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$LIBRA cryptocurrency scandal

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The $LIBRA cryptocurrency scandal is an ongoing political scandal that began on Friday, February 14, 2025, at 19:01 Argentina Time, when the President of Argentina, Javier Milei, recommended a cryptocurrency project called $LIBRA. The case had caused wide international repercussions due to the asset appreciating rapidly after the recommendation before falling dramatically in the span of a few hours.[1]

Background

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In 2021, the then-national deputy Javier Milei had recommended a crypto platform called CoinX that promised, through automated trading algorithms, to provide high returns of up to 8% per month in dollars. CoinX would end up being reported for fraud.[2]

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.[2] In response to the 23 raids on offices and homes for alleged fraud carried out by the Argentine Federal Police in the city of Buenos Aires, Buenos Aires Province, and Santa Fe Province on the instructions of Judge Ariel Lijo, Milei then responded: "I only gave my opinion" .[2]

In 2022, Milei promoted the Vulcano Game NFT gaming project, describing it as "very interesting". The video game company's token, $VULC, went to $0 weeks after Javier Milei's announcement.[3]

$LIBRA promotion

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Javier Milei's original tweet posted on Friday, February 14, 2025, at 7:01 p.m. Argentina Time, announced the launch of private economic initiative, aimed at stimulating economic growth in Argentina through investment in small businesses and startups. Milei stated that project operated under the token identifier $LIBRA and was structured to facilitate private investment in Argentine enterprises, and posted the project's associated blockchain contract address.[4][5]

During the time the tweet remained pinned to President Milei's account, $LIBRA quickly rose from $0.000001 to $5.20.[6] Within a few hours, its price dropped to $0.99.[7] The $LIBRA market reached $4.6 billion, then fell $4.4 billion to only $162 million as of February 15.[8]

The tweet by President Javier Milei that launched the $LIBRA project was shared by the President of the Lower House, Martín Menem, by national deputies José Luis Espert and Damián Arabia, and also among supporters of La Libertad Avanza such as Gordo Dan, Agustín Laje, and Emmanuel Danann.[9]

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 acknowledged his disassociation from the project in a later tweet.[7]

On February 17, after a new tweet from Javier Milei retweeting Darío Epstein, the cryptocurrency rose again, only to collapse again.[10]

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.[4]

Retraction

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Hours after the initial promotion, President Milei withdrew his endorsement and deleted the social media post. In a follow-up statement, he acknowledged that he had shared the information without proper verification of 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 who he accused of attempting to exploit the situation.[11]

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 development of the project.[12]

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.[13]

Impact

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The number of people affected by the project was estimated to be around 44,000.[14]

70% 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. ​It was also learned that there were bots trading the currency, which according to specialists in the crypto market[who?] indicates that there were people who had information on when the token would be publicly released come out so they could prepare themselves.

The company behind the token is KIP NETWORK INC, registered in Panama.[4] The CEO of the company KIP NETWORK INC is Julian Peh, a Singaporean citizen who had previously met with Milei at the Libertador Hotel in October 2024. The one who introduced them was Mauricio Novelli, a young trader who has known Milei since at least 2021.[15]

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 obtained from 50,000 people who invested in the cryptocurrency and saw its value disappear, with many media outlets describing the situation as characteristic of a scam.[1][6][16]

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.[17]

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.[18]

Political repercussions

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The impeachment process in Argentina is outlined in the Constitution of Argentina. To initiate it, it is necessary for the Chamber of Deputies to formulate a formal accusation against the president, which must be approved by a special majority. Once approved, the process goes to the Senate, which acts as a judicial court and has the power to remove the president if his guilt is proven based on the charges brought against him.[19]

The Union for the Homeland (UxP) bloc of deputies has been one of the main promoters of the impeachment initiative for this situation. Through their social networks, they expressed that Milei's participation in the scheme was an unprecedented scandal. Cristina Fernández de Kirchner, former Argentine national president, spoke out on the matter, calling the president "the hook for a digital scam" and questioning his actions in promoting a cryptocurrency of dubious origin from his official account.[20] A second bill to initiate impeachment proceedings was presented by Socialist Party lawmaker Esteban Paulón.[21]

The Workers' Left Front (FIT) requested the immediate appearance of Milei in the Chamber of Deputies to provide verbal reports on the promotion of what they considered a "million-dollar scam" spread from his social network accounts.[22]

