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What is Milei’s “Libragate” controversy?

An X tweet by Argentine President Javier Milei resulted in a crypto controversy threatening his political position. It all started when Milei endorsed the token LIBRA on X, describing it as a project focused on boosting economic growth by supporting small businesses and startups. 

Given Milei’s 3.8 million followers and the credibility he brings in as a president, the token’s value surged from near zero to $5, briefly reaching a $4-billion market capitalization. 

However, the endorsement was met with public backlash, leading Milei to delete the post just hours later. This triggered a massive sell-off, causing LIBRA’s value to drop rapidly and wiping out millions in investor funds. The sudden rise and fall of LIBRA raised concerns over potential manipulation and the risks of political figures influencing volatile crypto markets. 

Viva La Libertad Project, which is associated with the LIBRA token, includes Milei’s popular catchphrase La Libertad (meaning “long live freedom” in Spanish) in the domain name. The project’s stated purpose was to channel funding for Argentine investors and citizens in a decentralized manner. Its token distribution earmarked 50% tokens for Argentina’s growth, 30% for liquidity and 20% for treasury.

Team behind LIBRA token

Hayden Davis is a 28-year-old American crypto developer and CEO of Kelsier Ventures and had a significant role in the launch of the controversial memecoin LIBRA. He said he was an adviser to Milei, though the latter’s office denied any such connection. Davis is also said to have a role in the launch of Melania Trump’s memecoin, MELANIA.

However, KIP Protocol denied their involvement in a statement released on Feb. 24 via its X handle. The company stated that it was invited by Mauricio Novelli on Feb. 13, 2025, for support in financing Argentine small and midsize enterprises but had nothing to do with the token’s creation.

Dave Portnoy, founder of Barstool Sports, said he was approached by someone connected to the LIBRA memecoin launch to discuss potential promotional opportunities. A crypto firm headed by an anonymous “Meow” was also involved in the launch.

Did you know? The LIBRA incident has drawn comparisons with the launch of the TRUMP coin, which is associated with US President Donald Trump. That venture also involved a memecoin, which experienced a rapid price increase followed by a sharp decline.

Accusations against President Milei concerning LIBRA memecoin scam

Argentine President Javier Milei is facing serious accusations following his endorsement of the cryptocurrency LIBRA. Critics have labeled the incident a potential rugpull scam, alleging that investors were lured in by Milei’s support for the token and invested in the token before it collapsed, leaving many with worthless coins. 

Lawyer Jonatan Baldiviezo, alongside Marcos Zelaya, engineer María Eva Koutsovitis and economist Claudio Lozano, a former head of Argentina’s Central Bank, filed a lawsuit against President Milei, accusing him of fraud. 

Baldiviezo claimed his actions were instrumental in an “illicit association” with the promoters of the coin. The non-governmental organization Observatorio del Derecho a la Ciudad echoed these concerns, filing a case that accused Milei of playing a key role in a scheme that allegedly caused over 40,000 investors to lose more than $4 billion. 

Even Davis, one of LIBRA’s developers, claimed that Milei’s abrupt withdrawal of support contributed to the token’s crash, implying betrayal by the president’s team.

Latin American leaders also expressed concern, with Mexico’s president, Claudia Sheinbaum, stating that “it is extremely serious if confirmed, particularly regarding a president’s authority to promote something private.”

Reportedly, he is under investigation in Spain over his involvement in the LIBRA cryptocurrency scandal. Accusations include fraudulent operations, market manipulation and insider trading after LIBRA’s value crashed, resulting in significant losses for investors.

How did Milei put up his defense?

In response to the accusations, Milei and his office firmly denied any wrongdoing. A statement from the president’s office emphasized that Milei was not involved in LIBRA’s development and that his social media posts merely reflected his broader support for entrepreneurial ventures. 

The statement noted that Milei regularly promotes business projects as part of his free-market philosophy. His endorsement of the KIP Protocol, the developers behind LIBRA, was a part of the broader policy.

An anonymous government official defended Milei in communication with Reuters, arguing that if anyone had been deceived in this situation, it was the president himself. The official emphasized that Milei often supports private initiatives and will continue to do so. In a social media post, Milei dismissed the controversy as a politically motivated attack by his opponents.

Despite these defenses, public skepticism about Milei remains high. Critics argue that Milei’s massive influence on social media should come with responsibility, especially regarding financial endorsements. The scandal has sparked a broader debate on the ethical obligations of political figures in the volatile crypto space, with many questioning whether Milei’s promotion was reckless or intentional.

Did you know? Facing criticism, Milei responded by accusing his political adversaries, whom he disparagingly labeled “filthy rats of the political caste,” of attempting to exploit the situation for their own malicious purposes.

Investigations into the scandal and possible repercussions

The fallout from President Milei’s endorsement of the cryptocurrency LIBRA has triggered a formal investigation and calls for his impeachment. Federal Judge María Servini is leading the probe, examining whether Milei engaged in fraudulent activities related to the token’s sudden rise and crash. 

Notably, the project is under investigation by the US Department of Justice for potential fraud and market manipulation. The probe, led by the fraud section, may expand to involve agencies like the Federal Bureau of Investigation, Securities and Exchange Commission and Department of Homeland Security.

While some opposition politicians have called for an impeachment trial, such an outcome seems unlikely. However, the controversy could damage Milei’s economic credibility, especially as Argentina approaches the 2025 midterm elections.

In addition to the judiciary, Milei’s administration has established its own Investigation Task Unit (UTI), composed of representatives from financial, legal and Anti-Money Laundering organizations. The Anti-Corruption Office has also been activated to probe potential misconduct by government officials, including the president. The UTI will investigate the launch of LIBRA, focusing on the individuals and entities behind the project.

Did you know? This crypto scandal threatens to damage Milei’s public image, which he cultivated as a reform-minded economist promising to control Argentina’s rampant inflation and political corruption.

Is LIBRA a rug pull?

LIBRA’s controversy mirrors a classic rug pull, where developers artificially inflated the token’s value only to drain its liquidity, leaving investors with massive losses — echoing incidents like Hawk Tuah (HAWK) and Froggy (FROGGY), where hype masked hidden risks.

Rug pulls are common in decentralized finance (DeFi) projects where liquidity pools play an important role. Scammers generally create hype around the token using social media, influencers and sometimes bogus endorsements. When many investors buy the cryptocurrency and the price skyrockets, the developers sell off their shares, making big profits and leaving investors holding worthless tokens.

While Milei’s “Libragate” scandal is suspected of being a rug pull, several high-profile rug pulls have occurred in cryptocurrency. For example, Hawk Tuah (HAWK) made headlines after a rug pull incident. Launched by social media celebrity Haliey Welch on Dec. 4, 2024, its value crashed from $500 million to $60 million within just 20 minutes. The incident sparked widespread backlash from both the online community and legal authorities.

Similarly, Froggy (FROGGY) became one of the most oversized rug pulls of 2024. Its playful branding and promises of quick profits attracted many investors. Developers fueled excitement on platforms like X and Reddit, presenting it as a community-driven project with strong backing. 

But once enough funds were gathered, they drained the liquidity, causing the token’s value to collapse. Froggy (FROGGY) ultimately suffered a devastating 99.95% drop from $0.00001577, its peak price.