Crypto News

The Rise and Fall of Libra: How a Promoted Token Led to $99 Million Withdrawn Amid Controversy in Argentina

February 24, 2025
Smart Money

Major Withdrawal from $LIBRA Token Sparks Controversy in Argentina

Overview of Events

In a significant turn of events surrounding the controversial cryptocurrency $LIBRA, blockchain researchers have reported that eight digital wallets connected to its creator have withdrawn approximately $99 million from the token’s liquidity pool. This massive transaction occurred shortly after Argentinian President Javier Milei publicly recommended the little-known crypto coin on social media platform X (formerly Twitter) on Friday. However, the post was subsequently deleted, and Milei has since denied any personal involvement with the cryptocurrency.

Weekend Surge and Plunge

The $LIBRA token, initially promoted by Milei, experienced a rapid price surge, climbing as high as $4.50 shortly after its mention. Yet, this rise was short-lived, with the price of the token plummeting just hours later—a classic scenario in the world of meme coins, which often experience extreme volatility. Blockchain analytics firm Chainalysis noted that while the tokens withdrawn from the liquidity pool comprised stablecoins like USDC and the cryptocurrency SOL (Solana), their dollar value fluctuates with market conditions.

Investigative Scrutiny and Political Fallout

The launch of $LIBRA and Milei’s involvement has drawn the attention of a federal judge, who is currently investigating the circumstances surrounding the token’s introduction. In the aftermath of the decline in $LIBRA’s value, Milei has claimed that political adversaries are exploiting this situation for their own gain.

Chainalysis stated that while they couldn’t conclusively identify the wallet owners connected to the withdrawals, the on-chain activity indicates a close relationship to the team behind $LIBRA. The investigation raises questions about the integrity of the token’s launch and its political implications in Argentina.

Current Holdings and Market Activity

As of earlier reports, wallets that withdrew assets from the $LIBRA marketplace still possess a cumulative value of approximately $87 million, according to another analytics firm, Nansen. This figure underscores the substantial capital remaining in the hands of those associated with the token’s rollout, suggesting potential further market movements.

Insights from Industry Stakeholders

Hayden Davis, who claims to be a "launch advisor" for $LIBRA and CEO of Kelsier Ventures, acknowledged in a statement that he has control over nearly $100 million in crypto from the Libra marketplace. Davis asserted that he plans to reinvest this sum back into the token. In an interview with popular cryptocurrency YouTuber Stephen Findeisen, known as "Coffeezilla," Davis refuted accusations of a “rug-pull” scheme—a scenario where creators lure investors before making a quick exit with funds, leaving investors with worthless tokens. Instead, he characterized the situation as a "plan gone miserably wrong," emphasizing his commitment to the project and distancing it from allegations of fraud.

Market Trends and Future Implications

The incident aligns with a broader trend in the cryptocurrency landscape, where meme coins—often characterized by whimsical branding or references to internet culture—can experience volatile price movements. Nansen’s data indicated that from Sunday to Tuesday, approximately 70% of wallets trading $LIBRA incurred losses.

The cryptocurrency market remains unpredictable, with tokens often fluctuating wildly in value. As this situation unfolds, both the political ramifications in Argentina and the viability of $LIBRA could shape future discussions in the crypto community.

Conclusion

As the investigation into the $LIBRA token progresses and market reactions continue to develop, the implications of this incident may extend beyond cryptocurrency, impacting the political landscape in Argentina. The case highlights the intersection of digital finance and governance, raising crucial questions about transparency and regulation in the rapidly evolving world of cryptocurrencies.

Reporting by Elizabeth Howcroft and Hannah Lang. Additional contributions from Lucinda Elliott.