Milei’s ‘Libragate’ Scandal Explained : What You Need to Know

Key Takeaways

• The “LIBRA” memecoin scandal centers around allegations that President Javier Milei promoted a cryptocurrency that rapidly gained value and then collapsed, leading to significant investor losses.
• The incident has raised concerns about the regulation of memecoins and the potential for insider trading within the cryptocurrency market.
• Hayden Davis faced multiple legal complaints after the $LIBRA scandal, with investors accusing him of fraud, market manipulation, and insider trading.
• The scandal has political ramifications, with calls for investigations into Milei’s involvement and its impact on his administration’s credibility.

Memecoins linked to political figures have become a trend in crypto. The launch of $TRUMP and $MELANIA demonstrated how celebrity and political associations could drive hype—and sometimes controversy. 

But Argentina’s $LIBRA took things further, with a story involving alleged insider trading, price manipulation, and a direct link to the President’s inner circle.

What started as Argentina’s promising memecoin quickly turned into one of its biggest crypto scandals. Here’s how it all unraveled.

What Is the Libragate Scandal?

In mid-February 2025, a new cryptocurrency called “LIBRA” was launched, quickly reaching a market capitalization of over $4.5 billion. The coin’s rapid rise was notably influenced by a tweet from Argentine President Javier Milei, who described the project as an initiative to support small and mid-sized businesses in Argentina.

However, shortly after the initial surge, the value of LIBRA plummeted by more than 95%, leading to significant financial losses for investors. This sharp decline has been compared to a “rug pull,” where insiders profit at the expense of new investors.

The U.S. Department of Justice is reportedly investigating President Javier Milei’s participation in endorsing the LIBRA memecoin, alongside the involvement of its founders—Hayden Davis from Kelsier Ventures, Julian Peh of KIP Protocol, and two Argentine entrepreneurs—regarding their roles in the alleged scheme.

How $LIBRA’s Political Connections and Insider Trading Harmed Investors

Political endorsements can add credibility to a project, but they can also be a double-edged sword—especially in crypto. The $LIBRA scandal revealed how insider deals and high-profile associations can mislead investors, fueling hype before orchestrated sell-offs wipe out unsuspecting buyers. 

With alleged payments to a political figure and market manipulation behind the scenes, $LIBRA’s collapse became a stark reminder of how unchecked influence and insider trading can turn a promising token into a financial disaster.

Here’s a breakdown of how the scandal unfolded , step by step:

• $LIBRA’s quick emergence: In February 2025, $LIBRA emerged as a hyped-up meme coin, capturing attention as Argentina’s first major token of its kind. Within days, it saw a massive surge in trading activity, largely driven by heavy promotion from one of its key creators, Hayden Davis.
• Controversial ties to Argentine politics: Behind the excitement, however, was a troubling revelation. Davis allegedly made a deal with Karina Milei, sister of Argentina’s President Javier Milei, to help promote $LIBRA. Private conversations, later leaked, showcased Davis bragging about this arrangement, revealing the political connection that boosted the coin’s credibility—though it was all part of a bigger, more questionable plan.
• Manipulated markets and insider trading: As the hype continued, insiders, including Davis, reportedly controlled $LIBRA’s supply, executing coordinated buys and sells before the general public even had a chance. These actions resulted in massive profits for early movers, while retail investors were left with holdings that soon lost almost all their value.
• The $LIBRA crash: The truth eventually surfaced: the project’s manipulation tactics were exposed, and $LIBRA’s price tumbled by more than 90% almost overnight. Investors who had bought in during the token’s rise found themselves with almost worthless assets, while the project’s creators had already cashed out. In the wake of the collapse, the Argentine government quickly distanced itself from the scandal, signaling their disapproval.
• The investigation and exposé: In a crucial interview, crypto investigator Coffeezilla dug into the $LIBRA story. Hayden Davis was forced to confront the reality of his actions, admitting to price manipulation but justifying it as part of the project’s strategy. Despite mounting evidence, Davis continued to deny that the project was a scam, leaving many to question his motivations.

Argentina’s fintech chamber has also raised concerns that the incident could be a “rug pull” — a type of fraud in which developers artificially inflate the value of a cryptocurrency, only to sell off their holdings and abandon the project, leaving investors with worthless assets.

Fraud Charges Against President Milei

Investigations into the LIBRA scandal have revealed that the cryptocurrency’s creators have been linked to previous memecoin scams. The rapid promotion and subsequent collapse of LIBRA suggest potential insider trading and market manipulation. 

President Milei’s involvement, through his public endorsement, has drawn scrutiny. While he has denied any wrongdoing, the incident has led to multiple criminal complaints and calls for impeachment.

For instance, on February 17, 2025, a group of Argentine legal and financial professionals took legal action against President Javier Milei in what has become a highly publicized controversy. Lawyers Marcos Zelaya and Jonatan Baldiviezo, joined by engineer María Eva Koutsovitis and economist Claudio Lozano, filed formal charges of fraud against Milei in a criminal court..

In addition to the fraud charges, Baldiviezo has also leveled a serious accusation at Milei for breaching Argentina’s Public Ethics Law. This law is designed to ensure transparency and accountability among public officials, requiring them to disclose their assets, financial interests, and any potential conflicts of interest. Baldiviezo’s claim suggests that Milei may have failed to adhere to these ethical standards, further complicating the political fallout from the scandal. 

If proven, these violations could not only lead to legal consequences but could also damage Milei’s credibility as a proponent of clean governance, especially in the context of his promotion of digital currencies and financial technology.

In addition, Argentine lawyer Agustín Rombolá, founder and partner at the Rombolá Mangione law firm, has lodged a separate legal complaint against President Javier Milei regarding his involvement in promoting the Libra memecoin.

In a statement released on X on February 16, Rombolá, announced that he had formally reported Milei for alleged offenses, including “fraud, conflicts of interest, price manipulation, and financial crimes.” Notably, Rombolá is also a member of the Argentine political party Unión Cívica Radical. 

The legal action adds further fuel to the growing controversy surrounding Milei’s endorsement of the controversial memecoin, which has raised concerns over ethical and legal violations in his promotion of digital assets.

Lessons for Investors from the $LIBRA Scandal

Here’s how investors can protect themselves by learning from the $LIBRA scandal:

• Political endorsements do not guarantee legitimacy. A token linked to politicians can still be a high-risk investment.
• Watch for pre-launch wallet activity. Large insider holdings before public trading can indicate potential manipulation.
• Be cautious of hype-driven projects. Rapid growth fueled by influencers and media buzz often leads to pump-and-dump schemes.
• Transparency matters. Always check for clear tokenomics, team details, and open governance before investing.

Conclusion

The LIBRA memecoin scandal is a pivotal moment in Argentina’s political landscape, challenging the balance between state control and digital freedom. 

As President Milei’s government faces scrutiny over its involvement in the promotion of LIBRA, the cryptocurrency community and global financial markets will be watching closely. 

How Milei addresses these allegations could have lasting implications for his leadership and for Argentina’s role in the global digital economy.

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