Crypto News

Javier Milei Under Fire: Investigating the $LIBRA Cryptocurrency Controversy and Alleged Fraud

February 25, 2025
Smart Money

Investigation Launched into President Milei’s Alleged Role in Cryptocurrency Scandal

Background Overview

In a developing controversy, federal authorities in Argentina have initiated an investigation into President Javier Milei’s involvement with the recently launched cryptocurrency $LIBRA. The inquiry comes in light of accusations that the cryptocurrency’s rapid rise and subsequent collapse has resulted in significant financial losses for investors.

Judicial Inquiry Announced

On Monday, it was announced that Federal Judge Maria Servini has been randomly designated to oversee the investigation into Milei’s potential legal transgressions regarding $LIBRA. There are growing concerns within the political sphere that the findings of this probe could lead to impeachment proceedings against the president, depending on the evidence that emerges.

The Rise and Fall of $LIBRA

The $LIBRA cryptocurrency made headlines upon its launch last Friday, largely due to endorsement from President Milei, who promoted it through his social media platform, X. In his promotional content, Milei claimed that $LIBRA was aimed at fostering economic growth by financing small businesses and startups. This high-profile backing propelled the cryptocurrency to a remarkable market capitalisation of $4 billion. However, the euphoria was short-lived as the value of $LIBRA plummeted sharply within a matter of days, leading to allegations from critics that the currency was a fraud or a scam.

Shortly after the cryptocurrency’s value began to decline, Milei deleted his promotional post, raising further suspicions among investors and critics alike. Many are now questioning whether this situation reflects a “rug pull” scheme—a tactic where initial investors artificially inflate the price before withdrawing their funds, leaving latecomers with virtually worthless investments.

Government’s Response

In the face of mounting criticism, Milei’s office issued a statement asserting that the president had no direct role in the establishment or development of the $LIBRA cryptocurrency. The statement reaffirmed Milei’s commitment to promoting various entrepreneurial initiatives in Argentina, including the cryptocurrency’s developer, KIP Protocol. "The president shared a post on his personal accounts announcing the launch of KIP Protocol’s project, as he does daily with many entrepreneurs who wish to launch projects in Argentina to create jobs and attract investments,” the statement read.

An unnamed official within the government defended Milei, positing that if anyone has been victimized in the context of the cryptocurrency debacle, it is the president himself, emphasizing that Milei regularly promotes private business ventures.

Legal Accountability

However, critics remain unconvinced and are calling for accountability. Jonatan Baldiviezo, a lawyer representing one of the plaintiffs in the case against Milei, stated, “Within this illicit association, the crime of fraud was committed, in which the president’s actions were essential." Additionally, the NGO Observatorio del Derecho a la Ciudad has filed a lawsuit accusing Milei of being part of an "illicit association," claiming that the rapid fluctuation of $LIBRA has devastated the savings of over 40,000 investors, resulting in a loss exceeding $4 billion.

Hayden Davis, one of the developers associated with $LIBRA, expressed disappointment in Milei, indicating that the president and his team unexpectedly distanced themselves from the cryptocurrency after initially providing support.

Political Ramifications

Experts suggest that, while the prospect of impeachment remains slim, the ongoing scandal could have significant implications for Milei’s economic reputation as he approaches the 2025 midterm elections. In response to the accusations and unfolding events, Milei took to social media, framing the backlash as a politically motivated attempt by his adversaries to undermine his administration. "This increases our conviction to kick them in the [a**],” he concluded.

As the investigation unfolds, the political landscape in Argentina may witness further developments and reactions from both supporters and critics of President Milei.