Argentine President Javier Milei's public support for the little-known cryptocurrency LIBRA has drawn strong criticism.
His open endorsement briefly boosted the token's value, but it later plummeted, triggering accusations of misconduct and potential legal violations.
Anti-Corruption Office Launches LIBRA Promotion Investigation
On February 14, President Milei promoted the LIBRA meme coin on X, claiming that the meme coin could revitalize the Argentine economy and benefit small businesses.
His statements triggered a sharp rise in the token's price, with its market capitalization exceeding $4 billion within hours. This surge allowed insiders to realize over $100 million in profits.
However, the rally did not last long. The meme coin lacked tokenomics, the website was created just hours before launch, and over $87 million was cashed out in the first 3 hours.
The token's value soon plummeted, revealing a typical pump and dump scam.
"Within minutes of launch, several large holders started selling hundreds of millions of dollars worth of LIBRA. This included over $4 million in profits as LIBRA reached a $4.6 billion market cap. After peaking at 5:40 PM ET, the coin literally went straight down," โ The Kobeissi Letter
As a result, Milei deleted his posts and attempted to retract his endorsement. The president admitted he did not fully understand the project.
He also explained that he decided to stop the promotion after obtaining more information.
"I didn't know the details of the project, and after getting information, I decided not to continue the exposure (so I deleted the tweets)," the president stated.
The Argentine Presidency tried to downplay the incident as a routine business promotion related to blockchain finance.
However, officials acknowledged that Milei had met with Hayden Mark Davis, a figure associated with the KIP protocol that powers the LIBRA infrastructure.
Nevertheless, the government announced that it would investigate whether any officials, including Milei, had acted inappropriately. The probe will also examine whether the KIP protocol associated with LIBRA was involved in illegal activities.
Additionally, the president ordered the creation of an Investigation Task Unit (UTI) under the Presidency. This unit, composed of experts in finance, cryptocurrencies, and anti-money laundering, will investigate the individuals involved in the LIBRA launch.
"All information collected during the investigation will be submitted to the courts to determine whether companies or individuals related to the KIP protocol project have committed crimes," the statement added.
Political Fallout... Impeachment Threat
The controversy has spilled over from the cryptocurrency realm into a political crisis. Critics argue that Milei's reckless promotion of a speculative asset has caused financial losses to investors and the public.
Argentine MP Gabriela Estevez accused him of being involved in a classic pump and dump scam, explaining that it is a serious financial fraud that manipulates market prices for personal gain.
"What the president did is called a pump and dump, which is a serious financial fraud. The 'cryptocurrency' creators buy in bulk at the initial price. Then, they lure more people with lies about the potential, artificially inflating the value. When the price rises, the 'cryptocurrency' creators sell their holdings, causing the price to plummet and leaving other investors with losses," Estevez stated.
This backlash has also led to impeachment threats. One political force has initiated impeachment proceedings, calling it an unprecedented scandal in Argentine history.
"Our parliamentary bloc has decided to submit a request for the impeachment of the national president," Diputados UP wrote on X .
Buenos Aires Governor Axel Kicillof also reflected these concerns, labeling the incident a large-scale financial fraud. He warned that investors in Argentina and beyond had been misled, comparing the situation to a typical cryptocurrency pyramid scheme.
Overall, this is a major reflection of how political endorsements have made the meme coin market highly vulnerable since the TRUMP launch. Previously, Ethereum co-founder Vitalik Buterin had warned that more political meme coins could harm the market's development.
After the launch of Trump's meme coin, various scammers have issued and inflated fake tokens based on other political leaders. LIBRA is the latest extreme risk in this space.
