The $Libra cryptocurrency scandal is an ongoing political scandal that began on February 14, 2025, when the president of Argentina, Javier Milei, promoted a cryptocurrency project called $LIBRA. The price of the meme coin spiked following Milei's promotion but then suffered a severe price drop, leading to allegations of a rug pull scam. This scandal has been dubbed Cryptogate.[1][2][3]The Economist called it the "first big scandal" of Milei's presidency.[4]
In 2021, then-national deputy Javier Milei recommended a crypto platform called CoinX that promised, through automated trading algorithms, to provide high returns of up to 8% per month. CoinX would end up being reported for fraud.[5]
A year after Milei's recommendation, the National Securities Commission banned the financial operation for not having any authorization to offer investments and compared its operation to a Ponzi scheme. Thousands of investors were affected by CoinX and suffered millions in losses.[5] In response to 23 Argentine Federal Police raids on offices and homes in Buenos Aires and the Santa Fe Province investigating the alleged fraud, Milei responded: "I only gave my opinion".[5]
In 2022, Milei promoted the Vulcano Game NFT gaming project, describing it as "very interesting". In the weeks after Javier Milei's announcement, the price of the video game company's token, $VULC, went to $0.[6]
A week before $Libra's launch, Diógenes Casares, co-founder of decentralized finance company Stream Finance, wrote a report mentioning rumors that "a meme coin around Milei [was] being created," including the involvement of bribes. However, he initially thought they were not real.[7][8] American analyst Nick O'Neill stated that "Javier Milei and his team worked for weeks on launching a token" and claimed "with 100% certainty" that payments were involved in the development and launch of $Libra.[9]
On Friday, February 14, 2025, at 6:58 pm Argentina time, the Delaware-registered company Kelsier Ventures created the "$LIBRA" token libra (transl.pound) without publicizing the event, as part of a project called "Viva La Libertad" (transl.Long Live Freedom).[10][11] The CEO of the company Kelsier Ventures is Hayden Davies, who had previously met with Milei at the Presidential Palace in 2024. The one who introduced them was Mauricio Novelli, a young trader who has known Milei since at least 2021.[12]
$Libra promotion
Three minutes after the token's creation, on Friday, February 14, 2025, at 7:01 p.m. Argentina time, Milei shared posts promoting the coin on his X, Instagram, and Facebook accounts.[13] The posts described it as launching a private economic initiative to stimulate economic growth in Argentina through investment in small businesses and startups. Milei stated that the project operated under the token identifier $LIBRA and was structured to facilitate private investment in Argentine enterprises. He posted the project's associated blockchain contract address in the same message.[14][15]
During the time the tweet remained pinned to President Milei's account, the price of $LIBRA quickly rose from $0.000001 to $5.20.[16] Within a few hours, its price dropped to $0.99.[17] The market cap[note 1] of $LIBRA reached $4.6 billion, then fell to only $162 million by February 15.[18]
There was speculation that Milei's account might have been hacked, which was denied by members of La Libertad Avanza, such as Lilia Lemoine, and then by Milei himself when he disassociated himself from the project in a later tweet.[17]
On February 17, after a new tweet from Javier Milei retweeting Darío Epstein, the cryptocurrency rose again, only to collapse again.[20]
Twitter users began to use the platform's Community Notes feature to warn users about a possible rug pull scam under the initial promotional tweet.[14]
Retraction
Hours after the initial promotion, President Milei withdrew his endorsement and deleted the social media post. In a follow-up statement, he acknowledged sharing the information without properly verifying the project's details, explaining that he had no connection to the enterprise. The president characterized the incident as one of many routine social media posts he had made before in support of private enterprise initiatives. President Milei criticized political opponents he accused of attempting to exploit the situation.[21]
At roughly the same time, the company KIP Network Inc. posted a message describing the $LIBRA project as a success and stated that President Milei had never been involved with the project's development.[22]
Hayden Mark Davis, advisor to the launch of $LIBRA, stated that the advertising campaign had been previously agreed upon with the president's team and accused Milei of "betrayal" for abruptly withdrawing his support.[23]
