Argentina’s President Javier Milei endorsed the $LIBRA cryptocurrency on social media, causing its value to surge from almost zero to $4.978 in minutes. However, the token’s price quickly crashed to below $0.50, leaving over 40,000 investors with losses totaling $4 billion. The Buenos Aires Stock Exchange also dropped by 5.58%. This sparked public outrage, legal investigations, and calls for Milei’s impeachment.
Key Details:
- Token Surge & Crash: $LIBRA skyrocketed after Milei’s post but collapsed within hours.
- Investor Losses: Over 40,000 investors affected, with $4 billion in losses.
- Political Fallout: Milei faces fraud accusations and impeachment calls.
- Regulatory Changes: Argentina plans stricter rules for crypto endorsements and token launches.
The scandal highlights the dangers of political influence on volatile crypto markets and raises questions about accountability in promoting digital assets.
Event Timeline
Major Events
The $LIBRA scandal unfolded over just a few intense days in February 2025. It all began on Friday, February 14, when the $LIBRA token launched at 7:00 PM local time. Just three minutes later, President Javier Milei publicly endorsed the cryptocurrency on social media[2][3].
Here’s a breakdown of the key events:
| Time (Feb 14-17, 2025) | Event | Impact |
|---|---|---|
| 7:00 PM, Feb 14 | $LIBRA Token Launch | Trading officially begins |
| 7:03 PM, Feb 14 | Milei’s Endorsement Post | Token value skyrockets |
| Late Evening, Feb 14 | Peak Price Reached | Surpasses $4 per token |
| Night, Feb 14 | Price Collapse Begins | Drops below $0.50 |
| Late Night, Feb 14 | Milei Deletes Post | Sparks further market panic |
| Feb 16 | Official Statement Issued | President’s office defends his actions as "information sharing"[3] |
| Feb 17 | Television Interview | Milei denies promotion, claims only 5,000 were affected[1] |
These events unfolded at breakneck speed, causing chaos in the market.
Market Response
The market’s reaction was swift and severe. The token’s dramatic rise and equally dramatic crash shook Argentina’s financial markets. By Monday, February 17, the country’s main stock index had dropped by more than 5%[3].
Julian Peh, CEO of Kip Network, came under scrutiny as investigators began probing connections between the token’s creators and government officials[2]. The scandal’s impact wasn’t limited to cryptocurrencies – it also strained international relations and rattled investor confidence.
"The chances of any of the affected investors being Argentine were very, very remote", President Milei stated during his televised defense[1].
Federal prosecutors quickly launched investigations into possible fraud and criminal activities. The Anti-Corruption Office also began looking into whether government officials had engaged in misconduct[2]. Adding to the complexity, reports suggested the FBI had joined the investigation, introducing an international angle and raising questions about future cross-border cryptocurrency regulations.
Legal and Regulatory Effects
Changes in Argentina’s Crypto Laws
The $LIBRA scandal exposed gaps in regulations concerning public officials endorsing digital assets. In response, a task force has been set up to launch an "urgent investigation" into the $LIBRA launch and the roles of all involved parties[2].
Here’s a look at the proposed regulatory changes:
| Regulatory Area | Before Scandal | Proposed Updates |
|---|---|---|
| Public Official Endorsements | No specific rules | Mandatory disclosures and waiting periods |
| Token Launches | Limited oversight | Stricter vetting and transparency requirements |
| Investor Protection | Basic safeguards | Better risk disclosures and protection rules |
These updates aim to address the gaps highlighted by the scandal and lay the groundwork for ongoing legal challenges.
Current Legal Status
Federal Court No. 1, under Judge María Servini, and Argentina’s Anti-Corruption Office are investigating accusations of fraud, criminal association, neglect of official duties, and misconduct involving government officials[2]. Milei’s defense – that he shared $LIBRA details through personal accounts – further blurs the line between personal and official communications[3].
The fallout has extended beyond legal probes. The Buenos Aires Stock Exchange saw a 5.58% drop after the incident, reflecting shaken investor confidence[2]. Opposition leaders have intensified the situation, calling for impeachment and labeling it an "unprecedented scandal"[3]. Additionally, international law enforcement agencies are now keeping an eye on the case, signaling possible global legal consequences.
Technical Breakdown of Token Collapse
Blockchain Data Analysis
An analysis of blockchain data reveals suspicious, coordinated activity surrounding the collapse of $LIBRA. Before President Milei’s endorsement, around 80% of the tokens were held by a small group of investors, creating a setup ripe for market manipulation[2].
