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Cryptocurrency He was promoted in January US First Lady Melania Trump was part of an elaborate fraud that “exploited celebrity association and ‘false fame’ to sell legitimacy to unsuspecting investors,” a new legal document has claimed.
In April, cryptocurrency investors filed a federal class action lawsuit against Benjamin Chow, co-founder of cryptocurrency exchange Meteora, and Hayden Davis, co-founder of cryptocurrency venture capital firm Kelser Labs, among other defendants, accusing them of defrauding millions of dollars using a single memcoin, M3M3.
Prosecutors later filed an amended complaint, expanding the allegations to include racketeering activity. They alleged that the pair colluded to rig the market for LIBRA, a coin Promoted by Javier MailePresident of Argentina, whose value collapsed shortly after its launch.
On Tuesday, prosecutors asked the court for permission to file another amended complaint, based on information allegedly provided by an anonymous whistleblower. With Zhao acting as “leader,” the pair launched, pumped and dumped at least 15 cryptocurrencies, the proposed second amended complaint alleges, including $MELANIA. The scheme allegedly caused millions of dollars in losses to unwitting investors.
The proposed second amended complaint says Trump, who is not named in the lawsuit, was used “as a front for a crime engineered by Meteora and Kelsier.” The filing also states that prosecutors do not allege that Trump or Miley “managed the scheme.”
“This case could clarify fundamental expectations for token launches and disclosures in the United States,” says Max Burwick, senior managing partner at law firm Burwick Law, which is representing the plaintiffs. “We recognize that many across the cryptocurrency industry and regulatory community are watching closely.”
The White House, Chao and Davis did not immediately respond to requests for comment.
By the time Zhao and Davis launched Project Melania in January, they had refined a recurring six-step “playbook” for combating pump-and-dump fraud, investors claim.
According to the proposed Second Amended Complaint, Meteora controls the technology infrastructure, while Kelsier provides the necessary capital and coordinates the promotional campaign, relying heavily on credibility borrowed from public figures or brands. Together, the filing claims, they effectively control a network of cryptocurrency wallet “snipers” that seize large amounts of coins at artificially discounted prices, then release them onto the market as ordinary investors pile in.
“I’m going to try to tell all my friends early,” Davis told an acquaintance before $MELANIA’s launch, in a private exchange that was presented in redacted form as evidence in the lawsuit. “I’m about to launch the biggest token ever.” (It is unclear whether Davis is referring to $MELANIA or $LIBRA.)