Impact
The number of people affected by the project is around 44,000.[24]
Seventy percent of the total tokens were in the hands of their creators. A few accounts had profits estimated between 70 and 100 million US dollars in a few hours. According to The Economist, "it seems that insiders may have profited from prior knowledge of Mr Milei's post."[4]
The project granted significant profits for the initial owners, who took the opportunity to get rid of the tokens when their price was high, and massive losses for many who invested after being motivated by the Argentine president. The nine founding accounts of the cryptocurrency earned about $87 million from 50,000 people who invested in it and saw its value disappear, with many media outlets describing the situation as characteristic of a scam commonly known as a "rug pull".[1][16][25]
Several economic experts pointed out that those affected had advanced knowledge of digital currencies since, to access said cryptocurrency, it was necessary to have a wallet in Solana, a blockchain known for its low security and reduced operating costs. In addition, the purchase had to be made with the SOL cryptocurrency, which limited participation to people with prior knowledge of the ecosystem.[26]
Mariano Biocca, a specialist in the crypto ecosystem, explained that $LIBRA belongs to a group of assets whose access is considerably complex and requires advanced technical knowledge. According to Biocca, "Up to the information we have, there was no person who exchanged pesos for $LIBRA directly," suggesting that investment in this cryptocurrency was not within reach of the general public or the middle class without experience in cryptocurrencies.[27]
Political repercussions
Rejected proposal to call Karina Milei to testify before the Congress.
The main opposition block, Union for the Homeland (UxP), has heavily criticized the president's actions and has proposed articles of impeachment in response.[28][4]Socialist Party lawmaker Esteban Paulón presented a second bill to initiate impeachment proceedings.[29] However, the initiative does not have enough supporters in the Impeachment Commission to proceed with the proposal.[30]
The Workers' Left Front (FIT) requested the immediate appearance of Milei in the Chamber of Deputies to provide verbal reports on the promotion of the cryptocurrency.[31] Those requests were declined by the Congress.[32]
The Civic Coalition, represented by its president Maximiliano Ferraro, distanced itself from the impeachment proposal. Ferraro stated that, although what happened was serious and could constitute crimes such as money laundering or fraud, impeachment was not the solution. Instead, he advocated for ensuring the proper service of justice and made himself available to collaborate in the relevant investigations.[33]
Republican Proposal (PRO) expressed concern about the incident's economic impact and possible damage to Argentina's credibility. However, they rejected impeachment, calling it "opportunistic."[33]
Possible legal consequences
Over 100 criminal complaints alleging fraud were filed against Milei by February 17.[4] Most accusations were lodged by politicians aligned with Kirchnerism, and a group led by Claudio Lozano[es], the leader of the opposition Popular Unity party, filed charges of fraud against Milei.[34][35] In the first 48 hours following Milei's initial tweet, 112 criminal complaints were filed in the Supreme Court of Argentina.[34]
In response, Milei ordered the Anti-Corruption Bureau to determine whether any member of the national government, including himself, had misbehaved.[36] Additionally, a new body called the "Unit for Investigation Tasks" was created within the Presidency to investigate the entire $Libra project.[37]
International law firms, such as Burwick Law, organized class action lawsuits on behalf of foreign investors who suffered significant losses following the collapse of $LIBRA. These firms sought to group affected parties from various jurisdictions to present cases in international courts, arguing that Milei's cryptocurrency promotion constituted a deceptive practice that led to detrimental investments.[38]
On February 17, 2025, an Argentine law firm operating in the United States and victims of the cryptocurrency scam reported Milei and other responsible parties to the United States Department of Justice and the FBI.[39]
↑ Telechea, Juan Manuel (February 15, 2025). "$Libra: qué pasó con la estafa que promocionó Milei"[Chronicle of a scam announced: the minute by minute of the memecoin that Milei promoted]. Cenital (in Spanish). Retrieved February 18, 2025.
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