Argentina's crypto scandal dings Milei, involves strange mix of characters
The budding scandal in Argentina has been dubbed locally as 'cryptogate' and has links to a diverse cast of characters, including a high-profile U.S. influencer, a crypto developer who uses the pseudonym 'Meow,' and a 28-year-old American entrepreneur who said he helped launch First Lady Melania Trump's meme coin last month.
Here's an explainer on what happened and where things stand:
First off, what exactly is a meme coin?
Meme coins are a type of cryptocurrency that are generally just goofs on internet memes, viral moments or celebrities that aren't trying to make use of a new techology or solve any new problems. They often have silly names, like Dogecoin, or Fartcoin.
Critics – including many cryptocurrency enthusiasts -- say they are nothing more than digital Ponzi schemes that exist to enrich insiders at the expense of retail investors. Those more supportive say meme coins shouldn't be so easily dismissed and could be early indicators of ways in which the internet could revolutionize financial and other transactions.
'New technologies often look like a toy but evolve into something much more powerful over time,' Coinbase CEO Brian Armstrong said in a recent social media post.
So, what happened with the meme coin associated with Milei?
In short, a disaster.
Milei, the tech-loving, chainsaw-wielding, libertarian president of Argentina, posted on X about the meme coin $LIBRA on Friday, just after it had launched, stating he was 'encouraging economic growth by funding small businesses and startups.'
The coin's price soared almost immediately, pushing the market value for the project beyond $4 billion.
A few hours after launch, early holders of the coin started cashing out of the project and its price collapsed.
The trajectory of $LIBRA's price had the hallmarks of a 'rug pull,' a not uncommon phenomenon with meme coins. Rug pulls occur when insiders dump their holdings in newly launched meme coins that are soaring in value, which tanks the price and causes losses to newer investors.
Milei deleted his initial post after the price collapsed and distanced himself from the project. By Monday, dozens of criminal complaints had been filed, a judge in Argentina had been selected to investigate allegations of fraud and Argentina's main opposition party called for his impeachment.
A defiant Milei insisted he had acted in good faith and said that he had asked the Justice Ministry's Anti-Corruption Office to investigate if he or anyone else had committed wrongdoing.
Who is a key player in this?
Hayden Davis, a 28-year-old American crypto developer who said he's an adviser to Milei and helped launch $LIBRA, has emerged as a central figure. Milei's office said the government has no connection to Davis.
In an interview with independent crypto journalist Stephen Findeisen, Davis said that meme coins are essentially a rigged game that benefit a small group of people at the expense of retail investors.
'It is an insiders' game. This is an unregulated casino,' Davis said.
Davis said the $LIBRA coin was not a rug pull but was supposed to be an experiment to show the power and utility of digital currency that's consistent with Milei's desire for Argentina to be a hub for innovation.
Davis also said he was involved in the launch of Melania Trump's meme coin. Launched just before her husband took office, that meme coin's price underwent a similar trajectory as $LIBRA – quickly soaring upon launch and then dropping. The first lady's office declined to comment.
Who else was involved?
Online influencer Dave Portnoy, who founded the Barstool Sports podcast empire and is a vocal gambling enthusiast, said on social media that Davis had told him about $LIBRA's launch before it went public and asked him to promote it.
Portnoy said there were also discussions about the possibility of him interviewing Milei, much like he'd done with President Donald Trump during his first term. Portnoy said he did not buy any $LIBRA until after Milei's post on X and lost money on the purchase when the price crashed. Davis said he reimbursed Portnoy's losses.
'Meow' is the anonymous co-founder of a crypto firm involved in launching meme coins, including $LIBRA, said on social media that they were confident that no one at the firms had been involved in insider trading or financial wrongdoing. Still, Meow said the company had hired a law firm to conduct an independent investigation and that one of the company's leaders had resigned for showing 'a lack of judgement.'
What's next for Milei?
Cryptogate represents the first big scandal of Milei's presidency. Analysts said it risks eroding public confidence in Milei, who rose to prominence as an iconoclastic economist vowing to tame Argentina's sky-high inflation and eliminate corruption among the political elite.
In a poll released Thursday by prominent Argentine consulting firm Zuban Cordoba and Associates, nearly 67% of respondents described cryptogate as the 'biggest crisis' of Milei's administration and over 83% said they thought Milei should stop acting as a social media influencer. The poll has a margin of error of plus or minus 2.8 percentage points.
Questions remain over how this will affect the Mileli administration's perception among foreign investors at a crucial time in which the government is hoping to ease strict currency controls and negotiate a loan with the International Monetary Fund. He is now in Washington meeting with Tesla chief Elon Musk and other high-profile tech leaders in a bid to generate hype for his economic overhaul.
What about meme coins?
