The latest news is striking because it may give the impression that the case was dismissed because the authors of $LIBRA were found innocent, when the legal reality is quite different. First of all, there was no criminal trial, and at the same time, there was no comprehensive adjudication of the merits of the case. Three facts are key, let's see them.
This was a class-action civil lawsuit. The plaintiffs, Omar Hurlock and Anuj Mehta, filed the action in a New York state court, and the defendants removed it to federal court on last May. The complaint asserted claims for fraud, conspiracy to commit fraud, the Racketeer Influenced and Corrupt Organizations (RICO), violations of New York consumer-protection law, and unjust enrichment. There was no prosecutor and no criminal defendant. RICO also provides a civil cause of action under §1964(c), allowing treble damages, and that was the route the plaintiffs used.
The court addressed the requirements of a particular statute rather than adjudicating the underlying case as a whole. The RICO-criminal-association analogy in Argentina is useful here. The judge did find that the alleged activity, spanning roughly six months, did not satisfy the continuity required for a RICO pattern. But the complaint also described a single enterprise, multiple defendants, a single objective, and wire fraud as the sole underlying predicate offense.
This closely resembles the distinction made in Argentine legal doctrine between "asociación ilícita" under Article 210 of the Criminal Code and the mere participation of several individuals in a specific plan. Criminal association requires an agreement to commit unspecified crimes rather than a single criminal operation. The structural difference is significant: under Article 210, Argentine law establishes an autonomous endangerment offense that punishes membership in the association even if no other crime is ultimately committed. RICO, by contrast, requires predicate offenses to have been committed and to form a pattern.
The requirement of “open-ended” continuity also failed because the complaint itself described the defendants’ businesses as primarily legitimate, and because wire fraud, standing alone, is not considered conduct that inherently suggests a threat of continued criminal activity. The judge therefore examined whether the alleged conduct fit the particular legal structure required by RICO.
The court also examined whether it had personal jurisdiction over the defendants under Rule 12(b)(2), a question somewhat closer to the Argentine concept of jurisdiction based on the defendant’s domicile. The nationwide service provisions available under RICO (§1965) and Rule 4(k)(2) depend on the existence of a viable federal claim. Once RICO fell away, New York’s personal-jurisdiction provision did not reach the defendants. The fact that the transactions passed through U.S. infrastructure and validators was insufficient to establish specific contacts with New York. It was a domino effect: RICO was the key to the forum, and once RICO fell, the forum fell with it.
A brief digression is appropiate here. The case also raises the question of why there has been no apparent criminal prosecution in the United States. Any answer is necessarily speculative, but three factors may be relevant.
a ) The new regulatory framework closed, in principle, the most obvious avenue. In February 2025, the SEC stated that certain memecoins do not constitute securities under federal securities laws. This makes the traditional tools of securities fraud, such as Rule 10b-5, considerably more difficult to invoke. Fraud, if it occurred, does not disappear for that reason, but the matter would have to be addressed through other possible legal theories and agencies, such as the CFTC, or through more general federal criminal offenses.
b) What happened in Argentina has limited connections to the United States, and most of the victims are not American. The token was launched on Solana, the promotion came from a foreign president, and many of the victims were also foreign. This raises essentially the same jurisdictional problem that brought down the civil action in New York, now viewed from the criminal side.
c) The political dimension. The same group has reportedly been linked to $MELANIA, the First Lady’s token. This is context, not evidence of wrongdoing, but any serious criminal investigation into LIBRA would presumably have to consider whatever connection, if any, exists between the two operations.
In the end, the case terminated before the discovery stage, so the court did not determine whether the alleged underlying conduct actually occurred. At the same time, on a Rule 12(b)(6) motion to dismiss, the court takes well-pleaded factual allegations as true. In other words, the court did not disregard the alleged facts: it concluded that, even assuming those facts to be true, they did not amount to a RICO violation. Even more, it that does not preclude refilling them in a forum with jurisdiction -such as Texas or another- beyond the appeal to the Second Circuit.
