$LIBRA scandal: the memecoin Milei promoted crashed and sent shockwaves worldwide

For best results when printing this announcement, please click on link below:At 5:01 p.m. (ET) on February 14, the President of Argentina, Javier Milei,posted a message on the social media platform X that had global repercussions.In it, he promoted the memecoin $LIBRA, a digital asset whose valuationdepends on market confidence and its level of adoption.The token , which was valued at $0.000001 at the time, surged within minutesto $1 and reached a peak of $5.2. However, in just 11 hours—after hitting amarket capitalization of $4.56 billion, meaning the total value of all itscirculating units— it lost more than 94% of its value , according to DexScreener, a platform that tracks cryptocurrency prices and movements indecentralized markets.Today, although the president has denied it, it is estimated that more than40,000 people have recorded losses exceeding $4 billion . Additionally, thepresident of the neighboring country is under investigation for abuse ofauthority, fraud, influence peddling, and bribery in a case led by federalprosecutor Eduardo Taiano.What is a memecoin?A memecoin is a digital currency based on a meme or an intellectual property.By bringing together a community or representing a mission, people can give itvalue by turning it into an asset they can buy, sell, or trade. Its pricedepends on how many people support it and make it popular.The collapse of $LIBRAFrom the beginning, the distribution of $LIBRA was completely manipulated. Asingle group controlled more than 80% of the total supply, giving themabsolute power to move the price at their convenience. However, thisinformation was never disclosed to the public, leading many investors to buywithout knowing the real risk.Just three hours after the launch, insiders or individuals with privilegedinformation began selling their tokens in large quantities, managing towithdraw $87.4 million before the price collapsed. As a result, the supply oftokens in the market increased drastically, causing a sharp drop in its value.But the insiders\' strategy didn't end there. Instead of selling directly onexchanges , they manipulated the token's liquidity using Meteora, a financialplatform on the Solana blockchain . There, they added large amounts of $LIBRA,making it appear as if there was significant liquidity in the system.However, instead of allowing the market to function fairly, they withdrew thedigital dollars ( stablecoins ) and SOL ( another cryptocurrency ), which werethe funds backing the token, leaving $LIBRA without real financial support.To understand it better, imagine a currency exchange where people trade money.The creators of $LIBRA put many coins into circulation, but before buyerscould exchange their money back, they emptied the vault and took all the realcash. When people wanted to sell their tokens, there was no money left,causing the price to crash.This move left the token without sufficient financial backing, acceleratingthe collapse of its price. With each sale, there was less liquidity to sustain$LIBRA's value , leading to a straight-line decline.Involvement with MileiThe link shared in the X post directed users to a Google form for the Viva LaLibertad project , sponsored by KIP Network Inc., which was reportedly createdshortly before the launch of $LIBRA , according to The Kobeissi Letter, anaccount specializing in global capital market analysis."Today was the launch of the Viva La Libertad project, and the $LIBRA coin hasbeen a success. We want to thank everyone for their trust and support. We wantto clarify that President Milei was not and is not involved in any way in thedevelopment of this project, which is entirely private. Thank you for beingpart of this great beginning!" reads their first tweet on that fateful day.However, it was not until the following day that the organization clarifiedthrough its X account that the token launch was "entirely handled by thecompany Kelsier Ventures, represented by businessman Hayden Davis."By that time, a photo was already circulating showing Javier Milei alongsideJulian Peh, co-founder and CEO of KIP Protocol , during a meeting in Argentinaon October 19, 2024, as part of the Tech Forum Argentina, which did not dispelsuspicions.Later that same day, Davis himself posted a video confirming that he wasbehind the launch of the $LIBRA project and that he served as an "advisor toMilei." According to his own admission, he managed to capture the Argentinepresident's attention due to his family's direct ties to Donald Trump , whichwould also explain his involvement in the $MELANIA memecoin."Davis came to me and proposed this. I met him at the fintech event in October2024, and in that context, he suggested creating a structure to financeentrepreneurs and promote economic growth. I found it to be an interestingtool," Milei said on the local channel Todo Noticias (TN).After that, and following death threats, Davis is believed to have moved withhis family from Dallas (United States), and his whereabouts are now a mystery.Lastly, there is his role as a professor at N&W Professional Traders .This becomes relevant because, before disappearing, Davis mentioned in aninterview with the YouTube channel "Voidzilla" the Argentinians ManuelTerrones Godoy and Mauricio Novelli, who were allegedly involved in thedevelopment of $LIBRA.Novelli is the co-founder of the Argentine trading academy, which specializesin training for buying and selling financial assets. In this context, it isunderstood that the president cannot claim—despite having done so—that hewas unaware of the technology behind the token.It is important to note at this point that the authenticity of the FBI postershowing Javier Milei as one of the 10 most wanted fugitives has been debunked."I didn\'t promote it, I shared it" and "If you go to the casino and losemoney, what\'s