The Civic Coalition, represented by its president Maximiliano Ferraro, distanced itself from the impeachment proposal. Ferraro stated that, although what happened is 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.[23]

Republican Proposal (PRO) expressed concern about the incident's economic impact and possible damage to Argentina's credibility. However, they rejected the use of impeachment, calling it "opportunistic."[23]

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In the first 48 hours following Milei's initial tweet, 112 criminal complaints were filed in the Supreme Court of Argentina. The accusations against Milei were classified as several crimes under Argentine legislation, such as fraud, criminal conspiracy, and failure to comply with the duties of a public official.[24]

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 together affected parties from various jurisdictions to present cases in international courts, arguing that Milei's promotion of the cryptocurrency constituted a deceptive practice that led to detrimental investments.[25]

On February 17, 2025, an Argentine law firm operating in the United States coupled with victims of the cryptocurrency scam, reported Milei and other responsible parties to the United States Department of Justice and the FBI.[26]

References

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  1. ^ a b "Argentina: la oposición pide investigar a Milei tras promocionar criptomoneda que se desplomó" [«Argentina: opposition calls for investigation into Milei after promoting cryptocurrency that crashed»]. France 24. 2025-02-15. Retrieved 2025-02-18.
  2. ^ a b c "CoinX: el antecedente de Javier Milei recomendando otra supuesta estafa cripto" [CoinX: Javier Milei's background recommending another alleged crypto scam]. Perfil (in Spanish). 2025-02-15. Retrieved 2025-02-18.
  3. ^ "Vulcano y CoinX, los fraudes previos vinculados a Javier Milei" [Vulcano and CoinX, the previous frauds linked to Javier Milei]. Perfil (in Spanish). 2025-02-16. Retrieved 2025-02-18.
  4. ^ a b c Chaves, Facundo (2025-02-16). "La fallida cripto $LIBRA provocó un fuerte impacto político y el Gobierno enfrenta una ofensiva opositora" [The failed crypto $LIBRA caused a strong political impact and the Government faces an opposition offensive]. infobae (in European Spanish). Retrieved 2025-02-18.
  5. ^ ""Viva la Libertad Project": opositores de Milei lanzaron una catarata de críticas y pidieron explicaciones por la promoción de "Libra"" [“Viva la Libertad Project”: Milei's opponents launched a torrent of criticism and demanded explanations for the promotion of "Libra"]. Rosario3 (in Spanish). Retrieved 2025-02-18.
  6. ^ a b "Cómo fue la operatoria con $LIBRA, la criptomoneda que promocionó Javier Milei en redes sociales" [«How the operation with $LIBRA, the cryptocurrency that Javier Milei promoted on social networks, went»]. infobae (in European Spanish). 2025-02-15. Retrieved 2025-02-18.
  7. ^ a b "Polémica por un tuit de Javier Milei en X: promocionó una criptomoneda y luego borró el posteo" [Controversy over a tweet by Javier Milei on X: he promoted a cryptocurrency and then deleted the post]. Cronica. 14 February 2025. Retrieved 18 February 2025.
  8. ^ "Argentinian President Javier Milei shares $LIBRA scam coin on X, $4.4 billion erased from the market". www.mitrade.com. Retrieved 2025-02-18.
  9. ^ Soriano, Por Fernando (2025-02-16). "Cronología de la fallida promoción de la criptomoneda $LIBRA: del tuit de Javier Milei a lo que podría pasar en el Congreso" [Timeline of the failed promotion of the cryptocurrency $LIBRA: from Javier Milei's tweet to what could happen in Congress]. infobae (in European Spanish). Retrieved 2025-02-18.
  10. ^ elDiarioAR (2025-02-17). "Milei reposteó un instructivo para comprar $LIBRA y la criptomoneda volvió a subir para después hundirse otra vez" [Milei reposted an instruction to buy $LIBRA and the cryptocurrency rose again and then sank again]. elDiarioAR.com (in Spanish). Retrieved 2025-02-18.