Here’s a closer look at the key data:
| Timeframe | Activity | Impact |
|---|---|---|
| Pre-endorsement | 80% token concentration | Increased vulnerability to manipulation |
| Peak Trading | Surge to $4.978 | Market cap hit $4.6B |
| Post-Peak | Mass liquidation | Withdrawals exceeding $4M in minutes |
At its peak, coordinated wallet activity kicked off mass liquidations, with over $4M withdrawn in a short span of time[2].
DEX Platform Effects
These irregularities on-chain spilled over into decentralized exchanges (DEXs), creating a volatile market environment. Platforms like Defx, which allow high-leverage trading (up to 50x), played a pivotal role. The initial price spike attracted traders using leverage, but as the token’s value plummeted, forced liquidations caused a chain reaction, worsening the decline.
Major token holders withdrawing liquidity further destabilized DEX liquidity pools, leading to extreme slippage. Even small sell orders caused outsized price drops. The combination of concentrated token ownership, high-leverage trading, and rapid liquidity removal points to what seems like a pump-and-dump scheme[2]. This sequence of events highlights the risks for leverage traders and has prompted updates to safety guidelines.
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Trading Safety Guidelines
Political Token Risk Assessment
When dealing with politically linked cryptocurrencies, it’s crucial to evaluate them carefully. Watch out for tokens concentrated in a few wallets – this could indicate manipulation. Similarly, low trading volumes often point to liquidity problems. Be cautious of unverified endorsements and smart contracts that haven’t undergone proper security audits.
| Risk Factor | Warning Signs | Protective Measures |
|---|---|---|
| Token Distribution | Concentration in a few wallets | Use blockchain explorers to verify token distribution |
| Market Liquidity | Low trading volumes | Limit exposure based on your portfolio’s overall strength |
| Political Endorsements | Lack of confirmation via official channels | Cross-check with official government sources |
| Smart Contract Integrity | No reputable security audits | Ensure smart contracts have been thoroughly audited |
A staggering 73% of crypto investors who fell for scams in 2022 were influenced by social media platforms[3]. Always verify political endorsements through official government announcements and press releases[1].
Once you’ve assessed these risks, you can implement safer trading practices, especially on decentralized exchanges.
Safe DEX Trading Methods
Volatility is a common trait of these tokens, so it’s essential to follow strict trading protocols on decentralized exchanges (DEX).
On platforms like Defx, prioritize security and risk management:
Position Management:
- Set strict stop-loss orders to control potential losses.
- Limit each trade to only 1-2% of your total portfolio[5].
- Keep a portion of funds in stablecoins to mitigate market swings.
Technical Security:
- Activate all available security features, such as two-factor authentication and hardware wallet integration.
- Double-check smart contract addresses and review permissions before executing trades.
- Use automated tools for risk management to streamline your safety measures.
If you’re engaging in leveraged trading on Defx’s 50x platform, opt for isolated margin. This ensures that losses are contained within individual positions. Additionally, keep an eye on blockchain analytics tools to monitor large wallet movements, especially during political or regulatory events. Sudden, unusual activity can serve as an early warning for emerging risks[4].
Inside Argentina President Javier Milei’s LIBRA Crypto Scandal
Conclusion: Key Findings
The scandal surrounding the Libra cryptocurrency and President Javier Milei has highlighted weaknesses in Argentina’s cryptocurrency market while sparking intense debate about political accountability. Federal prosecutors estimate losses exceeding US$4 billion, impacting over 40,000 investors[2]. The extreme price swings tied to politically endorsed cryptocurrencies have underscored the risks involved.
| Impact Area | Key Effects | Regulatory Response |
|---|---|---|
| Market Impact | 5% drop in Argentina’s main stock index[3] | Creation of a cryptocurrency task force[2] |
| Political Consequences | Impeachment calls and fraud accusations | Investigation into potential breaches of duties |
| Investor Protection | Over 40,000 affected individuals | Stricter due diligence requirements |
These figures illustrate the crisis’s wide-ranging effects, from market disruptions to political fallout.
President Milei’s defense, claiming he only "shared" information about $LIBRA[1][2], has fueled further debate about the responsibilities of public officials in promoting digital assets.
The regulatory and political consequences echo past concerns about market manipulation and inadequate oversight. New measures now stress mandatory disclosures, stricter vetting, and stronger safeguards for investors.
This event marks a critical shift for Argentina’s regulatory framework and could influence how politically linked digital assets are governed worldwide.