Hayden Davis and the Libra Token Freeze: Understanding the Implications of Frozen Crypto Funds

On November 11, an Argentine court ordered the freezing of Libra tokens owned by Hayden Davis, a prominent figure in the Libra scandal, and two suspected associates due to suspicions of bribery involving public officials. This action raises important questions about the prerogative of crypto issuers to freeze assets—an issue that strikes at the heart of cryptocurrencies’ foundational principle of decentralization.

Key Takeaways

On November 11, an Argentine court froze Libra tokens belonging to Hayden Davis, suspecting misuse for bribery.
Centralized issuers like Circle can freeze crypto assets, challenging the core principle of “not your keys, not your coins.”
The Libra token, launched as a memecoin, has led to significant financial losses for investors.
Freezing mechanisms exist across multiple blockchains, allowing for centralized control over user assets.
Risks associated with asset freezing necessitate careful risk management by token holders.

Hayden Davis's Libra tokens got frozen via the Argentine judge

The Freezing of Hayden Davis' Tokens

Hayden Davis, a young crypto entrepreneur, was involved in controversial promotional efforts for memecoins such as Libra, Melania, and YZY, enlisting high-profile figures like Argentine President Javier Milei and U.S. First Lady Melania Trump. Despite facing legal challenges, Davis has not yet been convicted, but his schemes have reportedly resulted in significant losses for retail investors, estimated at around $250 million.

The Libra token was launched on February 14 and was heavily promoted by Milei, yet it had no substantial use case, leading to a rapid price collapse shortly after launch. Davis, through his company Kelsier Ventures, allegedly profited around $100 million from Libra, mirroring his earnings from the Melania token.

Davis employed a trading strategy called “crypto sniping,” which exploits automation for high-speed trading during new token launches and price fluctuations. His advanced knowledge of upcoming projects allowed Kelsier Ventures to make profitable trades just moments before public announcements.

In the case of Libra, he is accused of using a “one-sided liquidity” strategy, masking sell orders and leaving buy data visible, deceiving investors into thinking there was significant momentum. This tactic was apparently also utilized during the sale of Melania tokens.

In May, a U.S. judge directed Circle to freeze $57 million in USDC connected to the Libra launch. However, reports indicate that by August 20, these tokens were unfrozen, restoring access to Davis and his team.

The exact method of freezing the Libra tokens remains unclear. Libra operates on the Solana blockchain, which features a temporary freeze account option. Circle may have used this capability to freeze USDC linked to the Libra project, although it is not confirmed in this instance. Chainalysis indicated that government authorities can freeze an individual's assets by transferring them to a government-controlled wallet.

NEW: $LIBRA | 🇦🇷 Argentine judge freezes funds related to memecoin $LIBRA promoted by President @JMilei.
The prosecution’s investigations revealed that Hayden Davis transferred $507,500 via @bitget just 42 minutes after President Milei tweeted a selfie with him. pic.twitter.com/QsSFxXD8rH — crypto.news (@cryptodotnews) November 11, 2025

Understanding Token Freezing in Blockchain

While the method of freezing Libra tokens is not explicitly known, centralized stablecoin issuers clearly have the ability to freeze user funds. The GENIUS Act, enacted on July 18, mandates that both U.S. and foreign stablecoin issuers freeze funds when warranted. This requirement treats stablecoin issuers as financial institutions, compelling compliance with relevant laws.

Even prior to the GENIUS Act, issuers had frozen funds to combat hacks or scams. For instance, after the Cetus Protocol hack on May 22, 2025, which stole $200 million in crypto, the Sui Foundation froze $162 million of the compromised tokens, although concerns about excessive control emerged.

Following this incident, Bybit’s Lazarus Security Lab investigated several leading blockchains’ capacity to freeze user assets. Their report, released on November 12, 2025, analyzed the code across 166 blockchains, revealing that 16 of them can freeze holders' funds unilaterally. This centralization contradicts the fundamental principle of decentralization in crypto.

Research indicated that 16 blockchains currently possess features to freeze user assets, and 19 more may adopt this capability in the future. Various blockchains implement hardcoded freezing (public blacklist), configuration file-based freezing (private blacklist), and on-chain smart contract freezing. Notable blockchains with such mechanisms include BNB Chain, Sui, VeChain, and Cosmos.

This report aims to raise awareness about existing asset freeze mechanisms so that token holders can make informed decisions about their investments. Given instances of individuals claiming their crypto funds were frozen without clear justification, robust risk management practices have become essential for all crypto investors.