Argentina's Judicial Independence and Milei's Credibility Tested by $LIBRA Scandal

Argentina's President Javier Milei faces mounting scrutiny over his alleged role in the $LIBRA cryptocurrency scandal, with a congressional committee accusing him of enabling a $251 million rug pull that devastated investors. The opposition-led investigative body released a 200-page report concluding that Milei's promotion of the token constituted "essential collaboration" in what it describes as a state-backed crypto scheme. The report recommends evaluating the president for misconduct in office, alleging a deliberate bypass of institutional oversight to facilitate the project.

The scandal, dubbed "Cryptogate," erupted in February 2025 when Milei tweeted a promotion for $LIBRA, a meme coin tied to his pro-reform agenda. The price surged from $0.000001 to $5.20 within 40 minutes, only to collapse by 85% as founders-including American entrepreneur Hayden Davis-dumped their holdings, netting $87 million. The report links this to a broader pattern, citing the prior KIP Protocol launch in December 2024, where similar tactics were allegedly employed.

Investigators note that both projects received public validation from Milei before liquidity pools were drained, suggesting systemic evasion of regulatory bodies like the National Securities Commission.

Milei has denied wrongdoing, disbanding an investigative task force days after a judge requested access to his and his sister Karina's bank accounts. Judicial probes now target him, Davis, and associates like Mauricio Novelli, an advisor whose home was raided and assets frozen. Over 100 criminal complaints have been filed against Milei, with opposition figures pushing for impeachment. However, his party, La Libertad Avanza, has rejected the report, arguing it lacks sufficient support.

The scandal has political ramifications, with the main opposition bloc, Union for the Homeland (UxP), criticizing Milei's actions as a threat to Argentina's credibility. While impeachment efforts lack traction, the report underscores concerns over Milei's prior crypto endorsements, including the defunct CoinX platform and the failed Vulcano Game NFT project. Critics argue these incidents reveal a pattern of leveraging presidential influence for speculative ventures, with limited safeguards for public investors.

The U.S.-based Davis, central to the $LIBRA launch, faces an Interpol Red Notice and asset freezes in Argentina. International law firms, including Burwick Law, are pursuing class-action lawsuits on behalf of foreign victims. Meanwhile, Argentina's Chamber of Deputies has approved an investigation into the scandal, though Milei and his sister will not be questioned.

As the political and legal battles unfold, the $LIBRA affair has become a defining crisis for Milei's presidency. With allegations of fraud, money laundering, and state complicity in a financial scam, the case tests Argentina's judicial independence and the president's claim to economic reform credibility. The outcome could reshape the nation's regulatory approach to cryptocurrencies and redefine the boundaries of political accountability in a volatile market.