Investigation Looms Over President Milei’s Support for LIBRA Amid Accusations of Market Manipulation and Potential Impeachment

• Argentina’s President Javier Milei is under investigation after endorsing the little-known cryptocurrency LIBRA.

• Lawmakers and critics claim Milei’s actions resemble a pump-and-dump scheme, with some calling for his impeachment.

• The government has formed a task force to examine the incident and determine whether Milei or others engaged in unlawful activities.

Argentina’s President Javier Milei faces investigation for promoting LIBRA cryptocurrency amid allegations of market manipulation and potential legal violations.

Anti-Corruption Office Begins Investigations Into LIBRA Promotion

On February 14, President Milei promoted the LIBRA meme coin on X, claiming it could boost Argentina’s economy and benefit small businesses. His statement triggered a surge in the token’s price, with the market cap hitting over $4 billion in hours, allowing insiders to cash out over $100 million in profits.

However, the rally was short-lived. The meme coin didn’t have any tokenomics; the website itself was created hours before the launch, and over $87 million was cashed out in the first three hours.

The token’s value crashed soon after, indicating a classic pump-and-dump scheme.

“Within minutes of the launch, multiple large holders began liquidating millions of USD worth of LIBRA. This included gains of +$4 million or more as LIBRA rose to $4.6 billion in market cap. After the top was set at 5:40 PM ET, the coin fell in a literal straight-line,” wrote The Kobeissi Letter.

This resulted in mounting criticism that led Milei to delete his post and attempt to backtrack. The president stated that he had not fully understood the project.

Also, he later clarified that, after learning more, he chose to stop promoting it.

“I was not aware of the details of the project and after becoming informed, I decided not to continue giving it exposure (that’s why I deleted the tweet),” the president stated.

Argentina’s presidential office attempted to contain the fallout, downplaying the incident as a routine business promotion tied to blockchain financing. However, the officials acknowledged that Milei had met with Hayden Mark Davis, a figure linked to the KIP Protocol, which is behind LIBRA’s infrastructure.

Despite this, the government has announced an investigation into whether any officials, including Milei himself, had acted improperly. The probe will also examine whether KIP Protocol, the entity linked to LIBRA, engaged in unlawful activities.

LIBRA Meme Coin Market Cap Chart. Source: GeckoTerminal

Additionally, the president has ordered the formation of an Investigation Task Unit (UTI) under the presidency. This unit, composed of financial, crypto, and anti-money laundering experts, will examine LIBRA’s launch and those involved.

“All information gathered during the investigation will be handed over to the courts to determine whether any of the companies or individuals linked to the KIP Protocol project committed a crime,” the statement added.

Political Fallout and Impeachment Threats

The controversy has escalated beyond the crypto space, sparking a political crisis. Critics argue that Milei’s reckless promotion of a speculative asset led to financial losses for investors and the public.

Argentine lawmaker Gabriela Estevez accused him of engaging in a classic pump-and-dump scheme. They described it as a severe financial fraud that manipulated market prices for personal gain.

“What the President did is called Pump and dump, and it’s a serious financial fraud. The ‘crypto’ creators buy large amounts of it at its initial price. Then, they artificially inflate its value by attracting more people with lies about its potential. When the price goes up, the ‘crypto’ creators sell their holdings, causing the price to crash and leaving other investors with losses,” Estevez remarked.

The backlash has also led to impeachment threats. A political faction has initiated proceedings, calling the scandal unprecedented in Argentina’s history.

“Our block of National Deputies decided to move forward with the presentation of an impeachment request against the President of the Nation,” Diputados UP wrote on X.

Buenos Aires Governor Axel Kicillof echoed these concerns, labeling the incident a large-scale financial fraud. He warned that investors in Argentina and beyond had been misled, comparing the situation to a typical cryptocurrency pyramid scheme.

Overall, this is a major reflection of how political endorsement, since the TRUMP launch has made the meme coin market extremely vulnerable. Previously, Ethereum co-founder Vitalik Buterin also warned that more political meme coins could harm the market’s progression.

Since Trump’s meme coin launch, several scammers have launched and pumped fake tokens based on other political leaders. LIBRA is just another latest example of the current extreme risks of this space.

Conclusion

As Argentina’s government continues its investigation, the implications of President Milei’s endorsement of LIBRA serve as a critical reminder of the volatility and risks associated with cryptocurrencies. Stakeholders across the financial spectrum will be watching closely to see how this situation unfolds and what it might mean for regulatory approaches to emerging digital assets.