This weekend was undoubtedly marked by the “Milei cryptocurrency scandal.” It is still difficult to measure the full extent of this mega-scam´s impact, but Milei has been criticized, denounced, and generated concern both domestically and internationally. Was it a policy mistake or a scam? In either case, it is a severe scandal that is already spreading ripples in the country and around the world, and has unknown and unpredictable political consequences.

By Andrea Lanzette and Gonzalo Zuttion

In the “Crypto World”

For analysts and crypto specialists, it was a “classic pump and dump,” a fraud that involves artificially inflating a price, attracting unsuspecting investors (or those aware of the scheme but looking to profit), and then withdrawing the funds so that a few can take profits.

This is done through so-called memecoins, virtual currencies that have no basis in the real economy other than internet hype.

Milei’s now famous X post promoting the token that has since disappeared caused unrest in the industry. For analysts, economists, and developers, what happened damages confidence in the crypto market and can cause uncertainty in the sector, affecting its development and dynamics.

The US courts

The alleged $LIBRA digital mega-scam reached the United States with concern, as those affected are not only some Argentines but also many regular crypto users worldwide who were deceived. This is why the Department of Justice and the Federal Bureau of Investigation (FBI) received at least one criminal lawsuit against the protagonists of the massive fraud, which generated illicit profits of between 80 and 100 million dollars.

The so-called “criminal operations report” explicitly pointed out the role that President Javier Milei played, as well as those of Hayden Mark Davis of the US, Julian Peh of Singapour, and Argentine “entrepreneurs” Mauricio Novelli and Manuel Terrones Godoy, of Spanish origin.

The most significant lawsuit was filed by an Argentine law firm specializing in international insolvency and financial fraud cases, Moyano & Asociados, which also notified the US Securities and Exchange Commission (SEC) about the criminal maneuvers registered since Friday night.

International figures

Colombian president Gustavo Petro mocked Milei on his X account: “Invest in Colombian coffee Mr. President; it’s international price is growing like never before. It is also sold by the pound.”

In tune with the indirect and direct criticisms Milei and Petro have previously exchanged, the latter took advantage of the situation to mock the “lion.”

Media Coverage

Several media outlets around the world featured this event in their headlines or among their most important articles, expressing how serious the issue is in various ways.

The newspaper El País of Spain remarked that “experts in cryptocurrencies immediately warned on social media that something was off” which in result, that “when the fate of the currency seemed determined, the army of trolls that defends the president every day panicked.”

The newspaper O Globo of Brazil also illustrated the scandal starring the far-right president. “Milei mentions cryptocurrencies in a social media post, then the currency collapses, and the president could become a target of investigation,” the newspaper explained.

The news reached the well-known US newspaper The New York Times, which echoed the impact of the case in their article “Argentine Leader Draws Fire After Cratering of Crypto Coin He Promoted.”

It is “one of the strongest controversies he has to face since he arrived at the Casa Rosada,” Spain’s ABC newspaper said.

Media Specialized in Economics

International portals specialized in economics and finance took note of the scandal, and shock grew. Bloomberg published: “Milei Pushes Crypto Token, Then Deletes Post Amid Fears of Scam,” adding that the President “then said he was not aware of the details of the project.“

Cryptocurrency specialist outlet Cointelegraph reported that “Javier Milei-backed Libra token plummets after a tipster withdrew $107 million.”

At the same time, CoinDesk detailed the amounts of money involved in the operation that Milei promoted on his platforms and led to the scam: “Javier Milei backs down on his $4.4 billion investment in memecoin after insiders pocketed $87 million,” the outlet stated.

Impact on the Market

The “lion of economics,” who is running to be “the leader of the far-right in the world,” who boasts of being the best economist, aspiring to win the Nobel Prize in the field, is the manager of a mega scam; his participation was key.

Whether as the creator of the business or simply a necessary participant, he cannot evade his responsibility. This will have global implications, primarily in Milei’s position relative to other leaders, economic groups, and capitalists, as his credibility is in doubt.

Shares of the S&P Merval are down almost 4% on the first day of trading after the $LIBRA scandal featuring President Javier Milei came to light. Meanwhile, dollar bonds in the local market have fallen more than 4%.

According to the government’s financial report: “The stocks leading the fall are BBAR, sinking more than 10%. Grupo Financiero Galicia follows with -9%, and Edenor with -8%. Bonds in dollars sank more than 4%, led by the Bonar 2035, which fell -4.1%; followed by the Bonar 2041, which lost almost 4%, and the Global 2038, which fell -3.5%.

A crisis of extensive and profound impact has opened that will continue to unfold in the country and around the world. It also opens a new moment for Milei and his government. Nonetheless, true to his style, he is enjoying how the whole world is talking about this mega scam, his participation, and his responsibility. The “fool” of Wall Street, or a thief disguised as a monarch? The truth is that, in one way or another, whether he is the deceived lamb or the real wolf and swindler hiding under its skin, Milei has to go.

