Argentina’s President Javier Milei is at the center of a growing controversy following his brief promotion of the LIBRA token, a cryptocurrency that surged and crashed suddenly. On Friday, February 14, Milei took to X to endorse the token, claiming it would “incentivize the growth of the Argentine economy” by providing funding to small businesses, according to a report by the Associated Press. The token’s value skyrocketed by an astonishing 3,223% shortly after his announcement, drawing significant attention from investors. However, just five hours later, Milei deleted the post, stating he was unaware of the project’s specifics. This sudden reversal triggered a 90% drop in the token’s value, leaving investors reeling and sparking accusations of misconduct and a potential rug pull of the token.
Government Response and Political Backlash
Milei’s administration has downplayed the incident, describing the promotion as a routine effort to support entrepreneurial ventures. The president has also launched an internal investigation to determine whether any government officials acted improperly concerning the token. Despite these assurances, the move has drawn fierce criticism from Argentina’s political opposition. Former President Cristina Fernández de Kirchner has accused Milei of deceiving the public, while some lawmakers are calling for a congressional investigation and even impeachment proceedings. The controversy has intensified scrutiny of Milei’s leadership and raised questions about the integrity of his administration.
Legal Action and Fraud Allegations
The fallout from the LIBRA token’s crash has escalated into legal action. On Sunday, a group of Argentine lawyers filed a formal fraud complaint against Milei, likening his actions to a “rug pull” scam, a scheme in which developers promote a project to attract investors before abruptly abandoning it, leaving investors with worthless assets. Lawyer Jonatan Baldiviezo, one of the complainants, argued that Milei’s involvement was a critical factor in the alleged fraud, suggesting that his endorsement lent credibility to the project. Argentina’s Anti-Corruption Office has taken up the case, and a judge is expected to review the allegations later this week.
Details of the LIBRA Token Project
The LIBRA token was developed by KIP Protocol and Hayden Davis, who marketed it as a means to support small businesses in Argentina. Investors could purchase the token through a website that prominently featured Milei’s well-known slogan, further tying the project to his public image. However, following the token’s crash, Davis posted a video on X blaming Milei for the collapse. He claimed that despite prior commitments, Milei and his team unexpectedly withdrew their support and removed all related social media posts, undermining the project’s credibility and value. Milei, in response, has dismissed his critics as political opportunists and denied any direct ties to the project.
Evidence of Insider Activity and Market Manipulation
Blockchain analysts have uncovered evidence suggesting potential insider activity surrounding the LIBRA token’s launch. According to Lookonchain, an analytics firm, an unknown insider may have received $5 million worth of Circle’s USD Coin (USDC) as compensation. Additionally, someone reportedly anticipated the token’s launch but entered the market too late, resulting in a loss of over $5.3 million in cryptocurrency. Rumors have circulated that the wallet in question may belong to Dave Portnoy, a prominent figure who received LIBRA tokens for promotional purposes and had funds prepared to invest in advance.
Further investigation by Bubblemaps, another blockchain analytics group, has linked an on-chain wallet to the creator of LIBRA, who allegedly cashed out $87 million following the token’s launch. This wallet also engaged in “sniping,” a practice of quickly buying tokens at a low price before their value rises, earning $6 million through side addresses funded via a cross-chain protocol. Bubblemaps has identified similar patterns of activity in other tokens tied to the same wallet, including TRUST, KACY, VIBES, and HOOD, which they suspect were part of pump-and-dump schemes. The group estimates that the creator of LIBRA has amassed over $100 million from these projects.
Comparisons to Other Cryptocurrency Scams
The LIBRA token incident has drawn comparisons to other cryptocurrency controversies, notably the Official Melania Meme coin, which has lost over 84% of its value since its launch. Bubblemaps noted similarities in the on-chain activity between the two projects, raising concerns about a broader pattern of market manipulation within the cryptocurrency space. These findings have fueled calls for greater regulation and oversight of digital assets, particularly those promoted by high-profile figures such as politicians and celebrities.
Implications for Milei’s Presidency
The LIBRA token scandal poses significant challenges for Milei’s presidency, both politically and legally. As the Anti-Corruption Office and judicial authorities investigate the allegations, the outcome could have far-reaching consequences for his administration’s credibility and Argentina’s economic policies. The incident has also highlighted the risks associated with cryptocurrencies and the potential for influential figures to impact volatile markets, intentionally or otherwise. For now, Milei remains defiant, but the mounting pressure from political opponents, legal challenges, and public scrutiny suggests that this controversy will not be resolved quickly or quietly.
