Argentina's Chamber of Deputies Launches $LIBRA Memecoin Collapse Probe

Argentina’s Chamber of Deputies has initiated a comprehensive investigation into the collapse of the $LIBRA memecoin, which resulted in the loss of over $280 million in value. The probe aims to clarify the government's role in promoting the token and its subsequent rapid decline. This investigation comes amidst growing allegations of insider manipulation and legal actions against the token's developers, intensifying criticism of President Milei’s cryptocurrency policies.

On April 8, the Chamber of Deputies overwhelmingly approved the formation of a committee to investigate the $LIBRA catastrophe. Despite efforts by President Milei’s allies to halt the investigation, 128 votes in favor ensured its passage. The investigation will focus on the government’s potential involvement in supporting or legitimizing the project, claims of market manipulation, and the token’s evolution. Two additional motions were also approved: one requesting reports from the executive branch and another calling for key officials to testify.

Parliamentary discussions have intensified regarding the government’s indirect role in promoting $LIBRA. Lawmakers are seeking to understand how the token gained national prominence and whether institutional platforms were used to boost investor confidence. A group of lawmakers has proposed stricter disclosure policies for digital asset mentions by public officials, aiming to prevent excessive market impact. The suggested system would require regulatory authority evaluation for every state entity mention of cryptocurrencies.

Public trust has been eroded in the wake of the $LIBRA controversy. Civil society groups and independent economists are urging the government to define its stance on digital assets and establish clear boundaries between political support and financial speculation to protect retail investors.

The $LIBRA memecoin controversy began on February 14 when President Milei posted on X, describing LIBRA as a means to boost the Argentine economy. The cryptocurrency’s value surged by over 3,000%, attracting retail investors across Latin America. However, just hours later, Milei removed the post and distanced himself from the initiative, stating he was unaware of its technical background. The coin then plummeted by more than 90%, wiping out hundreds of millions in market value.

Legal actions have intensified with a class-action lawsuit filed in March by New York-based Burwick Law against several companies linked to the project, including Kelsier Ventures, KIP Protocol, and Meteora. The lawsuit alleges insider trading, false representation, and market manipulation. Court records indicate that developers lured investors with promises of governmental support and economic regeneration, while the token’s structure was designed to benefit a small group of early holders at the expense of the broader population.

The controversy has significantly damaged President Milei’s anti-corruption reputation and libertarian economic program. While his government maintains that the LIBRA promotion was “normal support for entrepreneurship,” critics argue that the president’s lack of accountability is detrimental. Opposition alliances, such as Unión por la Patria and Coalición Cívica, have seized the opportunity to challenge Milei’s credibility ahead of Argentina’s midterm elections. Several legislators who previously supported the president have joined the opposition in endorsing the probe, indicating growing internal dissent.

On April 16, Speaker Martín Menem scheduled Chief of Staff Francos to present a report to Congress, with LIBRA-related inquiries expected to dominate the session. Although Argentina has traditionally been open to cryptocurrency growth, the $LIBRA controversy may dampen enthusiasm. Regulators are now under pressure to implement stricter anti-manipulation protections and disclosure policies for crypto debuts.