MercoPress. South Atlantic News Agency

Repercussions of Milei's support for cryptocurrency that vanishes

The opposition is pushing for the President's impeachment in addition to filing criminal charges against him

Argentine President Javier Milei is under heavy flak after praising the $LIBRA cryptocurrency token, which would boost the country's development from the private sector, only to vanish into thin air after many investors trusted in the advice of the head of State, who is also a graduate economist.

“The world wants to invest in Argentina. $LIBRA,” Milei wrote Friday as he explained that the $LIBRA cryptocurrency was “a private project” that was going to be dedicated to ”incentivize the growth of the Argentine economy, funding (financing) small Argentine companies and enterprises.“ He forgot that blockchain technology has no backing in real money. Still, Milei's endorsement led to a dramatic increase in the token's value, reaching a market cap of around US$ 4.56 billion. However, within hours, it crashed, losing over 94% of its value, leaving many investors with significant losses.

There are allegations that the sudden rise and fall of $LIBRA might have been a ”rug pull“ or an insider trading scam, where developers or insiders sold off their holdings after the price was artificially inflated. This has led to accusations of fraud and calls for an investigation into the project's legitimacy.

Milei, who has stopped posting on social media after apologizing for his previous comment, which he deleted, ordered the Anti-Corruption Office to launch an investigation into the matter while the opposition is pushing for his impeachment for the alleged violation of the ethics law and other norms, in addition to at least 112 suits seeking to hold him financially accountable.

Argentine investors were reported to be cautious for Monday when a significant fall in the stock market is foreseen. The fallout has led to discussions about regulation, ethics in cryptocurrency promotion, and the role of political figures. The situation has also sparked debates on the need for better investor protection in the crypto space.

”I was not aware of the details of the project and after I became familiar with it I decided not to continue disseminating it,“ Milei said in his apology message.

He also announced the creation of an ”Investigative Task Force Unit“ to handle the $LIBRA cryptocurrency scandal ”and all the companies or individuals involved in said operation,” the Casa Rosada noted.

According to the magazine The Kobeissi Letter, about 80% of the $LIBRA asset was in the hands of very few holders before Milei's support. After the president's message, it grew exponentially in value, after which holders began selling making millions in profits and then the value of the asset collapsed.

The opposition Unión por la Patria (Peronism) said Milei's impeachment was in order but former President Mauricio Macri's Propuesta Republicana (PRO) downplayed the incident and warned that it would prevent the removal procedure from succeeding.

Meanwhile, the Presidential Secretary and sister Karina Milei reportedly suggested Justice Minister Mariano Cúneo Libarona - a seasoned criminal lawyer - should resign to handle Milei's defense. In any case, she and Economy Minister Luis Toto Caputo participated in a support gathering rally in Buenos Aires Sunday for this year's mid-term elections where the $LIBRA case was not even mentioned.