Meme coins don't appear to be going away anytime soon, but their track record should serve as a cautionary tale for investors and creators alike.
The meme coins promoted by Trump and his wife have seen their prices fall dramatically since the days after their launch and drawn criticism from some Democrats and crypto enthusiasts.
Hailey Welch, better known as Hawk Tuah Girl, saw her popularity plummet after her meme coin collapsed amid allegations of a rug pull. And celebrity Caitlyn Jenner is the defendant in an ongoing class action lawsuit filed by investors who said they were duped into losing money on the $JENNER meme coin. Welch and Jenner have both denied wrongdoing.
The impoverished Central African Republic issued a meme coin earlier this month. After a brief spike, its price has also collapsed.
___
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Herald Scotland
an hour ago
- The Herald Scotland
Wayne Rooney: Criticism from Birmingham minority owner Tom Brady ‘very unfair'
NFL great Brady, who became a minority shareholder at Birmingham in August 2023, said he was 'a little worried about our head coach's work ethic' during a documentary after visiting Blues' training ground the following November. Tom Brady, right, became a minority shareholder at Birmingham in August 2023 (Nick Potts/PA) Former England captain Rooney said he was 'really disappointed' at the seven-time Super Bowl winner's criticism. The ex-Everton and Manchester United striker said: 'I think Tom came in once, which was the day before a game where the days are a little bit lighter anyway, and I don't think he really understood football that well. 'But what he does understand is – he's a hard worker – we know that.' Rooney added: 'Football is not NFL – NFL works for three months a year. Players do need rest as well, so I think he's very unfair, the way he's come out and portrayed that.' Wayne Rooney was sacked by Birmingham after 15 games in charge (Bradley Collyer/PA) Birmingham were bought out by American consortium Knighthead Capital Management in the summer of 2023 and Brady became a shareholder two months later. Rooney was sacked following 15 matches after Blues had slipped to 20th in the Sky Bet Championship and the club were relegated at the end of the 2023-24 season. Under current boss Chris Davies, Birmingham bounced straight back to the second tier as League One champions last season with an English Football League record points tally of 111.
Daily Mirror
2 hours ago
- Daily Mirror
World's richest tennis player makes retirement admission as she speaks out on future
Jessica Pegula has announced that she will not follow the trend of elite tennis stars playing into their 40s, with Coco Gauff just about convincing her to carry on until the 2028 Olympics Billionaire tennis star Jessica Pegula has revealed she is looking to retire within the next 'two or three years'. Pegula, dubbed the world's richest tennis player, has won nine singles titles on the WTA Tour and is currently ranked No. 4 in the world. But despite being just 31 years old, the American insists she won't follow the Williams sisters' example by playing into her forties. The 2024 US Open finalist has set a deadline for her time on the court by stating she will not play professional tennis at the age of 35. Pegula has endured a tough and inconsistent season but has still won three titles, making her the oldest player currently inside the top 10. But she still has one specific tournament in mind – the 2028 Olympic Games in Los Angeles – which she hopes could be her swan song. She recently told Caroline Garcia on the Tennis Insider Club: "I don't [have plans to follow the Williams sisters' example], I would definitely not be playing at 35, definitely not. "I think that's where I for sure have to stop. I think at 31? Yeah, I think it would be cool maybe like to try and make the Olympics, because it's in LA in a couple years. 'Three years, that's a long time, though. I'm counting technically like two years, because then you qualify, so I'll probably have an idea by then if I'm in or not. So we'll make it sound like two, it's three.' Given that she is the daughter of businessman Terry Pegula and stands to inherit some of his £5.6billion fortune, it is unlikely that she will continue playing out of any financial incentive. Terry, ranked as the 418th wealthiest person by Forbes, amassed his wealth through his ventures in the oil and gas industry. The billionaire also owns sporting giants Buffalo Bills (NFL) and Buffalo Sabres (NHL). Among the family's extravagant possessions are a £58million superyacht named Top Five II and a private jet, which Jessica also uses. Meanwhile, in terms of Pegula's own wealth she's earned on the tennis caught, she has amassed almost £14m from her playing career. Pegula's decision to play until the next Olympics was thanks to her former doubles partner and compatriot Coco Gauff. Having reached No. 1 in the doubles rankings together and represented America at last year's Paris Olympics, 21-year-old Gauff is insistent that the pair have to play together in LA. Pegula explained: 'I was talking to Coco, and she was like, 'You can play until LA.' She was mad at me because I was like, yeah, maybe a couple more years. 'She's like, 'If you're going to play two more years, you might as well just play another year for the LA Olympics.' And she's like, 'You can't retire before then.' This was the year before so it was four years. I was like, 'Coco, it's a long time, I'm going to be 34, what are you talking about?' 'She's like, 'You can just stay top 20. The way you hit the ball, you'll be fine.' She's like, 'I'm not letting you retire before the LA Olympics, especially if I qualify.' I was like, 'Okay. You're young, it's okay, you won't even be 25 yet, you still can't rent a car!'' Pegula went on to reveal that she will not return to professional tennis when she decides to have children. Since winning Bad Homburg, Pegula has gone only 2-4 in her last six matches. She was dumped out of the opening round at Wimbledon in July and suffered a disappointing defeat in the third round of the Cincinnati Open. But she'll be hoping to turn things around at her home Grand Slam tournament, the US Open, where she finished runner-up last year.
