Javier Milei, argentine president
Javier Milei, president of Argentina, assured that he never promoted the $Libra cryptocurrency (Photo by LUIS ROBAYO / AFP).

Cryptocurrency: the Libra Scandal that Affects President Javier Milei

Milei is embroiled in a scandal involving Libra, a cryptocurrency that has plummeted in value. Argentinians are blaming their president for the situation.

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The Argentine political and financial ecosystem is in turmoil following the controversy surrounding the cryptocurrency $LIBRA, promoted by President Javier Milei on social media. What began as an alleged initiative to boost Argentina's economy ended in an abrupt collapse of the digital token's value, resulting in massive losses and sparking a debate about the volatility of the crypto market and its risks.

The Rise and Fall of Libra

Last Friday, President Javier Milei posted on social media a message describing $LIBRA as a "private project to encourage the growth of the Argentine economy." This statement had an immediate effect: the cryptocurrency, which had been launched that same day, surged from fractions of a cent to nearly $5 within hours. However, the boom was short-lived. In less than two hours, the price dropped by 90%, resulting in estimated losses of $250 million for investors.

President Javier deleted his post shortly after the collapse and claimed he was unaware of the details of the project. In a televised interview, he stated that his intention was to "lend a hand to Argentines" and compared investing in crypto to "betting in a casino." However, for IT specialist Javier Smaldone, this analogy was insufficient, as he considered it "a casino where the machines are rigged by the owner."

Complaints and Consequences of the scandal

The collapse of $LIBRA triggered a wave of complaints both in Argentina and the United States. Several opposition congress members accused the president of having promoted what they describe as a "crypto scam," and the Peronist opposition announced they would push for an impeachment against President Javier Milei. However, analysts such as Carlos Germano consider this possibility "null," given that the opposition lacks the necessary votes to remove him from office.

The impact was also felt in the markets: the MERVAL stock index fell by 5.58% on the Monday following the $LIBRA scandal, reflecting investor nervousness. This situation raises concerns about Argentina's financial stability and its impact on the confidence of foreign investors, who are cautiously monitoring the case's development.

Javier Milei under suspicion?

At the judicial level, the investigation is ongoing. According to lawyer Adolfo Suárez Erdaire, an expert in digital fraud, President Milei could face charges of financial fraud once his term ends, with penalties of up to six years in prison. "Judicial cases always remain," said the jurist, referring to the possibility that the justice system continues its course despite the lack of immediate political sanctions.

Other key figures in the scandal include Hayden Mark Davis, CEO of Kelsier Ventures and co-founder of $LIBRA, and Julian Peh, responsible for the website from which the cryptocurrency was launched. Also involved is Mauricio Novelli, an Argentine businessman who arranged a meeting between these executives and the president in Buenos Aires. The connections between these actors and their influence on the token’s development raise questions about potential conflicts of interest.

Argentina and The Volatility of the Crypto

The $LIBRA scandal also reignites the debate about the volatility and risks of the cryptocurrency market. Unlike traditional assets, cryptocurrencies can experience extreme price swings within minutes. This is partly due to speculation and the lack of regulation.

While some experts believe that what happened with $LIBRA has characteristics of a "pump and dump" scheme—a market manipulation tactic where a token’s price is artificially inflated before being massively sold—others argue that it was simply an example of the speculative nature of the crypto ecosystem.

President Milei and his position

President Milei has attempted to distance himself from the $LIBRA scandal, asserting that he had no financial ties to the cryptocurrency and that he merely "shared" the project rather than "promoting" it. However, his critics insist that his endorsement contributed to the speculative bubble that ultimately affected thousands of investors.

Former President Mauricio Macri, a strategic ally of President Javier Milei, described the case as "very serious" and stated that it "impacted the country's credibility," although he ruled out supporting an impeachment "at this time."

The public debate has also intensified, with Milei’s supporters arguing that investing in crypto carries inherent risks and that each investor must take responsibility for their financial decisions. Others, however, question the lack of transparency and potential hidden interests behind the promotion of $LIBRA.

Cryptocurrency: A Blow to Credibility

Beyond the legal implications, the $LIBRA scandal represents a blow to the image of President Javier Milei, who has based his rhetoric on trust in the free market and economic deregulation. This episode could mark a turning point in his administration and in public perception of the risks associated with cryptocurrencies in Argentina.

On the international stage, the $LIBRA case also raises concerns about cryptocurrency regulation and the need to establish mechanisms that protect investors from potential frauds or unexpected collapses.

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