Did Javier Milei participate in a crypto scam?

When Javier Milei took power in Argentina there was one group whose ears pricked up with interest: the global crypto bros. After all, here was a president who seemed perfectly aligned with their values. A lover of economic freedom who harbors a deep hatred for state regulations and government spending. Surely this “anarcho-capitalist” was a fan of cryptocurrencies? Twitter filled with threads about why Milei’s election victory was a “big moment for Bitcoin.”

Once in power, however, he did not seem all that interested. That is until Friday, when he took to his X account to post about a new crypto coin that was “dedicated to boosting the growth of the Argentine economy by funding small businesses and entrepreneurs.” Money poured in, but within hours it had collapsed into one of the worst political scandals Milei has faced in his first year in power.

With Milei’s promotion, the value of $Libra coin soared to more than $4 but an alleged sell-off by insiders saw the price collapse to less than a dollar, wiping out millions of dollars in investments. Accusations have been made of a “rug-pull” scam. This is where a new coin is promoted heavily, driving up demand and the price, before insiders sell their stake — leading to massive profits for them, but losses for most investors.

The Argentine president had deleted his posts on X within a few hours — and issued a clear denial that he was involved in the scheme itself. But it was too late to avert the scandal. The Perónist opposition has said it will begin impeachment proceedings, legal cases have been filed by lawyers, and Milei gave a television interview on Monday night to explain himself. In it he painted himself as naively trusting in the potential for tech advancements. “I’m a techno-optimist… and this was proposed to me as an instrument to help fund Argentine projects,” he said. “It’s true that in trying to help out those Argentines, I took a slap in the face.” The government anti-corruption office has been ordered to begin an investigation.

Milei is also now subject to a criminal complaint from a group of lawyers, who said: “We believe that he is a fundamental participant in the development, execution and planning of the mega-scam related to the launch of the $Libra token.” Leandro Santoro, a member of the opposition coalition, said: “This scandal, which embarrasses us on an international scale, requires us to launch an impeachment request against the president.”

Such an attempt at impeachment is likely to fail, according to most observers, with a two-thirds majority necessary to oust the president unlikely to be achievable. But the greater issue for Milei and his political project could be the damage to his reputation. The president trained as an economist and came to public prominence as a television pundit on the economy. His election campaign — and indeed his early successes as president — have been predicated on his prowess at turning the economy around. Such a monumental economic misjudgment could dent the international reputation he has so far been able to build as a safe pair of hands.

A large part of his plan to lead Argentina to economic prosperity relies on attracting international investment. Argentina has many of the ingredients for a good investment in the form of huge deposits of natural resources, but many international companies have been put off by decades of economic chaos and heavy state regulations. Milei has stripped back much of the red tape and has offered huge tax breaks to foreign investors in a bid to coax them in. How kindly are they likely to view the crypto scandal? As long as there is money to be made many will still invest. But it is perfectly feasible that some investors, wary about the long history of economic mismanagement in Argentina, may delay as a result.

And there may be one other consequence of the scandal. Milei might be forced to become a little quieter. The president is reported to spend hours a day on X — and posts and reposts at least dozens of times a day. In his television interview, he suggested that his openness to meeting and hearing from new people may have played a role in his promotion of $Libra. “The most interesting lesson is that… I need to put up more filters, it can’t be so easy for people to reach me,” he said.