I had lunch recently with one young Filipino startup founder, whom I’ll call “Miguel,” whom I met at a recent local blockchain hub in Manila. With DeFi at his side, he’s going all in on a project to deliver access to micro loans to underserved communities around the world. He's ethical, transparent, and community-focused. As he admitted, his greatest challenge isn’t in developing the technology. Instead, it’s up against projects that seem to have endless VC cash available, regardless of the ethics of the business model.

The lawsuit filed against Meteora and Kelsier Labs alleging fraud and market manipulation during the M3M3 token launch isn’t just another crypto scandal. It’s an avoidable disaster for the whole Asian blockchain ecosystem, and especially to the smaller partakers like Miguel and his crew.

DeFi Dreams Crushed By VC Pressure?

The core allegation is simple, and infuriating: The lawsuit claims that Meteora and Kelsier Labs intentionally misrepresented information, artificially inflating the price of M3M3, misleading investors, and causing at least $69 million in losses.

Is it the impossible demands from VCs such as Kelsier Labs to grow quickly and be expected to spit out mind-boggling returns on investment? Did that pressure push Meteora to short-circuit the process, to play some of the same games here?

This topic deals with the inequities born out of the VC funding ecosystem. It looks closely at potential unintended consequences, especially in the sometimes wild west of crypto.

The lawsuit, which asserts XYZ’s practices were deceptive, arrives at a time when investor confidence in the Asian blockchain space is particularly tenuous. We’ve already experienced dozens of rug pulls, pump-and-dumps, and other scams. This M3M3 mess might just be the straw that breaks the camel’s back. When investors lose faith, particularly retail investors who are vital to so many projects, that’s a cause for alarm. This erosion of public trust can choke off future funding for truly worthy and above-board projects.

Picture this— you’re a Filipino investor, you have an interest in investing in blockchain, and then you read this news. You’ll be so glad you second guessed yourself before risking your hard earned dollars!

Eroding Trust, One M3M3 at a Time

I spoke to a local blockchain expert, Sarah, who echoed this sentiment: "It's tough enough for Filipino startups to compete with well-funded foreign projects. When those projects are accused of fraud, it makes it even harder for us to build trust and attract investment."

Meteora claimed M3M3 was a solution to problems in the memecoin investment market, distinguishing it through the involvement of co-founder Ben Chow. That's some serious irony right there!

The SEC, while having reigned back some of their liberty crypto enforcement, continues to still want to go after fraudulent tokens project. Here’s to hoping they throw the book at them and use this case as an example.

Instead, we must start calling for more accountability and transparency in the VC funding process across Asia. We could use new investor protections from market manipulation and abuses, along with new competitive protections for capital formation retail investors.

Kelsier Ventures, KIP Protocol, and Meteora are all defendants in an ongoing class-action lawsuit filed in New York, concerning the LIBRA token. Quite frankly, this should be a big red flag to anyone doing business.

  • Decreased Investor Confidence: Headlines about fraud discourage new entrants.
  • Funding Drought: Legitimate projects struggle to secure capital.
  • Innovation Stifled: Promising startups wither before they can blossom.

This is not simply about punishing the bad actors. It's about creating a level playing field where ethical projects like Miguel's can thrive, and where investors can have confidence that their investments are safe. Now, we are dedicated to building a sustainable and reliable blockchain ecosystem in Asia. Now we need to make sure it works for everybody and not just the usual suspects. This is why we have to stay mad, stay loud and keep pushing for better. Let’s redouble our efforts so that this M3M3 debacle becomes a clear wake-up call to the whole industry. Alternatively, how many more Miguels will have their dreams squashed by VC avarice?

Transparency: The Only Antidote to Greed?

We need to demand greater accountability and transparency in the VC funding process in Asia. We need measures to protect retail investors and ensure fair competition.

Here are a few ideas:

  • Stricter Due Diligence: VCs need to conduct more thorough due diligence on the projects they fund, going beyond just the potential for profit.
  • Increased Regulation: Regulators need to develop clear guidelines and enforce them effectively to prevent fraudulent activities.
  • Community Oversight: Empowering the community to monitor and hold projects accountable can help deter unethical behavior.

The fact that Kelsier Ventures, KIP Protocol, and Meteora face a similar class-action lawsuit in New York over the LIBRA token should raise serious red flags.

This isn't just about punishing the bad actors. It's about creating a level playing field where ethical projects like Miguel's can thrive, and where investors can have confidence that their investments are safe. It's about building a sustainable and trustworthy blockchain ecosystem in Asia, one that benefits everyone, not just a select few. This is why we need to be angry, be vocal, and demand change. Let's make sure this M3M3 mess serves as a wake-up call for the entire industry. Otherwise, how many more Miguels will have their dreams crushed by VC greed?