 "Argentina's President Javier Milei attends the 55th annual World Economic Forum (WEF) meeting in Davos, Switzerland, January 23, 2025. File Image/Reuters")
Argentine President Javier Milei is facing growing scrutiny after promoting a cryptocurrency token called $LIBRA, which saw a dramatic rise and crash within hours, leading to significant investor losses.
Federal prosecutors have opened an investigation into whether Milei was complicit in fraud, criminal association, or a breach of duty. Judge María Servini has been randomly assigned the case following more than 100 complaints filed in Argentina and the United States.
Milei had posted on X (formerly Twitter) on Friday night, endorsing the little-known cryptocurrency, stating that it aimed to stimulate Argentina’s economy by funding small businesses and startups.
The endorsement caused the token’s value to surge, reaching nearly $5, only for it to plummet within hours . Amid widespread backlash, Milei deleted his post and denied any involvement with the cryptocurrency’s development.
Accusations of fraud against Javier Milei
Critics argue that the event resembles a classic “rug pull” scheme, where developers lure investors by inflating a token’s value before cashing out, leaving investors with worthless assets.
Argentina’s fintech chamber has acknowledged that the case could indeed amount to such a scheme, while a lawsuit filed by the Observatorio del Derecho a la Ciudad NGO accuses Milei and other government officials of illicit association, fraud, and dereliction of duty.
“We denounce Milei as being part of an illicit association that organised a scam with the $LIBRA cryptocurrency, affecting more than 40,000 people and resulting in losses exceeding $4 billion,” the NGO said in a statement.
Opposition lawmakers, including Leandro Santoro of the Peronist coalition, have called for impeachment proceedings against Milei, describing the incident as an “international embarrassment.” The Buenos Aires Stock Exchange reacted negatively, with Argentina’s S&P Merval stock index tumbling by 5.6 per cent on Monday.
Former President Cristina Fernández de Kirchner also weighed in, calling Milei a “crypto-scammer.” Some lawmakers have proposed a parliamentary commission to further probe Milei’s role in the debacle.
Javier Milei’s defence
A government source claimed that Milei was actually the biggest victim of the fraud. “The only one on the face of this earth who was cheated is Milei,” the source told Reuters anonymously.
The administration maintains that Milei frequently promotes private projects and was merely offering support to an initiative he believed would benefit Argentina’s economy.
Meteora, the crypto exchange that launched $LIBRA, has denied any involvement in the token’s creation. The company “never had any access to the tokens or to Milei,” said co-founder Ben Chow. The platform had previously hosted the $Trump meme coin, which also saw a rapid rise and fall in value earlier this year.
The President’s Office released a statement on Saturday denying any ties between Milei and the cryptocurrency developers . However, it admitted that Milei and his administration had recently met with representatives of KIP Protocol, the entity behind $LIBRA.
The government also announced that the Anti-Corruption Office would investigate the matter to determine whether any wrongdoing had occurred.
Hayden Mark Davis, one of the individuals associated with KIP Protocol, blamed Milei for the token’s collapse. In a video posted online, Davis claimed that Milei and his team had suddenly withdrawn support, leading to the crash.
What this means for Javier Milei’s political future
While analysts believe that impeachment proceedings are unlikely to succeed due to a lack of legislative support, the scandal threatens to derail Milei’s reform agenda ahead of midterm elections.
His reputation as a pro-market reformer has taken a significant hit, and political opponents are seizing the opportunity to challenge his leadership .
Beyond the legal challenges, economic experts warn that the incident could undermine investor confidence in Argentina, particularly in its already volatile cryptocurrency sector.
Prominent digital fraud expert Javier Smaldone described the event as “one of the most blatant rug pulls in recent history,” estimating that nearly $107 million had been siphoned away, with total transactions related to the scam reaching approximately $4.4 billion.
The scandal also raises questions about the role of social media in financial markets. Milei’s rapid endorsement and subsequent deletion of the post played a critical role in the cryptocurrency’s price movements.
Legal experts suggest that authorities could investigate his actions under Argentina’s Public Ethics Law, which prohibits public officials from engaging in activities that could create conflicts of interest.
Milei remains defiant, claiming that his political enemies are using the scandal to undermine him. “This increases our conviction to kick them in the ass,” he said in an X post.
However, opposition forces continue to push for a deeper investigation, with calls for Milei to testify before Congress and for forensic analysis of his social media accounts.
Also Watch:
With inputs from agencies