An Argentine president endorsing a joke cryptocurrency was bound to raise eyebrows. Mid February 2025, President Javier Milei used his official social media to draw attention to a new Solana-based “memecoin” called $LIBRA, billing it as a project to spur Argentina’s economy by funding small businesses . The endorsement from the firebrand libertarian leader ignited a frenzy. Investor enthusiasm drove the token’s fully diluted market value to an eye-popping $4.5 billion within hours of launch . But the euphoria was short-lived. By the end of the weekend $LIBRA had plummeted by roughly 90%, a collapse as swift as its rise .
What looked initially like an innovative fundraising idea soon bore the hallmarks of a classic crypto “rug pull.” Blockchain data revealed that insiders controlled the vast majority of $LIBRA tokens – reportedly 95% of the supply was unlocked for the team and early investors. As the public rushed in, these insiders quietly cashed out. Liquidity providers gradually removed funds as prices surged, extracting hefty profits before the crash. One key backer, Hayden Davis of crypto firm Kelsier Ventures, later admitted in a recorded interview that he withdrew about $100 million from $LIBRA’s liquidity pool during the frenzy . This maneuver left everyday holders holding the bag: $LIBRA’s market capitalization imploded from the billions at its peak to only a few hundred million. (Some estimates put the post-crash value around $300 million, down from $4.5 billion .) To many in the crypto community, the pattern was all too familiar – insiders profited handsomely while late-arriving retail buyers saw their investments evaporate. As one blockchain analyst dryly noted, a handful of wallets holding almost all the tokens is typically “a sign of a scam” .
The political backlash was immediate. Facing public outrage, Mr. Milei scrambled to distance himself from the debacle. He deleted the original post and insisted in a television interview that he hadn’t actively promoted $LIBRA, merely “shared” information about it . “I did not promote, I shared,” the president protested, as if drawing a line between endorsement and passing mention. Such semantic defenses did little to mollify his critics. Over the weekend, opposition lawmakers and civic groups excoriated the president for his role in amplifying what turned out to be a speculative scheme. By Monday, a group of Argentine lawyers had filed fraud charges against Milei in federal court, accusing him of participating in a fraudulent operation . They argued that by leveraging his office to publicize $LIBRA, the president lent credibility to a scheme that “wiped out billions” in small investors’ savings . One lawyer leading the complaint, Jonatan Baldiviezo, alleged that Milei was part of “an illicit association” that orchestrated the scam, calling the president’s actions “essential” to the fraud .
Opposition leaders are now openly talking impeachment. They accuse Mr. Milei of violating public ethics laws and defrauding the public trust. Such accusations strike at the heart of Milei’s mandate. The 53-year-old former economist swept to power last year on a promise to uproot Argentina’s endemic corruption and restore trust in government . It is an ironic twist, then, that barely 14 months into his term he finds himself enmeshed in a scandal about financial deceit. The chorus of critics contends that at best Milei showed poor judgment in touting an unvetted crypto venture; at worst, they imply he abetted a fraud. Argentina’s judiciary has taken notice: a federal judge was swiftly assigned to investigate the $LIBRA affair, and the country’s Anti-Corruption Office has launched a parallel inquiry into the token’s launch and money flows . Mr. Milei, for his part, maintains his innocence. He claims he had no prior knowledge of $LIBRA’s insider arrangements and ceased any promotion once he learned of irregularities . His administration says it is cooperating with investigators and will hand over all information needed to determine if any crime was committed .
The president’s allies argue that he, too, was misled by those behind $LIBRA. In a bid to stem the political damage, Milei’s supporters have taken to social media to explain that buying into $LIBRA was never simple for ordinary investors, suggesting that few average Argentines were actually duped. One economic advisor in Milei’s camp even posted a step-by-step account of the arcane process required to purchase the token – ostensibly to show how inaccessible it was – though this explanation backfired. The post was widely misinterpreted as a “tutorial” on how to buy $LIBRA, spurring some speculators to jump back into the coin and momentarily boosting its price again. Such confusion only underscored the chaos of the episode, and it did little to quiet the calls for accountability.
Beyond the political storm, the scandal has sent shockwaves through Argentina’s financial markets. On Monday morning, as news of the fraud allegations and Milei’s connection to $LIBRA dominated headlines, Argentina’s benchmark S&P Merval stock index plunged. The market opened more than 5% down in a knee-jerk reaction . By mid-day the index was still trading about 3% lower than its prior close , with investors clearly rattled. The sell-off reflects fears that the turmoil could distract or derail Milei’s economic agenda – a free-market program that had recently buoyed market sentiment. (Argentine stocks had rallied after his election on hopes of business-friendly reforms. Now, that optimism has given way to new uncertainty.) Even if equities later pared some losses, the message was unmistakable: crypto shenanigans at the highest level of government are now viewed as a risk factor for Argentina’s economy. As one market commentator noted, this debacle highlights how cryptocurrency events can spill into traditional markets, undermining confidence . It is a remarkable development in a country more accustomed to currency crises and debt defaults than crypto-driven stock tremors.
The crypto market itself also felt aftershocks. Solana (SOL) – the blockchain network on which $LIBRA runs – saw its native coin’s price slip amid the fallout . Solana’s reputation has ridden high on a boom in meme tokens and decentralized finance on its platform; now it faces unwelcome scrutiny. Some analysts mused that the “Solana casino” of speculative tokens may have hit its peak . While major cryptocurrencies like Bitcoin and Ethereum were relatively unscathed, the fiasco dented Solana’s credibility and raised fresh questions about insider trading in loosely regulated crypto markets . In short, the LIBRA episode has proven incredibly damaging to crypto’s image, reinforcing skeptics’ views of the sector as a Wild West rife with pump-and-dump schemes.
For President Milei, the memecoin scandal poses a serious test of leadership. It is not the first time he has flirted with dubious financial ventures. Before taking office, Milei had promoted a cryptocurrency investment platform called CoinX, which promised astronomical returns using algorithms and artificial intelligence. That venture, much like $LIBRA, ended in tears: CoinX was shut down by regulators in 2022 for operating without a license, allegedly costing investors large sums. Embarrassingly, Milei was sued by aggrieved investors who said his enthusiastic social media posts lured them into a scam. At the time, Milei again pleaded that he was merely sharing an opinion, not guaranteeing the product’s safety. Such episodes highlight a pattern of impulsivity that critics say is ill-suited to the presidency of a country facing grave economic challenges. Argentina was suffering 40% annual inflation and a fragile economy, conditions that helped fuel Milei’s rise as an anti-establishment figure promising radical change. His mandate is to stabilize and liberalize the economy – dollarising the currency, curbing inflation, and rooting out corrupt politics. Aligning himself, even unwittingly, with a get-rich-quick crypto scheme undermines the technocratic credibility needed to push through those tough reforms.
It is of course possible that Mr. Milei fell victim to poor advice or over-exuberance in championing a high-risk digital token. By his account, the idea was presented as an innovative way to fund entrepreneurs in Argentina’s capital-starved markets – a notion aligned with his libertarian belief in free-market solutions. But the naïveté of that move – failing to vet the token’s opaque mechanics and insider-heavy token distribution – has dented his reputation at home and abroad . It has given ammunition to opponents who were already skeptical of his unorthodox policy ideas, which include abolishing the central bank and adopting the U.S. dollar as Argentina’s currency. If nothing else, the affair illustrates the perils of mixing high office with the hype-prone world of cryptocurrency. As Argentine authorities investigate and investors count their losses, Mr. Milei will have to work hard to rebuild trust – both with the public and with financial markets that are warily eyeing his next moves.
