The $LIBRA Memecoin Debacle Is a 'Real Setback' for the Crypto Industry

The recent $LIBRA memecoin debacle is the latest in a long list of lessons in how the cryptocurrency industry needs to shape up if it is to see more

The recent $LIBRA memecoin debacle is the latest in a long list of lessons in how the cryptocurrency industry needs to shape up if it is to see more widespread acceptance.

Following the incident, several crypto industry figures have highlighted the need for extractive behavior to be called out, especially in the wake of traders losing billions, Chung said the crypto industry must call out “extractive behavior.”

“The entire $LIBRA memecoin fiasco over the weekend should serve as a reminder that all of us in the DeFi community have a responsibility to make this space safer for users,” Chung said.

Anyone building in the Solana ecosystem, as well as any other, needs to be aware of how quickly hype can build around memecoins, and how little it takes for retail investors to see something as an endorsement.”

Chung said this leaves an open question for decentralized exchanges on the role of verified lists. Jupiter on Solana has a verified “Token List,” which has been a core feature to help users distinguish between real and fake tokens.

He said it is good for helping users avoid fraudulent tokens but being featured on this is also inadvertently seen as an endorsement – through no fault of Jupiter’s.

“After $LIBRA, should there be a higher threshold for inclusion on such lists or potentially other applicable labels?” Chung asked.

Overall, Chung said this entire story is a “real setback” for the crypto space. If it wants to attract new retail users, this is not the way to do it.

He added that it’s time for the entire Solana ecosystem to call out extractive behavior. There are so many use cases for Solana’s incredibly advanced blockchain technology – it’s time to showcase it.

SPACE ID director of business development Harrison Seletsky said the $LIBRA story shows the crypto industry is reaching a tipping point and must reevaluate its narrative to avoid being pigeonholed as a dangerous casino.

He lamented that blockchain has so many more use cases that are being ignored amid the celebrity memecoin trading frenzy, and this needs to stop.

“The $LIBRA memecoin, endorsed by Argentine president Javier Milei, has shown the worst side of cryptocurrency for all the world to see,” Seletsky said.

“We’re now reaching a tipping point where we need to evaluate where the crypto industry is going, what it is we want to achieve, and – crucially – who is being rewarded. Right now, it isn’t the average investor but rather insiders who can pump and dump tokens to benefit their own pockets.

“This shouldn’t be what we’re promoting as an industry.”

Seletsky said $LIBRA is a reminder that it’s important to make sure you know what you’re investing in beyond just hyped narratives, especially in highly unregulated markets.

The now infamous saying by crypto influencers on X, “you can’t cry at the casino”, stops being relevant when it’s not just the odds being stacked against the average person but blatant rigging by insiders. It’s no longer gambling and simply fraud.

“I hope that this incident finally pushes people back into tokens with real value propositions instead of gambling on celebrity-backed coins,” Seletsky advised.

“The open access of crypto means anyone can launch their token – this is one of its use cases, but there are so many more that genuinely drive value back to users.

“It is a real shame if the entire industry gets pigeonholed as a casino where the most likely outcome is the total loss of funds, especially for newcomers interacting in the space for the first time. This can lead to a permanent stain that scares away a larger user base.”