Endorsement Causes Legal Examining
Javier Milei, the president of Argentina, is being investigated for his role in promoting the cryptocurrency LIBRA, which experienced a sharp increase and then decline, leading to allegations of fraud. Some MPs are even pushing for his impeachment, while others say the situation is similar to a pump-and-dump plan. To find out if Milei or anybody else committed any crimes, a government task group was formed.
The Unexpected Rise and Fall of LIBRA
Milei praised LIBRA on social media site X on February 14th, saying it might help small enterprises and the Argentine economy. As a result, insiders allegedly cashed out over $100 million in gains, and the token’s market value surpassed $4 billion. The token’s website was made just hours before launch, and it lacked a formal financial plan. Over $87 million was taken out in three hours, which caused LIBRA’s value to suddenly plummet and raised questions about possible financial malfeasance.
Unusual Market Behaviour
Major holders liquidated their holdings at peak value, with some making over $4 million each, according to reports from The Kobeissi Letter. When the token hit its peak price at 5:40 PM ET, its value plummeted. Milei removed his promotional post in response to criticism from the public and later stated that he did not completely comprehend the concept. He subsequently said that he decided to disassociate himself with LIBRA after knowing more about it.
Government Reaction and Examination
The presidential office of Argentina made an effort to minimise the controversy by portraying it as a normal blockchain-related marketing campaign. Officials did admit, though, that Milei had met with Hayden Mark Davis, a significant player connected to LIBRA’s infrastructure via the KIP Protocol. To find out if any government officials, including Milei, committed misconduct, an official investigation has been started. The KIP Protocol is also being examined by investigators for possible legal infractions.
Establishment of an Investigative Task Force
A special Investigation Task Unit (UTI) made up of specialists in banking, cryptocurrency, and anti-money laundering was established by Milei in response to mounting concerns. The LIBRA launch and its major participants will be examined in this unit. The administration has promised that, if required, all findings will be brought before the courts for legal action.
Calls for Impeachment and Political Repercussions
A political crisis has resulted from the controversy. Critics contend that investors lost money as a result of Milei’s careless support of a speculative asset. He was accused by Argentine politician Gabriela Estevez of masterminding a traditional pump-and-dump operation, in which token producers purchase at a discount, inflate it, and then sell at a premium, leaving others with large losses.
The Start of the Impeachment Process
A political faction, citing the episode as an unprecedented scandal in Argentina’s history, has started the impeachment process against Milei amid mounting fury. Axel Kicillof, the governor of Buenos Aires, called it a massive financial scam and warned that both foreign and domestic investors had been duped. He compared the scenario to a pyramid scheme involving cryptocurrency.
Risks to the Market and Crypto Endorsements
This instance demonstrates the dangers of public individuals endorsing cryptocurrency. Since former US President Donald Trump unveiled his own token, the trend has been growing. Vitalik Buterin, a co-founder of Ethereum, had previously cautioned that political meme currencies would damage the cryptocurrency market’s reputation. Scammers have introduced a number of phoney tokens based on political figures since Trump’s involvement; LIBRA is the most recent example of such a risk.
