What is the controversy surrounding Milei’s “Libragate”?
A tweet on X by Argentine President Javier Milei sparked a cryptocurrency controversy jeopardizing his political standing. It began when Milei advocated for the token LIBRA on X, portraying it as an initiative aimed at fostering economic growth by aiding small businesses and startups.
With Milei’s 3.8 million followers and the authority he holds as president, the token’s value skyrocketed from nearly nothing to $5, momentarily achieving a market capitalization of $4 billion.
Nonetheless, the endorsement faced public criticism, prompting Milei to remove the post within hours. This led to a significant sell-off, causing LIBRA’s value to plummet swiftly, erasing millions in investor funds. The abrupt rise and subsequent fall of LIBRA raised alarms regarding possible manipulation and the dangers of political figures affecting volatile cryptocurrency markets.
The Viva La Libertad Project, associated with the LIBRA token, incorporates Milei’s well-known phrase La Libertad (which translates to “long live freedom” in Spanish) in its domain name. The project’s declared aim was to direct funding to Argentine investors and citizens in a decentralized fashion. Its token allocation designated 50% for Argentina’s development, 30% for liquidity, and 20% for the treasury.
Team behind the LIBRA token
Hayden Davis, a 28-year-old American cryptocurrency developer and the CEO of Kelsier Ventures, played a notable role in the launch of the contentious memecoin LIBRA. He claimed to be an adviser to Milei, although the president’s office refuted this connection. Davis is also reported to be involved in the launch of Melania Trump’s memecoin, MELANIA.
Nevertheless, KIP Protocol distanced itself from any involvement in a statement issued on Feb. 24 via its X account. The firm explained that it was invited by Mauricio Novelli on Feb. 13, 2025, to assist in financing Argentine small and mid-sized enterprises, but had no connection to the creation of the token.
Dave Portnoy, founder of Barstool Sports, revealed that he was approached by someone linked to the LIBRA memecoin launch to explore potential promotional avenues. A cryptocurrency firm led by an unidentified “Meow” was also engaged in the launch.
Did you know? The LIBRA episode has drawn parallels with the launch of the TRUMP coin, which is linked to US President Donald Trump. That project also involved a memecoin that saw a rapid price surge followed by a swift downturn.
Allegations against President Milei regarding LIBRA memecoin scam
Argentine President Javier Milei is facing severe allegations following his support for the cryptocurrency LIBRA. Critics have termed the event a possible rugpull scam, claiming that investors were enticed by Milei’s backing for the token and invested before it crashed, leaving many with worthless coins.
Attorney Jonatan Baldiviezo, along with Marcos Zelaya, engineer María Eva Koutsovitis, and economist Claudio Lozano, a former head of Argentina’s Central Bank, initiated a lawsuit against President Milei, accusing him of fraud.
Baldiviezo asserted that his actions played a significant role in an “illicit association” with the coin’s promoters. The non-governmental organization Observatorio del Derecho a la Ciudad echoed these claims by filing a suit that alleged Milei was instrumental in a scheme that purportedly led to over 40,000 investors losing more than $4 billion.
Even Davis, one of LIBRA’s developers, stated that Milei’s sudden retraction of support contributed to the token’s downfall, suggesting a betrayal by the president’s team.
Leaders in Latin America also voiced concerns, with Mexico’s president, Claudia Sheinbaum, commenting that “it is extremely serious if verified, especially concerning a president’s authority to endorse something private.”
Allegedly, he is under investigation in Spain regarding his role in the LIBRA cryptocurrency scandal. Claims include fraudulent activities, market manipulation, and insider trading following the decline in LIBRA’s value, resulting in significant investor losses.
What defense did Milei present?
In reaction to the allegations, Milei and his team categorically rejected any misconduct. A communication from the president’s office highlighted that Milei was not involved in LIBRA’s creation and that his social media remarks simply mirrored his broader enthusiasm for entrepreneurial initiatives.
The statement emphasized that Milei frequently endorses business projects as part of his free-market ideals. His support of the KIP Protocol, which is associated with LIBRA, was part of his wider policy approach.
An unidentified government official defended Milei in discussions with Reuters, positing that if anyone had been misled in this scenario, it was the president himself. The official stressed that Milei frequently champions private initiatives and intends to persist in doing so. In a social media post, Milei dismissed the controversy as a politically motivated strike from his adversaries.
Despite these defenses, public doubts about Milei remain prevalent. Critics contend that Milei’s substantial influence on social media should entail responsibility, especially concerning financial endorsements. The scandal has ignited a wider discourse on the ethical responsibilities of political leaders.
in the unpredictable crypto sector, with numerous individuals debating whether Milei’s backing was irresponsible or deliberate.
Did you know? Responding to backlash, Milei accused his political rivals, whom he derogatorily named “filthy rodents of the political elite,” of trying to manipulate the circumstances for their own malicious agendas.
Investigations into the scandal and potential consequences
The repercussions of President Milei’s endorsement of the cryptocurrency LIBRA have instigated a formal investigation and demands for his impeachment. Federal Judge María Servini is spearheading the inquiry, scrutinizing whether Milei engaged in deceitful practices concerning the token’s abrupt rise and fall.
Importantly, the initiative is under examination by the US Department of Justice for possible malfeasance and market manipulation. The investigation, led by the fraud division, might broaden to include agencies such as the Federal Bureau of Investigation, Securities and Exchange Commission, and Department of Homeland Security.
While certain opposition lawmakers have urged for an impeachment trial, such an event appears improbable. Nonetheless, the intrigue could impair Milei’s economic reliability, especially as Argentina nears the 2025 midterm elections.
Aside from the judiciary, Milei’s government has set up its own Investigation Task Unit (UTI), consisting of members from financial, legal, and Anti-Money Laundering bodies. The Anti-Corruption Office has also been activated to investigate potential improprieties by governmental officials, including the president. The UTI will scrutinize the initiation of LIBRA, concentrating on the individuals and organizations affiliated with the project.
Did you know? This crypto scandal poses a risk to Milei’s public persona, which he developed as a reform-oriented economist committed to tackling Argentina’s soaring inflation and political misconduct.
Is LIBRA a rug pull?
LIBRA’s dispute resembles a typical rug pull, where developers artificially boosted the token’s worth only to deplete its liquidity, leaving investors facing substantial losses — reminiscent of events like Hawk Tuah (HAWK) and Froggy (FROGGY), where excitement concealed underlying dangers.
Rug pulls frequently occur in decentralized finance (DeFi) projects where liquidity pools are crucial. Scammers typically generate excitement around the token using social networks, influencers, and at times fraudulent endorsements. When numerous investors purchase the cryptocurrency and the value surges, the developers liquidate their holdings, reaping significant profits and leaving investors burdened with worthless tokens.
While Milei’s “Libragate” controversy is suspected of embodying a rug pull, several notable rug pulls have taken place in cryptocurrency. For instance, Hawk Tuah (HAWK) garnered attention following a rug pull event. Launched by social media influencer Haliey Welch on Dec. 4, 2024, its value plummeted from $500 million to $60 million in merely 20 minutes. The incident incited widespread outrage from both the online community and judicial authorities.
Similarly, Froggy (FROGGY) emerged as one of the largest rug pulls of 2024. Its whimsical branding and claims of rapid profits attracted numerous investors. Developers incited enthusiasm on platforms such as X and Reddit, presenting it as a community-driven venture with solid support.
However, once sufficient funds were amassed, they siphoned off the liquidity, resulting in the token’s value nosediving. Froggy (FROGGY) ultimately faced a staggering 99.95% decline from $0.00001577, its peak price.