Argentina’s President Milei Faces Backlash Over $LIBRA Token Crash

In a recent and rapidly unfolding controversy, Argentine President Javier Milei has come under intense scrutiny for promoting a cryptocurrency token named $LIBRA. The token experienced a meteoric rise followed by a catastrophic collapse, leading to significant financial losses for investors.

Promotion and Immediate Aftermath

On Friday night, President Milei took to social media platform X (formerly Twitter) to endorse $LIBRA, suggesting it would stimulate Argentina’s economy and support small businesses. The endorsement led to a surge in the token’s value, with its market capitalization soaring to approximately $4.5 billion. However, within hours, the token’s value plummeted by over 90%, erasing more than $4 billion in market capitalization. This sharp decline was exacerbated by insiders liquidating $87.4 million worth of tokens, as reported by blockchain analysis firms Kobeissi Letter and Bubblemaps.

Political Repercussions and Accusations

The incident has ignited a political firestorm. Former President and current opposition leader, Cristina Fernández de Kirchner, accused Milei of causing financial harm to thousands of investors, stating that while many lost millions, a select few profited from privileged information. Opposition legislators have called for impeachment proceedings, alleging misconduct and potential involvement in fraudulent activities.

President’s Response and Investigation

In response to the backlash, President Milei deleted his initial promotional post and announced an investigation to determine if any laws were violated. He claimed no prior knowledge of the project’s specifics and withdrew his support upon learning more details. The government has initiated an internal probe through the Anti-Corruption Office and has established a dedicated investigative unit within the presidency to address the matter.

Involvement of KIP Protocol and Animoca Ventures

The $LIBRA token is associated with KIP Protocol, a Web3 infrastructure platform for artificial intelligence. KIP Protocol has previously secured strategic funding from Animoca Ventures, a prominent investor in the Web3 space. Despite these affiliations, KIP Protocol’s official channels have stated that President Milei was not involved in the development of the $LIBRA token.

Investor Impact and Market Dynamics

The token’s collapse has had devastating effects on investors. Analysis indicates that at least 24 addresses suffered losses exceeding $1 million each, with the largest single loss amounting to $5.17 million. The incident has raised concerns about the centralization of token holdings, as 82% of $LIBRA’s supply was concentrated in a few wallets, leading to suspicions of a potential “rug pull” scheme.

Conclusion

This episode underscores the volatile nature of the cryptocurrency market and the profound impact that endorsements from public figures can have on investor behaviour and market dynamics. As investigations proceed, the incident serves as a cautionary tale about the risks associated with emerging digital assets and the importance of due diligence.