Fateful mistake: why President of Argentina is accused of fraud

​President of Argentina Javier Milei is embroiled in scandal. The politician endorsed an obscure cryptocurrency called LIBRA, leading to accusations of fraud and threats of impeachment.

A suspicious project

The controversy began on Friday, February 14, when President Javier Milei promoted the LIBRA token on his X (formerly Twitter) account. He clarified that it was a private initiative, with all proceeds intended to support small and medium-sized businesses in Argentina, and that he would not personally benefit.

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However, Argentinians reacted with skepticism. Some even suspected the president’s account had been hacked. But there was no hack—five hours later, Milei deleted the post, admitting he had made a mistake and was unaware of the project's details. Within that short time, LIBRA's market cap soared to $4.4 billion before crashing by over 95%. Meanwhile, eight wallets linked to the project reportedly withdrew more than $100 million in assets.

The fallout of a reckless decision

The scandal has affected not only Milei’s reputation but also Argentina’s economy. The country’s main stock index, S&P Merval, dropped nearly 4% on Monday, while calls for his resignation grew louder. Opposition lawmakers want him punished for promoting a dubious cryptocurrency and announced plans to file for impeachment, calling the situation an "unprecedented scandal."

Additionally, a group of Argentine lawyers has filed a lawsuit accusing Milei of fraud for promoting LIBRA on social media.

The president, in turn, accused his critics of exploiting the situation for political gain. He ordered the Anti-Corruption Office to investigate all government officials, including himself, for potential misconduct.

However, Milei appears unrepentant. In an interview, he stated that he never urged people to invest in LIBRA—he simply "shared" information.

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What comes next? Most analysts believe the opposition is unlikely to oust Milei. Before the incident, he was at the peak of his popularity, and many may soon forget about the scandal. However, his party may suffer politically as Argentina holds midterm elections later this year, where the opposition is sure to weaponize the LIBRA debacle.

Why LIBRA was in the spotlight

Was LIBRA’s sudden popularity solely due to Milei? Likely not. In 2018, Facebook announced plans for a cryptocurrency with the same name.

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However, the project faced intense regulatory scrutiny. Major financial partners withdrew, forcing Facebook to rebrand LIBRA as Diem in 2020. Despite these efforts, the project was abandoned in January 2022, but the name remained widely known.

How this LIBRA differs from Facebook’s version

Facebook’s LIBRA was meant to be a stablecoin, backed by a basket of fiat currencies and government bonds. It was to be managed by the Libra Association, which included companies like Mastercard, Visa, PayPal, and Uber.

The LIBRA token Milei promoted, however, was a Solana-based memecoin with 82% of its supply unlocked and sold from the start. The project lacked transparency regarding its tokenomics, raising red flags among traders.

Who inspired Javier Milei?

Why did Argentina’s president decide to dive into the crypto space now? Likely because of the hype surrounding Donald Trump. According to Coinbase's Conor Grogan, the U.S. president has made over $802 million since launching his TRUMP memecoin. His wife, Melania Trump, also appears to have profited from a MELANIA token.

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Meanwhile, the president of the Central African Republic launched his own token, and Binance founder Changpeng Zhao began promoting TST on BNB Chain. It seems likely that Milei wanted to follow their lead.

Reaction from the crypto community

Milei became Argentina’s president in December 2023 after a campaign heavily based on support for Bitcoin and private money. He criticized central banks, calling them instruments of state theft, and argued that cryptocurrencies could replace traditional finance. His libertarian stance attracted many Bitcoin enthusiasts.

However, the LIBRA scandal changed everything. Many Bitcoin supporters turned against him.For example, "The Bitcoin Standard" author Saifedean Ammous harshly criticized Milei, accusing him of knowingly misleading the public.

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Vice President of Riot Platforms Pierre Rochard also condemned Milei:

"Instead of building a strategic Bitcoin reserve, Milei is wasting time promoting random crypto scams and then launching investigations. He should fire the advisors who told him to do this and replace them with Bitcoin maximalists."

This sentiment was echoed by many in the crypto industry.

Conclusion

The LIBRA scandal has been a major political test for Javier Milei. His promotion of a questionable project not only damaged his reputation but also put his political future at risk. Despite his attempts to justify the situation, critics argue that such negligence is unacceptable for a head of state.

Although Milei is unlikely to be removed from office, the incident could hurt his party in upcoming elections. The opposition will not let Argentina forget about his involvement with LIBRA. One thing is clear: this fiasco has shown that politicians must be extremely cautious when engaging with unverified crypto projects—a lesson Milei has now learned the hard way.