The National
2 hours ago
- The National
Scottish Enterprise panned for lack of checks on Israeli-linked arms firms
A Freedom of Information request has revealed that two major arms companies in receipt of Scottish Enterprise grants – Italian arms giant Leonardo and American multinational Raytheon Systems – haven't received a human right due diligence check since October 2019 This funding comes despite both firms continue to supply Israel with weapons amid its genocide in Gaza. In that timeframe, both firms have also been in receipt of Scottish public money – Leonardo received £786,125 in 2023 while Raytheon Systems, which has a factory in Glenrothes, was given £500k in the first half of 2024. Leonardo produces laser targeting systems for Lockheed Martin, which sells the F-35 jets Israel, and Raytheon makes Paveway II guided missiles which are also used by Israel. READ MORE: JD Vance panned for 'lies about Scotland' ahead of luxury Ayrshire holiday The last time a check was performed on French arms firm Thales was July 2021, while Babcock was last checked in March 2022 and Chemring Energetics in December 2021. Bae Systems received a check in February 2024. In response, human rights charity Amnesty International told The National that the 'more we learn' about the checks 'the more concerning it becomes' that Scottish Enterprise and Scottish ministers are defending the process. Scottish Greens co-leader Lorna Slater, meanwhile, said it was 'shocking', adding: 'There is no point in having human rights checks at all if they are never carried out.' In total, Scottish Enterprise has given £8 million to 13 companies involved in weapons manufacturing since 2019. The Scottish Government has repeatedly insisted that no public funding goes towards the manufacturing of munitions specifically but other areas these companies operate in, including research, training and apprenticeships. Scottish Enterprise, meanwhile, has strongly denied its human rights checks are not adequate. However, that has been called into question given that, of the 199 human rights checks between 2021 and 2023, no firm has ever failed. When pressed on the issue in an exclusive interview with The National last weekend, First Minister John Swinney defended the grants. 'We won't support the production of munitions. That's our hard line. And we get criticised for taking that hard line, and I'm very confident that hard line is applied,' he said. The First Minister was then pressed on the argument that any funding – even if ring-fenced by the Scottish Government – will directly help a company's cash flow and could, hypothetically, free up money to be used elsewhere, including in the building of munitions. 'I understand that point. But there are also defence requirements of Scotland. Scotland is part of an island nation. We require, for example, shipbuilding resources to support the maritime defense of the United Kingdom because nobody wants to see us vulnerable to an attack from Russia. I certainly don't want to,' he responded. An Amnesty International spokesperson said: "Amnesty is aware from our own research that payments were made to companies known to supply Israel without a new check being triggered by the unfolding genocide in Gaza. 'Alarmingly, that is the process Scottish Enterprise and the Scottish Government attempted to characterise as robust and well aligned to international standards. The recent in-house review of the human rights checks recommended some improvements, but unsurprisingly they don't go far enough. We will be meeting with Scottish Enterprise in the coming weeks to take these concerns forward." Slater, meanwhile, said it 'flies in the face of any kind of due diligence'. "These are some of the biggest arms companies in the world. They have armed human rights abusers and dictatorships and some have directly enabled and profited from the genocide in Gaza,' she said. "They should not be receiving public money in the first place, and the Scottish Government absolutely should not be setting up tests to win favourable headlines while refusing to actually implement them. "How can we trust a word they say on ensuring they are applying human rights standards when they are refusing to even ask the right questions of those they are giving public money to?" A spokesperson for Scottish Enterprise said: 'Under our current processes, Human Rights Due Diligence Checks last for three years. New checks are carried out prior to the approval of new funding if they have expired. Funding was authorised and contracted while valid checks or exemptions were in effect in all cases. 'It is important to note that contractual payments are made to companies in stages as the conditions of their contracts are met, in line with the effective management of public funds. Payments can therefore be made over several years. 'The recent review of our HRDD checks affirmed the strength of our processes while identifying areas for enhancement, including increasing the frequency of checks to better respond to emerging risks. We are committed to implementing identified improvements over the course of 2025/26. 'We have been transparent on the frequency of our checks and have corresponded in detail on this with interested parties including Amnesty International, who we look forward to meeting next week.'
