President Javier Milei on Monday denied promoting a cryptocurrency that crashed, brushing aside claims of wrongdoing as prosecutors begin an investigation into the scandal.
The ‘$LIBRA’ cryptocurrency crashed last Friday just hours after Milei posted on social media about it, losing investors billions of dollars and prompting a flood of complaints.
"I did not promote it, I spread it," Milei told broadcaster TN, adding that it "is a problem between private parties because the State does not play a role here."
"I acted in good faith," he said.
This "is a problem between private parties because the state plays no role here," he added.
"Someone who comes to me and proposes the creation of an instrument to finance projects is interesting to me. For wanting to give a hand to Argentines, I got slapped in the face," he claimed.
Federal prosecutors will examine whether Milei engaged in fraud or criminal association or was in breach of his duties when he praised the ‘$LIBRA’ cryptocurrency on social media last Friday evening.
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 so-called “memecoin.”
"The world wants to invest in Argentina. $LIBRA," read the President's initial message, referring to the token, a digital asset based on blockchain technology with no backing in real money.
The currency's value soared then crashed, and Milei deleted his blessing hours later, saying he had made a mistake.
Economists, crypto specialists and opposition political figures criticised the self-declared "anarcho-capitalist" president, an economist by training, and said the digital asset could be a fraud or a 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."
‘Nothing to hide’
On Monday, Milei said he had "nothing to hide" from an investigation.
He said that those who carried out the transactions, including "a lot of bots," were people who "knew very well what the risk was."
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.
The Buenos Aires Stock Exchange closed 5.58 percent down Monday from Friday's closing levels, with drops of up to eight percent for some stocks.
Argentina’s Presidency on Saturday announced that – “in light of the events” – the national 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.
Milei said he had learned an "interesting lesson" from the episode, and that he would have to construct “walls” and "raise the filters" around him.
"The most interesting lesson that I have to learn is that I assumed the Presidency and continued to be Javier Milei as always, and those who know me know that I was accessed in the same way as when I was President," he said, reiterating his line that he only shared details about the token and did not promote it.
In its judicial filing, Observatorio de Derecho la Ciudad noted the involvement of La Libertad Avanza party members in the token’s promotion.
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.
‘Rug pull’
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."
Milei dismissed criticism on Monday, stating it came from traditional politicians who are “nervous” as they are polling badly.
He claimed only 5,000 people had truly lost money in the events of last Friday, arguing they were “specialised” investors who knew what they were getting themselves into.
"They knew very well what they were getting into, they are volatility traders," he said, adding: "If you go to the casino and lose money, you knew it could happen.”
Asked for his take, political scientist Carlos Germano said that the case "affects his [Milei's] credibility," though his efforts to combat inflation – at its lowest in four years – remain popular with the electorate.
Milei continued with his duties Monday, hosting Republican US Senator Steve Daines in Buenos Aires. The President is due to visit the United States later this week.
– TIMES/AFP/PERFIL
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