Explained: Argentina’s president Javier Milei’s $LIBRA crypto and how it wiped $4.4 billion in market cap

$LIBRA crypto assets

Argentine president Javier Milei is under fire after his promotion of a lesser-known memecoin led to huge financial losses for numerous investors. The incident has led to impeachment calls, with opposition forces accusing Milei of endorsing a fraudulent scheme.

How it all started?

The controversy began when Milei posted a tweet to his X account, boasting over 3.8 million followers. In his tweet, he promoted the $LIBRA crypto assets project, calling it a private initiative aimed at boosting Argentina's economy. The tweet included a link to the project and generated immediate interest.

Interestingly, a community note soon emerged up under Milei’s post on X. It warned users to be cautious and even said that it might be a potential scam.

However, mere hours later, Milei deleted his initial post and issued a follow-up statement distancing himself from the project. He claimed he was unaware of the project's details and decided to retract his support upon learning more. In a response to a CNN inquiry, Milei's team labelled the incident as a mistake.

On Saturday, the presidency announced an investigation into the matter, stating that President Milei had involved the Anti-Corruption Office to assess if any improper conduct occurred, including by the president himself.

The rise and fall of $LIBRA

The crypto assets experienced a dramatic rise and fall within hours. Initially, most of the crypto assets were held in a few digital wallets, and its price was nearly zero. Following Milei's endorsement, its price skyrocketed to almost $5, only to crash to mere cents within three hours, according to trading application sites.

Argentine president Javier Milei

According to analysts at the Kobeissi Letter, a global capital market tracking firm, within 5 hours, over $4.4 billion of market cap was erased. The analysts, in a series of posts on X, explained several anomalies related to the whole project. For instance, the website of $LIBRA was created hours before launch. Furthermore, the domain was registered for a 1-year registration period. “There is no public owner information and there are multiple restricted domain statuses,” noted the analysts at Kobeissi Letter.

“Within 3 hours of the launch, insiders in $LIBRA began cashing out. According to Bubblemaps, $87.4 MILLION was cashed out within the first 3 hours,” said the analysts. Also, about 82% of $LIBRA was held in one cluster and no tokenomics were shared with the public.

$LIBRA’s launch had an impact on other memecoins as well. “The launch of this coin took so much liquidity out of the market that even $TRUMP coin fell sharply,” noted the analysts. Over $500 million in market cap was erased from $TRUMP — Donald Trump’s memecoin — after the launch of $LIBRA.

The political fallout

The Union for the Homeland coalition, Argentina's political opposition, announced plans to request Milei's impeachment. According to a report by CNN, figures close to the president, such as Congressman Diego Santilli, dismissed the impeachment calls as an attempt to overthrow Milei.

Milei is set to “break his silence” on the whole matter later in the day. But he has distanced himself from the whole controversy. “I did not know the details of the project and after learning about it, I decided not to continue promoting it,” he wrote on X. “I obviously have no connection with this alleged private company.”