TLDR
- Argentina faces political crisis after President Milei’s cryptocurrency endorsement ends in $4.5 billion market collapse
- Text messages reveal alleged payments to president’s sister by LIBRA token creator
- Stock market drops 6% amid impeachment threats and corruption probe
- Multiple crypto industry figures implicated in token’s rapid rise and fall
- Coincides with FTX beginning to repay customers after 27-month bankruptcy process
A cryptocurrency scandal has erupted in Argentina, threatening the presidency of Javier Milei and exposing alleged corruption at the highest levels of government, all stemming from a single social media post about a digital token.
The controversy began on February 14, when President Milei posted on the social platform X about LIBRA, a new cryptocurrency built on the Solana blockchain. The presidential endorsement caused the token’s value to skyrocket, reaching a market cap of $4.5 billion within hours of its launch.
What happened next sent shockwaves through both political and financial circles. The token’s value plunged 80% in just two hours as insider wallets began selling their holdings, leading to massive losses for retail investors who had bought into the presidential endorsement.
The situation worsened when Milei deleted his original post and attempted to distance himself from the project, claiming he had no knowledge of its details. This reversal prompted immediate backlash from opposition parties and triggered a wider investigation into potential government corruption.
Political Fallout Intensifies
The deepest blow came on February 18, when text messages emerged showing Hayden Davis, a key figure behind the LIBRA token, claiming to have bought influence within Milei’s inner circle. Davis specifically mentioned making payments to Karina Milei, the president’s sister and a powerful figure in the current administration.
Argentina’s stock market reacted sharply to the growing scandal, dropping almost 6% as news spread of a formal probe into the president’s involvement. Opposition leaders have begun calling for impeachment proceedings, creating the biggest crisis of Milei’s presidency.
The controversy has pulled in several well-known figures from the cryptocurrency and social media worlds. Dave Portnoy of Barstool Sports admitted to early involvement in the project but claimed he received a refund. Meanwhile, Ben Chow, co-founder of DeX Meteora where LIBRA was launched, resigned from his position as the scandal unfolded.
Blockchain analysts have traced approximately $100 million in profits flowing to insider wallets during the token’s collapse. The current market value of LIBRA sits at just over half a million dollars, representing a near-total loss for most investors.
The incident has had ripple effects across the cryptocurrency market. Solana, the blockchain platform hosting the LIBRA token, saw its native SOL token price fall. Other memecoins, particularly those associated with political figures, experienced rapid selling as investor confidence wavered.
Market Impact Widens
The scandal’s timing coincides with major developments in the cryptocurrency industry’s recovery from previous crises. FTX, the collapsed crypto exchange, has begun returning funds to customers after a 27-month bankruptcy process, releasing $1.2 billion to smaller claim holders.
Chris Chung, founder of Solana-based platform Titan, expressed concern about the incident’s impact on retail investor trust. “The cryptocurrency space needs to build trust, not destroy it,” Chung stated in a public response to the crisis.
Argentine financial regulators have announced plans to investigate all parties involved in the LIBRA launch. The probe will examine the relationship between the token’s creators and government officials, focusing particularly on the alleged payments to the president’s sister.
The scandal has highlighted the intersection of cryptocurrency speculation and political power. Davis, who also created the MELANIA token, attempted to defend the project, stating it was “not a rug pull” but rather a failed plan, though market data suggests a coordinated selling effort by early investors.
International observers have begun monitoring the situation, as the combination of political scandal and financial losses raises questions about cryptocurrency regulation and political endorsements of digital assets.
Local media reports indicate growing public anger in Argentina, where citizens have faced ongoing economic challenges. The revelation that government officials may have profited from a scheme that cost retail investors billions has sparked protests in several cities.
The investigation continues to expand, with authorities examining blockchain transactions, communication records, and financial transfers between all parties involved in the LIBRA project.
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