  11. ^ "El presidente Milei promocionó una criptomoneda y luego admitió que no estaba interiorizado del proyecto" [«President Milei promoted a cryptocurrency and then admitted that he was not aware of the project»]. infobae (in European Spanish). 2025-02-15. Retrieved 2025-02-18.
  12. ^ elDiarioAR (2025-02-16). "KIP Protocol se desliga de la caída de $LIBRA tras el escándalo con Milei" [«KIP Protocol distances itself from the fall of $LIBRA after the scandal with Milei»]. elDiarioAR.com (in Spanish). Retrieved 2025-02-18.
  13. ^ "Hayden Davis: el enigmático especialista en cripto que quedó en el centro del escándalo $LIBRA" [Hayden Davis: The enigmatic crypto specialist at the center of the $LIBRA scandal]. Forbes Argentina (in Spanish). Retrieved 2025-02-18.
  14. ^ "ESCÁNDALO: el token $LIBRA movió millones y se derrumbó en minutos - El Economista" [Milei's cryptocurrency scam: THIS is what happened, according to an EXPERT]. eleconomista.com.ar (in Spanish). Retrieved 2025-02-18.
  15. ^ Jastreblansky, Maia (2025-02-15). "Escándalo cripto: cómo fueron las horas desconcertantes de Milei, antes y después del tuit con el que promocionó $LIBRA" [Crypto scandal: what Milei's disconcerting hours were like, before and after the tweet with which she promoted $LIBRA]. LA NACION (in Spanish). Retrieved 2025-02-18.
  16. ^ Telechea, Juan Manuel (2025-02-15). "$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 2025-02-18.
  17. ^ ""Acá no hay doña Rosa, no hay inversores pyme": un economista de Harvard explicó el negocio detrás de $LIBRA" [“There is no Mrs. Rosa here, there are no SME investors”: a Harvard economist explained the business behind $LIBRA]. infobae (in European Spanish). 2025-02-17. Retrieved 2025-02-18.
  18. ^ "El rol de Javier Milei en el caso $Libra: "No es normal que un presidente publique un link directo para comprar un activo de alto riesgo"" [Javier Milei's role in the $Libra case: "It is not normal for a president to publish a direct link to buy a high-risk asset"]. Canal E (in Spanish). 2025-02-17. Retrieved 2025-02-18.
  19. ^ "La oposición pide juicio político a Javier Milei tras su promoción al polémico token $LIBRA" [Opposition calls for impeachment of Javier Milei after his promotion of the controversial $LIBRA token]. www.ambito.com. Retrieved 2025-02-18.
  20. ^ "La oposición confirma que pedirá juicio político contra Milei por la criptomoneda que promocionó" [The opposition confirms that it will request impeachment against Milei for the cryptocurrency he promoted]. infobae (in European Spanish). 2025-02-16. Retrieved 2025-02-18. 'el gancho de una estafa digital'
  21. ^ Cagliero, Ignacio (18 February 2025). ""Corresponde que se investigue"" ["An investigation must be carried out"]. Página 12 (in Spanish). Retrieved 19 February 2025.
  22. ^ "La oposición argentina confirma que pedirá juicio político contra Milei por la criptomoneda que promocionó" [The Argentine opposition confirms that it will request impeachment against Milei for the cryptocurrency he promoted]. EITB (in Spanish). 2025-02-16. Retrieved 2025-02-18.
  23. ^ a b "El PRO califica de "grave" la criptoestafa, pero no carga sobre Javier Milei y guerrea con el kirchnerismo" [The PRO describes the crypto scam as "serious", but does not attack Javier Milei and fights with Kirchnerism]. LetraP (in Spanish). Retrieved 2025-02-18. oportunista
  24. ^ Elverdin, Por Juan Pablo (2025-02-16). "Hay 112 denuncias penales en la Justicia Federal por el caso de la criptomoneda promocionada por Javier Milei" [There are 112 criminal complaints in the Federal Court for the case of the cryptocurrency promoted by Javier Milei]. infobae (in European Spanish). Retrieved 2025-02-19.
  25. ^ Glezer, Luciana. "Estudios jurídicos internacionales preparan demandas masivas contra Milei por la estafa cripto" [International law firms prepare massive lawsuits against Milei for crypto scam]. www.lapoliticaonline.com (in Spanish). Retrieved 2025-02-19.
  26. ^ Alconada Mon, Hugo (2025-02-17). "Denuncian en Estados Unidos a Javier Milei y a los otros protagonistas del escándalo $LIBRA" [Javier Milei and the other protagonists of the $LIBRA scandal are denounced in the United States]. LA NACION (in Spanish). Retrieved 2025-02-19.
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