Argentina’s President, Javier Milei, is under intense scrutiny for endorsing the little-known cryptocurrency, LIBRA.
His public backing briefly boosted the token’s value, only for it to dramatically crash soon after, leading to allegations of misconduct and potential legal breaches.
Investigations by the Anti-Corruption Office Into LIBRA Promotion
President Milei sparked excitement on February 14 by promoting the LIBRA meme coin, touting its potential to bolster Argentina’s economy and aid small businesses. This endorsement caused a frenzy in the market, driving the token’s market cap past $4 billion within hours. However, insiders took advantage of this surge, cashing out over $100 million in profits.
The excitement was short-lived as it emerged that the meme coin lacked substance: the website was hastily created just before launch, and a substantial amount was cashed out within the initial three hours. The sudden crash in value indicated a classic pump-and-dump scheme.
Criticism mounted swiftly, prompting Milei to retract his support and delete his post, citing a lack of understanding of the project. The president clarified that upon gaining more insight, he chose to discontinue promoting it.
Investigation Launched Amid Political Fallout and Impeachment Threats
The Argentine presidential office attempted to downplay the incident as a standard business promotion related to blockchain financing. Nevertheless, a probe has been initiated to examine potential improper actions by officials, including Milei, and scrutinize the activities of KIP Protocol, the entity tied to LIBRA.
An Investigation Task Unit (UTI) has been set up by the president, comprised of financial, crypto, and anti-money laundering experts to delve into the circumstances surrounding LIBRA’s launch and involved parties.
The controversy has transcended the crypto realm, triggering a political crisis as critics accuse Milei of endangering investors and the public with his promotion of a speculative asset. Lawmaker Gabriela Estevez labeled the incident as a serious financial scam, likening it to the infamous pump-and-dump scheme.
Impeachment threats have surfaced, with a political faction initiating proceedings due to the unprecedented nature of the scandal. Governor Axel Kicillof highlighted the gravity of the situation, cautioning investors about being misled and drawing parallels to a cryptocurrency pyramid scheme.
The fallout from LIBRA’s debacle underscores the vulnerability of the meme coin market following high-profile political endorsements like TRUMP's launch. Vitalik Buterin’s prior warnings about the risks posed by political meme coins have been underscored, with fraudsters exploiting this trend to the detriment of unsuspecting investors.