Argentina’s President Javier Milei is facing serious legal and political consequences following his promotion of the $LIBRA cryptocurrency token. His endorsement triggered a market surge followed by a dramatic collapse, resulting in billions of dollars in losses for investors. The scandal has sparked fraud charges, political backlash, and calls for impeachment.
Legal Accusations and Political Fallout
A group of prominent Argentine lawyers, including Jonatan Baldiviezo and former Central Bank president Claudio Lozano, have filed criminal fraud charges against Milei. The plaintiffs claim that Milei’s social media post promoting $LIBRA was central to a “rug pull” scheme, violating Argentina’s Public Ethics Law. They argue that Milei’s actions directly enabled fraudulent market manipulation. In response, opposition figures like lawmaker Leandro Santoro condemned the incident as a national embarrassment, demanding an impeachment trial.
The $LIBRA Token Collapse Explained
On Friday, President Milei promoted $LIBRA on X, presenting it as part of the Viva La Libertad Project, a crypto initiative intended to support small businesses. Following his endorsement, the token’s value skyrocketed to a $4.5 billion market cap. However, hours later, Milei deleted his post, citing a lack of due diligence. This sudden reversal caused the token’s value to plummet by 90%, erasing over $4 billion from its market capitalization. According to Kobeissi Letter and Bubblemaps, insiders liquidated approximately $87 million worth of tokens during the crash.
GeckoTerminal data shows that $LIBRA traded at around $0.3 at press time, down approximately 26% in the past 24 hours and 92% from its peak.
Milei’s Defense and Official Investigations
Milei distanced himself from the project, stating that he had no connection to the developers and was misled about its legitimacy. The President’s Office confirmed that although Milei met with representatives from KIP Protocol, the token’s developer, he was not involved in its creation. The Anti-Corruption Office has since launched an investigation to determine if any member of the government, including Milei, engaged in misconduct.
Market Impact and Expert Insights
Crypto security expert Pablo Sabbatella flagged the $LIBRA token as a likely scam, highlighting several warning signs, such as the token’s sudden creation just before Milei’s post and its registration on the Solana blockchain. Sabbatella identified classic “pump and dump” tactics, where large investors bought in at low prices before selling off during the peak, with some accounts reportedly profiting over $4 million within hours.
Political Reactions and Threats of Impeachment
The scandal has ignited a political firestorm. The opposition coalition, Union for the Homeland, announced it would pursue an impeachment trial, framing the incident as a blow to Argentina’s international reputation. However, Milei’s allies, including Security Minister Patricia Bullrich, dismissed the impeachment calls as politically motivated, defending Milei’s social media activity as a personal expression rather than an official endorsement.
Broader Implications and Future Outlook
The $LIBRA scandal underscores the risks of high-profile endorsements in volatile markets like cryptocurrency. It also highlights the complex relationship between politics and digital assets in Argentina, where economic instability has driven a surge in crypto adoption. As investigations continue, the outcome could significantly impact Milei’s presidency and Argentina’s regulatory stance on digital currencies.
Conclusion
President Javier Milei’s promotion of the $LIBRA token has resulted in a major scandal, shaking Argentina’s political and financial landscape. With ongoing investigations, potential impeachment proceedings, and millions in investor losses, the situation serves as a cautionary tale of the intersection between political influence and cryptocurrency markets.
