Memecoin Scandal Threatens Argentina's Milei
Argentina's president Javier Milei has come under fire for the abrupt collapse of a cryptocurrency he promoted, in a move that has triggered lawsuits and calls for his impeachment.
Milei is facing more than 100 complaints against him at the country's supreme court, accusing him of participating in an alleged scam related to the cryptocurrency $Libra, which opposition politicians estimate has resulted in financial losses for 40,000 people.
On February 14, the Argentine leader posted a message on his X account, which has 3.8 million followers: "Liberal Argentina grows! This private project will be dedicated to encourage the growth of Argentina's economy, funding small Argentine companies and ventures. The world wants to invest in Argentina. $Libra," he said.
In a matter of minutes, $Libra went from being worth fractions of a cent to $4.97 per unit. But unfortunately for investors, this hike was short-lived. Within hours it plummeted to $0.19.
Now, prosecutors will determine if there are sufficient elements to move forward with a criminal investigation against the president and other possible suspects.
Milei is accused of helping to inflate the price of the currency by promoting it on X, and then withdrawing his support causing the cryptocurrency to collapse.
Former Argentinian president Cristina Kirchner claimed that Milei was a 'crypto fraudster,' in a lengthy post on X in which she also accused him of turning the country into a casino in which he was the croupier.
'The president has to come to congress. He cannot investigate himself,' said politician Esteban Paulon, a member of the opposing socialist party, in a message on X calling for Milei's impeachment.
Milei has since distanced himself from this collapse, claiming he did not benefit from the memecoin.
'A few hours ago I posted a tweet, as I have done countless times before, about private initiatives that seek to contribute to the development of our country. I have no relationship with the company that created this cryptocurrency nor have I received any benefit.' In a statement on X, the official account for the office of the Argentinian president said: 'Given the facts, President Javier Milei has decided to immediately involve the Anti-Corruption Office (OA) to determine whether there was improper conduct on the part of any member of the National Government, including the President himself.'
Entrepreneur Hayden Mark Davis, one of the creators of the cryptocurrency $Libra, also blamed Milei for the collapse.
'His [Milei's] team had secured his public support at launch and assured me that his support would continue throughout the process,' the American investor said in a statement released by his firm, Kelsier Ventures. 'Despite prior commitments, Milei and his team unexpectedly reversed their position, withdrawing their support and removing all previous endorsements on social media,' Davis claimed, indicating that this setback would have triggered panic selling of the token.
'It is critical to recognize that memecoin investments are driven by trust and endorsement. When Milei and his team removed their posts, investors who had purchased the token, basing their trust on that endorsement, felt betrayed.'
Despite the allegations, Davis said in a video posted on X that Milei still has his support. He even introduced himself as 'his advisor,' and said that he will continue to collaborate on other tokenization projects in Argentina.
"My primary responsibility was to ensure that the token had sufficient volume, liquidity and a solid treasury to support its price and execute the vision of the project," Davis said, by way of personal justification. 'However, as an advisor, there were many factors beyond my control.'
In January, Milei wrote about a meeting he had with Davis, who allegedly "advised him on the impact and applications of blockchain technology" that could be expected in Argentina.
Faced with this response, Davis, his alleged advisor, contradicted the head of Argentina's executive branch, assuring that prior assurances were not respected, and regretted Milei's actions. "To my surprise, Milei later issued a statement indicating that his withdrawal was due to alleged misconduct on the part of the project's sponsors, calling them swindlers."
Davis came out in defense of the other project partners, emphasizing 'that Julian Peh, founder of KIP Network and lead sponsor of Libra Token, is completely innocent of any wrongdoing.'
This story originally appeared on WIRED en Español and has been translated from Spanish.
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