In a dramatic turn of events late Friday night, Argentine President Javier Milei found himself at the center of a cryptocurrency debacle that threatened to undermine his political standing. The crisis unfolded after Milei, a prominent social media figure, directed his followers to a platform purportedly raising funds for small businesses in Argentina via crypto. Meanwhile, the value of the Libra token, a memecoin co-launched by digital currency entrepreneur Hayden Davis, surged to a staggering $4 billion before it swiftly collapsed.
The fallout was immediate and severe, with investors, including Barstool Sports founder Dave Portnoy, suffering significant losses. Portnoy, who had been invited to participate in the token launch by Davis, called the incident “the biggest rug pull of all time,” a crypto term used to describe a scam. Despite the crash, Davis acknowledged some personal profits from the venture in a later post.
The controversy surrounding the Libra token has prompted an internal government investigation, as major figures within the cryptocurrency world shift blame toward one another. As the political fallout grows, Milei faces mounting pressure to address the issue that has left a stain on his reputation. “The Libra saga is a travesty,” said Henry Elder, a prominent figure in the crypto sector. “It’s a stark illustration that the current crop of crypto leaders lack any moral compass whatsoever.”
Milei, who won a landslide victory in Argentina’s 2023 elections, has increasingly aligned himself with global right-wing leaders. His promotion of the Libra token mirrors the launch of a similar project by former U.S. President Donald Trump just days before his inauguration. As Milei heads to Washington this week to seek Trump’s support for financial aid from the International Monetary Fund and possible exemptions from U.S. tariffs, the crypto scandal casts a shadow over his international outreach.
The Libra token, launched on the Solana blockchain, gained early attention due to its fast transaction speeds and low fees, attracting memecoin traders. However, confusion surrounding the token deepened over the weekend. After its crash, Davis, CEO of Kelsier Ventures, claimed to be an adviser to Milei, working with his team on larger tokenization projects in Argentina. Milei’s office quickly denied the claim, stating that Davis had no connection to the Argentine government.
Further complicating the situation, Milei initially denied any involvement with Libra beyond supporting a private initiative that he believed had good intentions. However, Davis contradicted this, asserting that the Argentine president had actively promoted the token before backtracking. Davis also promised to return the profits he had earned from the project in an attempt to reassure investors.
Portnoy, one of the token’s notable investors, detailed his involvement with Davis, revealing that the crypto entrepreneur had invited him to participate in the token’s launch after a meeting at Portnoy’s house. Despite returning a gifted amount of Libra coins, Portnoy later purchased more tokens after Milei’s initial post, only to see the value plummet. As the coin’s value crashed, Portnoy demanded answers from Davis while attending a Saturday Night Live special in New York, expressing his frustration with Milei’s misleading promotion of the token.
The scandal has left Milei’s presidency in turmoil, threatening to derail his efforts to stabilize Argentina’s fragile economy. Despite his global recognition as a libertarian economist and his successful performance at the World Economic Forum in Davos, the political ramifications of the Libra debacle are unclear. Although political opponents have threatened legal action and impeachment, such efforts are unlikely to succeed without the support of a two-thirds majority in Congress.
Polls indicate that Milei’s approval ratings remain relatively stable, with inflation decreasing, wages rising, and the economy showing signs of growth. However, analysts warn that the crypto scandal could undermine public confidence in his leadership. “Macroeconomic balance needs to come along with emotional balance,” said Alejandro Catterberg, director of consulting firm Poliarquia. “These types of things create a lot of unnecessary uncertainty.”
As the investigation unfolds, Milei must confront both the economic and political consequences of a scandal that has exposed the risks and instability of the crypto world while testing his ability to navigate Argentina’s volatile political landscape.
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