The controversy surrounding the LIBRA token has quickly escalated into a major political and financial scandal. What started as a cryptocurrency project promising to support small businesses has now led to legal action, accusations of fraud, and demands for political accountability.
Argentine President, Javier Milei, is at the centre of the storm after he publicly endorsed LIBRA on social media. His support caused the token’s price to skyrocket, but within hours, it crashed, wiping out millions in investor funds.
Now, lawyers in Argentina and the United States are calling for investigations, and some political opponents are even pushing for Milei’s impeachment.
This scandal has not only impacted Argentina but also raised concerns about similar crypto schemes being planned in other countries.
Legal action against LIBRA and Milei
The LIBRA scandal took a serious turn on 17 February when a group of Argentine lawyers filed a criminal complaint with the US Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI).
The lawyers want an investigation into who was behind the token’s collapse and whether President Milei played a role in misleading investors.
Argentine newspaper Clarin reported that the complaint specifically calls for Milei to be questioned. If US authorities take action, the scandal could have international consequences.
On the same day, the Civic Coalition ARI, an Argentine political party, filed a separate complaint with the Ministry of Justice. They accused Milei of fraud and bribery, arguing that the government should not be allowed to investigate itself.
The political fallout has been intense. Opposition lawmaker Leandro Santoro has publicly demanded that Milei be removed from office.
“This scandal, which embarrasses us on a global scale, compels us to file an impeachment petition against the president”, he told Reuters on 16 February.
The Argentine government, however, has tried to distance Milei from the situation. Officials insist that the president was “scammed” by the creators of LIBRA and that he had no knowledge of how the token worked or the risks involved. But critics argue that his endorsement gave LIBRA credibility and influenced thousands of investors to buy in.
How LIBRA skyrocketed and then crashed
The LIBRA token first gained attention on 14 February when President Milei made a post about it on X. In his message, he described LIBRA as a tool to help fund small businesses and even shared its smart contract address, making it easier for people to invest.
Following Milei’s post, the token’s market value surged, reaching an astonishing $4.56 billion within hours. But the excitement did not last long.
Just as quickly as it had risen, LIBRA’s value collapsed to $257 million, wiping out 95% of its worth. Panic spread among investors, many of whom accused the people behind LIBRA of pulling off a classic crypto scam.
Blockchain analysis firm Bubblemaps later revealed that LIBRA’s creators had been involved in other failed crypto projects, including one called MELANIA, which collapsed earlier in the year. This raised suspicions that LIBRA had been a setup from the start.
One of LIBRA’s key figures, Hayden Davis, denied any wrongdoing. In an interview with the investigative YouTuber Coffeezilla, Davis dismissed fraud claims, saying, “All the moaning on social media comes from people who didn’t get into the deals. If they were in, you wouldn’t hear them complain”.
Adding to the controversy, reports surfaced that the team behind LIBRA had been in discussions with Nigerian authorities to launch a similar project.
While there is no evidence that Nigerian President Bola Tinubu was personally involved, members of his team were reportedly in contact with LIBRA’s developers. There are also claims that other countries were approached for similar crypto schemes.
The investigation into LIBRA has uncovered even more troubling details. Blockchain data suggests that a large amount of money was taken out of the token before it crashed. In total, around $87 million in liquidity was withdrawn, raising concerns about insider trading.
Some investors now believe that LIBRA’s creators knew the token would collapse and took steps to secure their own profits before the crash.
President Milei’s response
As the scandal grew, President Milei defended himself in a television interview. He denied any involvement in fraud and insisted that he only shared information about LIBRA, rather than actively promoting it. “I didn’t promote it, I shared it”, he stated.
Despite his claims, Milei’s actions raised further suspicions. After deleting his original post about LIBRA, he later retweeted a “How to Buy $LIBRA” tutorial.
Many critics argued that this contradicted his attempts to distance himself from the token. It remains unclear whether the retweet was intentional or an oversight.
Meanwhile, Argentine authorities have launched multiple investigations into the scandal. Federal Judge, María Servini, has been assigned to lead the probe, and Argentina’s Anti-Corruption Office has also begun looking into the case. Lawyer Jonatan Baldiviezo, who filed one of the complaints, described Milei’s involvement as part of a fraudulent scheme.
The scandal has already affected Argentina’s economy. The S&P Merval, Argentina’s main stock market index, dropped more than 5%—its worst intraday fall since July 2023. Economy Minister, Luis Caputo, has tried to downplay the situation, dismissing the crypto market as a space full of “gamblers”.
One of the biggest questions now is whether Milei will face criminal charges. If investigators find evidence that he knowingly promoted a scam, he could face legal consequences. However, if he was genuinely misled, he may avoid punishment but still suffer political damage.
In the broader crypto world, the LIBRA scandal has reignited debates about the responsibility of public figures in promoting digital assets. Many politicians, celebrities, and influencers have previously faced backlash for endorsing failed crypto projects.
The LIBRA case is now being referred to as ‘Cryptogate’ by local media, reflecting the scale of the controversy. The coming weeks will be crucial in determining whether those responsible for the token’s collapse will be held accountable.
