Title: Investigation Launched into President Milei’s Role in Cryptocurrency Scandal as Argentina’s Stock Market Plummets
BY REUTERS | BUENOS AIRES, February 17, 2024 – An Argentine judge has been appointed to investigate President Javier Milei’s involvement in endorsing a cryptocurrency that has recently experienced a dramatic downturn. The incident has raised concerns about the stability of Milei’s presidency amid growing political pressure and a plunge in Argentina’s stock market.
Crypto Coin Endorsement and Fallout
On Friday, President Milei recommended the little-known cryptocurrency $LIBRA to his followers on the social media platform X (formerly Twitter). This endorsement initially sparked a brief increase in the token’s value, but it was short-lived. Soon after, Milei deleted his post and denied any affiliation with the cryptocurrency, which subsequently crashed, leading to significant losses for many investors.
In response to these developments, Argentina’s fintech sector suggested that the situation could qualify as a ‘rug pull,’ a fraudulent scheme where promoters attract investors and then withdraw their funds, leaving them with worthless assets. The move has prompted over 100 formal complaints submitted to both Argentine courts and even to courts in the United States.
Investigation and Legal Actions
Federal Judge Maria Servini has been assigned to lead the investigation into the alleged misconduct surrounding the $LIBRA cryptocurrency. The case has sparked a major reputational crisis for Milei’s government, with analysts asserting that the token is being labeled as a scam. Observatorio del Derecho a la Ciudad, a local non-governmental organization, has filed a lawsuit against Milei and other public officials, alleging illicit association, fraud, and breaches of public duty, claiming that more than 40,000 individuals lost over $4 billion due to the project.
Market Reaction and Political Implications
The ongoing turmoil has had a negative impact on Argentina’s economy, with the benchmark S&P Merval stock index plummeting 5.6%. The scandal threatens to hinder Milei’s momentum as he navigates his government’s commitments to rigorous austerity measures aimed at combating soaring inflation.
Despite the mounting pressure, a government source indicated that Milei may be the most affected by the debacle. ‘The only one on the face of this earth who was cheated is Milei,’ the source noted. The source emphasized the President’s commitment to promoting various private projects in the future.
Community Response
Investors expressed their outrage on social media, with many alleging that they had been swindled by the Argentine president. Conversely, supporters of Milei defended him, claiming that he is a victim of politically motivated attacks. In a subsequent post, Milei lashed out at his critics, suggesting that they are attempting to exploit the situation for their own gain.
The Broader Landscape
As Milei continues to push for market deregulation and a reduction of bureaucratic constraints, the cryptocurrency issue looms large. The token was launched on the Meteora exchange, a platform that had previously introduced the $Trump meme coin, which also saw rapid fluctuations in value, leading to losses for numerous crypto investors.
Meteora co-founder Ben Chow clarified that his team had no role in launching $LIBRA, stating that they only provided IT support and helped verify the token’s authenticity after its launch.
Conclusion
As political tension mounts in Argentina, the outcome of this investigation could have significant implications for President Milei’s administration, particularly with midterm elections approaching. The opposition, while vocal, may struggle to secure the votes necessary to initiate impeachment proceedings against him. However, the impact of this scandal on Milei’s political capital remains to be seen, with both supporters and detractors closely watching the unfolding events.
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This report encapsulates the current turmoil surrounding President Milei, the shrinking trust in his administration, and the broader implications for Argentina amidst a challenging economic landscape.
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