the complaint if you knew the risks?" are two of Milei\'s mostviralized statements when asked about the $LIBRA case.The scandal continued after an unaired segment of an interview for TN aboutthe $LIBRA case was leaked on X , in which Milei\'s response regarding thegovernment\'s subsequent actions was abruptly cut off.As observed, presidential advisor Santiago Caputo allegedly intervened to haltthe statement. Subsequently, journalist Jonatan Viale, who conducted theinterview, admitted to yielding to pressure to edit the content, stating, "Ilacked firmness."Impact on the Crypto World"$LIBRA was an unfortunate event for the industry. It exposed many of themistakes and bad practices that have happened and continue to happen,especially with memecoins," said S, the pseudonym used by the community leadof the memecoin Neiro , in an English-language interview with La República.According to S, regardless of the Argentine president\'s intentions inpromoting the token, the impact was greater than in the cases of $TRUMP and$MELANIA , where insiders also got rich while ordinary people were left inruin.The problem is that the scandal involves people with a strong publicreputation. When the industry makes headlines for scams and fraud instead offor its success and innovation, its credibility suffers. It will take time toregain public trust so that it can once again be seen with seriousness andrespect."People will adopt a more critical perspective on memecoins and will expect,and even demand, greater transparency from those who launch and manage them.It will take some time for the market to adapt to this new reality, but itwill be for the better," said S.Reference to the memecoin $TRUMP. Photo: AI/La República.On the other hand, he highlighted that $LIBRA had a positive effect bystrengthening the reputation of projects with a history of transparency andopenness. He added that the controversy surrounding this token has driveninvestors to seek alternatives with a solid track record. In this context, hementioned Neiro as an example, as it is managed by communities speakingEnglish, Chinese, Turkish, Brazilian Portuguese, Spanish, and other languages.Its value lies in them."I believe that when people are scared or angry, the key is education. LatinAmerica has great potential," explained S regarding the impact in LatinAmerica.$LIBRA is both a warning and a lesson. Events like this can be used to educatepeople on how to approach the industry by asking key questions: What does thelaunch of a new token really mean? Who is behind it? How is it distributed?Are there mechanisms in place for unfair profit?Argentina caseToday, Argentina positions itself as a leader in the Latin American industry,boasting the highest number of users and transaction volume on the continent.According to Lemon Cash , the country\'s leading crypto wallet, they havepresented, together with the Argentine Fintech Chamber , a tax reform proposalaimed at updating regulations in line with the growing adoption of theseassets. The proposal seeks to encourage the use of regulated environments,ensuring transparency and security for users and investors."2024 was a key year in the regulatory process for the cryptoasset industry inArgentina. A legal definition for virtual assets was established, and anational registry of Virtual Asset Service Providers (VASP) was created underthe National Securities Commission (CNV), a mandatory requirement to operatein the country," Lemon representatives told La República.This institutionalization has enabled regulatory advancements, such as thepossibility of establishing companies with cryptoassets as capital and thefiscal regularization of these assets. However, challenges remain to drive thenext wave of crypto adoption in Argentina and expand its use cases acrossdifferent sectors, including:* Tokenization of real-world assets. * A national strategic reserve in Bitcoin. * Crypto tax proposal. * Crypto Economic Zone: creation of new tokenized companies under specificregulations. "At CryptoMKT, we have noticed an increase in inquiries from users concernedabout the security of their assets and the level of oversight in theecosystem. However, by operating within a solid compliance framework andadhering to transparency practices, we have been able to mitigate uncertaintyand strengthen our relationship with the community," said María FernandaJuppet, CEO of CryptoMKT, to this newspaper.Peru caseIn Peru, the Superintendence of Banking, Insurance, and AFPs ( SBS ) primarilyregulates Virtual Asset Service Providers (VASPs) in terms of anti-moneylaundering (AML) and counter-terrorism financing (CFT) measures."The SBS mainly regulates what is known as KYC/AML, which stands for Know YourCustomer and Anti-Money Laundering," said Gustavo Cam, CEO of Tulkit Pay, aPeruvian multi-currency wallet, to this newspaper.This means that crypto exchanges and operators must identify their end usersand track transactions to ensure transparency.However, current legislation does not explicitly address the promotion ofvirtual assets, leaving a gap regarding how they can be advertised. Thisbecomes relevant in cases like $LIBRA , where mass promotion by a publicfigure led to speculative price increases."Just as IPOs (Initial Public Offerings) in the stock market require detailedfinancial disclosures, initial coin offerings (ICOs) could be subject tosimilar disclosure requirements," Cam suggested.However, the decentralized nature of many cryptocurrencies makes regulationchallenging. This means that even if Peru enforces stricter regulations,investors may still participate in these markets through global platformsbeyond local supervision.In summary, although the cryptocurrency industry remains optimistic withDonald Trump in office, further regulatory progress is needed to protectinvestors and maintain the appeal of what is emerging as the new financialsystem.