The Crypto Scandal Rocking Argentina’s Presidency

19 March, 2025

The saga began on the evening of February 14 when President Milei promoted the $LIBRA cryptocurrency on Platform X, just minutes after it started trading. The token’s value quickly surged past 4 USD before crashing to below 0.5 USD.

Angry investors alleged a possible “rug pull” scam, where early investors lure others to pump up the price and then quickly withdraw their funds. Following this incident, political opponents filed dozens of lawsuits, while the leftist Peronist opposition announced it would initiate impeachment proceedings, accusing him of “participating in a crypto scam.”

Analysts dubbed this the biggest crisis for Milei’s administration since he took office in December 2023.

Argentine President Javier Milei

In a TV interview on February 17, Milei called the scandal a “slap in the face.”

“I am an optimist about technology… and this was proposed to me as a tool to help fund Argentina’s projects,” Milei explained in the interview. “In my eagerness to help Argentines, I received a slap in the face.”

The President’s office stated that he had met with representatives of the companies involved in creating the token twice but “did not participate in any phase” of its development. They also announced that the President had requested the anti-corruption office to investigate any wrongdoing by himself or any government agents.

“The most interesting lesson is… I need to put more filters, I can’t let people approach me so easily,” Milei conceded in the interview.

Analysts warned that the incident could erode trust in the President, who is a former private-sector economist. He had previously succeeded in curbing inflation through a comprehensive austerity program and forged crucial alliances with tech leaders in Argentina and the US.

“In the medium and long term, this will damage the President’s credibility [even if] it was a mistake [made in good faith], given that he often boasts about his abilities as an economist,” said Marcelo García, Regional Director for the Americas at Horizon Engage consulting firm. “For foreign investors, this will feed into existing doubts about the government’s political capacity and raise fears that unforced errors could jeopardize his reform agenda.”

Markets reacted negatively to the scandal, with Argentine stocks falling over 5% on February 17, while the Peso lost 2% against the USD. However, according to Argentina’s Fintech Chamber, analyzing posts on Platform X suggested that most $LIBRA buyers were from the US and Asia, with very few Argentines financially affected by the token.

They added that the token was never listed on the exchanges that the “vast majority” of Argentine crypto users utilize.

Although Milei’s opponents are unlikely to secure the two-thirds majority needed in Congress to impeach the President, analysts believe that the investigations could still impact his approval ratings, which currently hover around 50%, as Argentina prepares for legislative elections in October.

The right-wing PRO party, an ally of Milei’s fledgling La Libertad Avanza alliance, called the incident “serious” as it involved “the country’s credibility… and the President’s entourage” but accused leftist leaders of “political opportunism” in calling for his removal.

Juan Cruz Díaz, CEO of the Cefeidas Group, a Buenos Aires-based consulting firm, said the scandal threatened to undermine the minority government’s negotiating position in Congress, where it is trying to pass an electoral reform bill. “This is the first significant crisis the government has faced,” he said. “They have room to maneuver [but] how they manage the situation in the coming days and weeks will be key.”

Vu Hao (According to FT)

– 09:50 18/02/2025