Milei is outrageous: “I Didn’t Promote a Scam, I Just Spread It”

Since last Friday, when the president promoted the already famous $LIBRA, generating magnitudes of this crypto crisis –the scope of which is still unknown– as the days and hours went by, the details of the scam came to light, and both the president and some of those close to him got dirtier and dirtier.

Without a doubt, the ruling party has inflicted on itself one of the hardest blows that the administration has received so far. The scam that the president carried out by promoting this cryptocurrency is such that even the answers provided by his own team are very unclear.

Neither the statements given by Bulrrich or Caputo, nor the communication engineering machine mounted by the media aligned with the libertarian government have managed to mitigate the consequences of this theft.

Milei’s interview on TN this Monday night failed to clarify the situation. The president chose to do the same thing he did last Friday on X, claiming ignorance of the details of this crypto project and blaming the opposition. He stated that he promoted this project because of his fanaticism towards technological matters.

As the president said in the interview with Jonatan Viale, he received a significant blow, and despite trying to minimize what happened, the consequences that are coming may be quite serious for the survival of his government. The magnitude of this scam is such that even Milei has to pretend to place himself at the disposal of the courts. The proposed solution was for the government itself to run a self-investigation led by the anti-corruption office and enquire about the president’s implications in this matter, that is, the government investigating itself, accompanied by a judiciary that works in tandem with the Executive power. Nonsense.

On top of this complex scenario an unedited cut of the interview that spread on social media hours after it had aired made fools of the President and the journalist. In the clip, a first-line official, Santiago Caputo, interrupts the interview to censor a question that he judged could legally affect Milei, all under the docile gaze of the “journalist” overshadowed by the government. The truth of the interview proves that everything is a big lie.

Some Consequences of This Crypto Crisis

So far, the government’s statements clarify nothing and obscure everything, and the developers of $LIBRA contradict everything that the president and his team say.

What was initially stipulated as a scam that reached US$ 80 million, now, according to a report by the Solana blockchain platform, reached US$ 286 million, affecting a total of 74,698 buyers of this token.

This multi million dollar theft could spark an interesting crisis that may make the government stumble. The President received a total of 112 criminal lawsuits in the national courts in less than 72 hours. At the same time, the scam also began to be identified in the international justice system, as the case opened by the FBI shows. Although the tentacles of the iron triangle formed by the Milei siblings and Santiago Caputo have some influence in the national justice system, the magnitude of this crisis may wound them to the degree that they might not receive the favors they are accustomed to receive from the Judiciary. In addition, the international lawsuits open another front, in which they have no control whatsoever.

The government also received a financial blow. The market gave the president a harsh response. The shares of the country’s leading companies registered a decline of 7% just minutes after the start of the trading day. It is worth clarifying that it was a half-hearted response, given US markets were closed on holiday.

The foreign exchange market also showed the magnitude of this blow. The unofficial dollar exchange rate registered a rise of $10, taking it to $1,230 for sale. Regarding financial dollars, the MEP showed an increase of 1.3%, leaving it at $1,201. This is a complicated scenario, especially considering the problems that the government had been facing regarding the stability of the dollar pressured by devaluation demands.

Investigate, Condemn, Oust

The explanations provided by the president and his entourage are baseless. As the interview with Jonatan Viale demonstrated, Milei’s answer is to disregard any responsibility in the case. The courts will have the responsibility of resolving the fate of the case. Faced with this, any serious path to identify the culprits cannot involve anyone who has so far acted side by side with Milei.

The scam caused a section of the opposition, formed by the traditional parties, to react. Some called for impeachment, others for an investigation commission. However, as far as libertarian administration is concerned, no tool that is registered within the limits of parliamentary institutionality has proven to be effective in stopping Milei. On the contrary, it has served his interests. It should be noted that those who would constitute the political trial or the parliamentarians who carry it out, could be the same people who have facilitated his governability to deploy a violent austerity program against the working class. Therefore, it is valid to ask ourselves, what real effects could such an action have if all the traditional forces have contributed to the government’s agenda of austerity, plunder, hunger, and repression? Another element that could be included in this reasoning is who would take office in Milei’s place? Legally, it would be the genocide-denying vice president, Victoria Villarruel. This could have a high price for most workers. In any case, even for a political trial to advance the decisive action is generating mass mobilizations on the streets against Milei and his entire plan. Therein lies the strength to put an end to this sinister government.

On the other hand, we must also analyze the role that the Judicial system has played up to this point. Currently, and taking into account the logic that its power is based on, its composition is determined by the political power of the day. It is not possible for this judiciary to be impartial, and it should also be held accountable by thousands of people on the streets. 

For all these reasons, as we say from the MST-FITU, it is essential to launch an independent investigation process, to punish Milei and all those responsible for this huge scam. They should all go to prison. The composition of an independent commission for justice with all the necessary tools to gather all the details of this multi million dollar theft, is essential for the president to pay for this scam. He has to go. And to achieve this, it is necessary to deploy, together with an in-depth investigation, a process of national mobilization, strikes and all the necessary actions against the boss of all frauds and his henchmen.