The token collapse and political consequences for the Argentine President: what happened in the past 72 hours.
Last weekend, another rug pull involved the cryptocurrency world. After Trump and the President of the Central African Republic, this time the scandal involved Argentine President Javier Milei and the new LIBRA token. Promoted as a digital asset intended to “support the Argentine economy,” the token’s rapid rise and sudden collapse shortly after caused major losses among investors and cast a shadow over Milei’s political career.
What happened?
The LIBRA story began on February 14 with a tweet from President Javier Milei in which he promoted the token to his 3.8 million followers on X. The post described the project as a private initiative aimed at strengthening the Argentine economy by financing local companies. The Argentine President’s endorsement triggered a speculative frenzy, with the token price shooting from almost zero to about $5, with a market capitalization reaching $4.4 billion within hours.
https://twitter.com/KobeissiLetter/status/1890611964994363769
But the surge was short-lived. A few hours later, the token crashed below $1.
Blockchain analysts quickly discovered that 82% of the tokens were controlled by insiders, who withdrew $107 million in USDC and SOL from liquidity pools (sets of tokens locked in smart contracts used in DeFi platforms to facilitate cryptocurrency exchange). Within hours, the LIBRA token crashed by 94%.
Protagonists and connections with $MELANIA
President Milei is at the center of the scandal. After the token’s collapse, he deleted his initial support tweet, posting a new one claiming he was unaware of the project’s details and stating he had withdrawn his endorsement once the flaws were discovered.
Other controversial figures associated with LIBRA’s creation and promotion have past histories of similar fraudulent activities. In particular, blockchain analysis firm Bubblemaps found connections between LIBRA developers and those responsible for the MELANIA token, another memecoin involved in a pump-and-dump scheme earlier this year. The same wallets involved in MELANIA token’s early gains were identified in LIBRA transactions, suggesting a pattern of coordinated pump-and-dump schemes.
According to Bubblemaps, one piece of evidence in the investigation is the activity of a Solana wallet called “P5tb4“. The wallet accumulated over $2.4 million through quick operations on the MELANIA token and subsequently transferred these funds to an Avalanche-based EVM wallet, “0xcEA“, directly linked to the MELANIA token creator. The connection was made through funding transactions and cross-chain exchanges.
Bubblemaps states that, weeks later, the “0xcEA” address began funding “DEfcyK“, the main wallet of LIBRA’s creator, which is also identified as the team wallet on Solscan.
After LIBRA token’s launch on February 15, the “0xcEA” wallet repeated the same operation with the latter, making a profit of $6 million. In this case too, the operations were conducted using multiple secondary addresses funded through cross-chain transfer protocols from wallets on Arbitrum and Avalanche.
Analysts noted that LIBRA’s website was created just hours before launch. Speaking to CNN, analyst Pablo Sabatella stated:
“The first thing I saw was that the website had been registered yesterday (Friday); (which) is typical of a scam.”
As reported by Criptovaluta.it, the domain was registered on February 13.
In an interview with the YouTube channel voidzilla (journalist Coffeezilla‘s channel), Hayden Davis, CEO of Kelsier Ventures and key figure behind the LIBRA token launch, admitted to being part of the same group that launched the MELANIA token and that the team adopted the same “sniping” strategy at that token’s launch. The term “sniping” refers to the use of automated bots or smart contracts to execute programmed transactions that purchase a large amount of a newly launched token. This is done very quickly, often within milliseconds, with the aim of reselling the tokens at a higher price and making a profit. Davis emphasized that every launch is subject to these dynamics that disadvantage retail investors unaware of privileged information. He then compared the cryptocurrency landscape to a casino, where the odds are against the average investor.
Political and legal repercussions
Opposition parliamentarians have called for Milei’s impeachment, accusing him of abusing his political influence to promote a speculative and deceptive financial asset. Legal experts argue that Milei could face fraud charges under Article 265 of the Argentine Penal Code, which covers market manipulation and financial crimes.
Several lawsuits have already been filed against Milei, arguing that his endorsement misled investors. Milei has tasked the Anti-Corruption Office with investigating his actions, investigating whether other government officials committed illegal conduct regarding LIBRA’s launch, and has announced the creation of a commission to investigate the creators for alleged fraud. If found guilty, Milei could face up to six years in prison and possible removal from office.
