Argentine President's Promotion of Crypto Rocks His Presidency — WSJ

By Kejal Vyas and Vicky Ge HuangArgentine President Javier Milei has been on the defensive after a cryptocurrency he endorsed on X saw its value crash, triggering fraud allegations and calls for impeachment by his political foes.The scandal is hitting the libertarian leader ahead of his trip Thursday to Washington to meet with Trump administration officials to win support for his economic reforms, including approval for an International Monetary Fund loan. A darling of the global conservative movement and ally of President Trump, Milei has described the fallout as "a slap in the face" against him and asserted he hadn't championed the cryptocurrency.But he has spent the last few days deflecting blame for the crypto fiasco and ordered the Anti-Corruption Office run out of the Justice Ministry to probe what happened."I did not promote it," he said to Argentine TV channel Todo Noticias on Monday. "What I did was I shared it. It's not the same."A federal judge, María Servini, was assigned to investigate the scam and the president's role in promoting the coin after more than 110 Argentines filed complaints with the judiciary saying that they lost their investments.The crisis began Friday when Milei, who frequently fires off missives on X, posted about an investment opportunity involving a memecoin called $LIBRA, which he described as a private project working to encourage growth of small Argentine businesses and startups."The world wants to invest in Argentina," Milei said in the now-deleted post.The coin saw its value surge before collapsing within hours, wiping away more than $4 billion in value. Investors believed they were duped into a "rug pull," crypto-world speak for a scam in which a coin is promoted to draw buyers from the public before early investors dump their holdings for a hefty profit and prices tank.In the aftermath of the token's collapse, Hayden Davis, who asserted online and in several media interviews that he advised on the $LIBRA token project, said he engaged in "sniping," a crypto parlance for using bots to scan blockchain transactions to conduct swift buying and selling of newly launched tokens for profits. Milei's office says Davis has no connection to the Argentine government.The practice has caused controversies because oftentimes insiders with prior knowledge of the token launches can "snipe" ahead of a token officially launches and dump them on ordinary investors who buy in later.In an interview with internet personality Coffeezilla, Davis, who said he has been advising Milei on crypto projects, noted he was also part of the team behind the launch of Melania Trump's $MELANIA token, and had sniped the first lady's coin, too.Influential figures in the crypto community were left trying to make sense of the collapse, with some saying they only invested in $LIBRA because they thought Milei was promoting it."So @JMilei once again pretends he is involved and then deletes it? Pure insanity," wrote Dave Portnoy, founder of Barstool Sports, who said he lost money on the token. "The President of Argentina is just rugging and pumping and dumping for fun."In a Sunday livestream on X, he said he almost pulled the trigger in promoting the $LIBRA token to his fan base before Davis told him that he couldn't tell them he had gotten about six million of the tokens for free. Portnoy said he sent the free coins back and bought a lot of it on his own.Milei wrote on X that he had no ties to the coin and that he decided to delete the original post after learning more details about the project. The president also lashed out at rivals who have criticized him for using his platform to publicize the tanked crypto, calling them "filthy rats of the political caste who want to take advantage of this situation to do harm."Sudden price spikes and crashes have long been a feature of meme coins, a type of cryptocurrency whose value is largely based on the popularity of internet memes.Many follow the same pattern: The coins are launched and then promoted on various social-media platforms. As word spreads, they surge in value until a small group of early investors — often insiders — dump the coins. Their sales in turn trigger a sharp retreat, often leaving the remaining investors "holding the bag," or sitting on large paper losses.In recent months, high-profile personalities have seized on the coins as an opportunity to capitalize on their fame. Even then, meme-coin offerings rarely generate much attention outside the community of die-hard crypto investors.Until, that is, the president of the United States promoted his own meme coin in January.President Trump and his wife, Melania, launched a pair of meme coins that have declined sharply after initially skyrocketing in value.The market cap of the president's coin stood at $3.3 billion after soaring as high as $15 billion, while the first lady's token is worth about $666 million after surpassing $2 billion, according to CoinMarketCap. Many of the investors who scooped up the $TRUMP coin were small, individual investors who had less than $100 worth of the coins in their wallets, according to blockchain analytics firm Chainalysis.To many crypto executives and investors, the launch of $TRUMP and $MELANIA has already undermined the legitimacy that the industry has worked hard to cultivate over the past few years. Some see the drama around the Argentine meme coin as even more damaging to the industry's image."I think this is going to hurt the entire industry," said Diogenes Casares, an Argentine-American crypto trader.Milei, who has built a friendship with Elon Musk and plans to meet him Thursday, explained to Todo Noticias why he is attracted to tech proposals in Argentina: "I'm a fanatical techno-optimist. I have a passion for technology, and I want Argentina to convert into a tech hub."Milei compared the situation for those who lost money on the coin to gamblers who lose at a casino."What's the complaint?" he asked in the Todo Noticias interview, "if you already knew it had those characteristics. Those who participated in it not only did so voluntarily, but it's a problem between private parties. Because here the state plays no role."The scandal hits Milei as his administration is working to make good on its promises to scale back on Argentina's bloated welfare state, slashing government spending and bringing down inflation.In Washington, Milei is to meet with IMF officials and conservative activists. He also looks to shore up support in the Trump administration and seek exemptions from the 25% tariffs that the White House has ordered on steel and aluminum imports beginning next month. The tariffs present a likely blow for Argentina, which exported about $460 million worth of aluminum to the U.S. in 2024, according to U.S. trade data.Write to Kejal Vyas at [email protected] and Vicky Ge Huang at [email protected]