Argentina agog after Milei promotes crypto that crashed
President Javier Milei’s backing of the crypto token $Libra that collapsed in hours is a story that the administration is hastily trying to rewrite amid calls for impeachment and international media attention.
On Friday night, the president took to X announcing the “Viva la Libertad Project” and promoting a token called $Libra, claiming it would bolster Argentina’s economy. The token’s value soared and promptly plummeted within hours in what is known as a “rug pull,” with eight users making away with most of the US$4.5 billion market cap.
The backlash was immediate and multipartisan, with many pointing to the endeavor’s red flags and the fact that it is illegal for elected officials to advertise private ventures. There was initial speculation that the president’s account had been hacked, which was later debunked. After five hours, Milei removed the post, saying he had since “become more familiar” with the scheme and lashed out at political opponents for wanting to ‘take advantage of this situation.”
The story plastered Argentina’s front pages over the weekend, and international media outlets, including the New York Times, Bloomberg, and El País wrote about what’s nationally being coined as the $Libra scandal.
Political firestorm
Online discussions quickly turned to whether Milei’s actions were illegal and whether he could be held liable for the losses incurred by those who invested in the meme coin. Constitutional lawyer Andrés Gil Dominguez claimed that the president’s incursion into $Libra violated “several criminal laws, Argentina’s Public Ethics Law (based on Article 36 of the Constitution” among others.
“With the post, President Milei induced the purchase of a hitherto non-existent cryptocurrency by linking it to the country’s economic growth. He linked the cryptocurrency’s smart contract (the place where the money should be sent) because, as a new currency, it was not listed anywhere. Without such a publication on X, no one would have invested in $LIBRA the way it happened,” he wrote in an X post on Sunday afternoon.
He highlighted Article 265 of the Penal Code — establishing a maximum six-year prison sentence for public officials who use their position for financial benefit — and the widely-reported meeting between the president and Julian Peh, the co-founder of KIP Protocol, the company which hosted $Libra.
Socialist deputy Esteban Paulón was the first to announce that he would litigate the president’s actions, saying he would demand Chief of Staff Guillermo Francos appear before the Lower House and give explanations. He later added that on Monday, he would file a petition requesting that impeachment proceedings be launched.
It should be noted that the Impeachment Commission does not currently have a presiding deputy and is thus not operational.
“You promoted a private cryptocurrency from your official X account, created by who knows who. You inflated its value taking advantage of your presidential investiture,” said former president and head of the Justicialist Party, Cristina Fernández de Kirchner, in an X post interspersed with capital and lowercase letters. “And, to top it all off, you say that you were ‘unfamiliar’! Weren’t you “the best president in history”? Weren’t you “the genius of the economy”? From self-proclaimed ‘global leader’ to CRYPTO SCAMMER.”
In a bid to address the growing political firestorm, the government announced on X that Argentina’s Anti-Corruption Organization would be audited “to determine whether there was improper conduct on the part of any member of the national government, including the president himself.”
“Milei has to explain to the country and to justice who the swindlers are and who he benefited. It has to be made clear if he and his entourage are among the swindlers,” said Buenos Aires Governor Axel Kicillof. “The president of Argentina was part of a worldwide con. It is a scandal and a disgrace. But, above all, it is a crime.”
Open questions remain as to how markets will react on Monday morning.