Federal prosecutors will investigate President Javier Milei for promoting a cryptocurrency that crashed, losing investors billions of dollars and prompting a flood of complaints.
Federal Court No. 1, presided over by Judge María Servini, was assigned the investigation by lottery on Monday. Her court will examine whether Milei engaged in fraud or criminal association or was in breach of his duties when he praised the ‘$LIBRA’ cryptocurrency on social media last Friday evening.
The currency's value soared then crashed, and Milei deleted his blessing five hours later, admitting he had made a mistake.
"The world wants to invest in Argentina. $LIBRA," read the President's initial message, posted on Friday, referring to the token, a digital asset based on blockchain technology with no backing in real money.
The memecoin was presented as "a private project" aimed at "boosting the growth of the Argentine economy by funding small businesses and Argentine start-ups."
Economists, crypto specialists and opposition political figures quickly criticised Milei, a self-declared "anarcho-capitalist" economist, and warned the digital asset could be a fraud or Ponzi scheme.
Industry observers said the operation was likely a "rug pull" – a scam where developers unveil a crypto token, attract investors, then quickly cash out.
Rights NGO Observatorio de Derecho la Ciudad, which filed one of several complainants, alleges Milei formed part of a "criminal organisation that organised a fraud with the $LIBRA cryptocurrency that simultaneously affected more than 40,000 people with losses of more than US$4 billion."
The Kobeissi Letter publication, which provides analysis on global capital markets, said on X Friday that within minutes of its 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 [capitalisation]," it reported.
The publication noted that some 80 percent of the token was concentrated in the hands of very few holders before Milei’s endorsement.
After the president's post, the token’s value skyrocketed from fractions of a dollar to a peak of $4.978, allowing the original holders to cash out with millions in profits before the asset's value plummeted.
Milei later said he did not know "the details of the project and after learning about it, I decided not to continue promoting it."
He added he had "obviously no connection" with the "alleged private company."
Improper conduct?
Deputies from the opposition Unión por la Patria (Peronist) coalition have announced they will institute impeachment proceedings against Milei.
Former president Cristina Fernández Kirchner branded Milei a "crypto-scammer."
Other parties are seeking the creation of a special parliamentary commission to question Milei. Some have called on the President to give testimony before Congress.
Leading stocks on the Buenos Aires Stock Exchange opened nearly four percent lower on Monday – a public holiday in the United States with markets there closed.
The Presidency on Saturday announced that – “in light of the events” – Argentina's Anti-Corruption Office will be tasked with determining “whether any improper conduct was committed by a member of the national government, including the president himself.”
It would also create a task force to carry out an "urgent investigation into the launch of the cryptocurrency $LIBRA, and all companies or individuals involved."
The prosecutor's office will also look into Julian Peh – CEO and co-founder of Kip Network and KIP Protocol, companies that participated in the creation of $LIBRA – as well as Lower House Speaker Martin Menem, who had reposted Milei's original endorsement.
In its judicial filing, Observatorio de Derecho la Ciudad noted the involvement of La Libertad Avanza party members in the token’s promotion.
"Immediately after the President’s endorsement, the crypto asset’s price saw an exponential surge before collapsing within five hours," states the complaint.
According to its text, "the fact that President Milei and other key figures from his party, La Libertad Avanza, promoted the token lent legitimacy to the project, leading thousands of investors to trust it."
As a result, the price surged, "and the groups controlling the largest share of the token liquidated their positions, securing exorbitant profits."
‘Neither random or naïve’
The plaintiffs argued that "Milei’s promotion of $LIBRA was neither random nor naïve’," highlighting that only "three minutes" passed between the token’s launch and the President’s tweet.
Milei, a professional economist, "has extensive knowledge of cryptocurrencies and how they operate," it argues.
The complaint asks the Judiciary to order a raid on the Olivos presidential residence to seize computers, tablets, and mobile phones.
It also calls for "the intervention and forensic analysis of the X platform to preserve the content of President Javier Milei’s ‘@JMilei’ account and those of the other accused individuals, including records of deleted tweets," as well as transaction traceability "to identify the beneficiaries of the fraud."
Beyond the formal complaint, hundreds of additional reports have been submitted via digital channels, according to judicial sources cited by local media outlets.
"What happened is what’s known in financial markets as a 'rug pull,'" said prominent digital fraud whistleblower Javier Smaldone.
"A cryptocurrency is created — this can also happen with stocks — it is given some initial liquidity so that it has some value, and then a promotional campaign begins to attract people," said the IT specialist.
He detailed that "as more people buy in, the asset’s value increases … until, at some point, those controlling the liquidity withdraw the money, and the whole thing collapses."
Smaldone estimated that the entire operation lasted "about two hours" and involved approximately US$4.4 billion in transactions.
"So far, it has been determined that about US$107 million was taken," he said regarding the fraud, adding, "It could be more."
– TIMES/PERFIL/AFP
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