Federal courts in Argentina over the weekend formally opened a probe into President Javier Milei and other individuals involved in the Libra cryptocurrency scandal.
The investigation, led by federal prosecutor Eduardo Taiano, aims to investigate Milei in relation to allegations of abuse of authority, fraud, influence peddling, and bribery after Milei publicly promoted the Libra cryptocurrency in mid-February, leading to a surge in its value and subsequent crash — events allegedly resembling what is widely described as a “rug pull” scam.
In addition to Milei, at least five other individuals are being investigated under the probe, including Hayden Mark Davis, believed to be a creator of the Libra cryptocurrency. The probe against Milei stems from 112 complaints filed against the president, of which roughly 20 were ratified by Argentine Judge María Servini.
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“The purpose is to establish the circumstances of time, manner and place surrounding the creation and launching of Libra and the participation of Javier Milei, Hayden Mark Davis, Julián Peh, Mauricio Gaspar Novelli, Manuel Terrones Godoy and Sergio Daniel Morales in the investigated events,” Taiano reportedly said over the weekend.
Judiciary sources told the Argentine newspaper La Nación that requests for reports have been made to the Argentine Central Bank, the National Securities Commission, and the General Inspection of Justice as well as foreign companies such as Google to determine which companies were involved in the commercialization of the cryptocurrency.
According to documentation reviewed by the Argentine newspaper Clarín, Prosecutor Taiano considers that there are “sufficient elements” to initiate a criminal case against the president and the owners of Libra.
“A few hours later, the price plummeted due to sales operations by the team that created the token, the main holders of the asset, and other players who had access to privileged information regarding the launch, which would have made possible the withdrawal of approximately 100 million dollars,” the probe’s documents reportedly read.
On February 14, Milei published a now-deleted message on his Twitter account promoting a cryptocurrency known as Libra. In the message, Milei shared a link to a website where individuals were able to purchase the token, described by the Argentine president as a private project named Viva la Libertad (“long live liberty”) that encouraged the growth of Argentina’s economy.
“Liberal [Libertarian] Argentina grows! This private project will be dedicated to encourage the growth of Argentina’s economy, funding small Argentine companies and ventures. The world wants to invest in Argentina,” Milei’s message reportedly read.
Milei’s message prompted a surge in Libra’s market capitalization to above $4 billion through some 40,000 buyers. According to the Argentine news channel Todo Noticias, the price of a Libra token went from $0.13 per unit to $4.56 after Milei’s publication. Hours later, the cryptocurrency plummeted in value after a small number of crypto wallets withdrew over $87 million worth of the cryptocurrency, which represented more than 80-percent of the token’s circulation.
The events led to a wide array of criticism and speculation among local politicians and citizens – and left-wing local politicians calling for Milei’s impeachment. Milei deleted the post where he promoted the Libra cryptocurrency and published a subsequent message on Twitter asserting that he was not aware of the details of the project and that he “obviously” had no connection to it.
“A few hours ago I posted a tweet, like so many other infinite times, in support of an alleged private venture with which I obviously have no connection whatsoever,” Milei’s message read. “I was not familiarized with the details of the project and, after I was, I decided not to continue spreading it (that’s why I deleted the tweet).”
“To the filthy rats of the political caste who want to take advantage of this situation to do harm, I want to say that every day confirms how lowly politicians are, and increases our conviction to kick them out of the country,” he continued.
Milei spoke to Todo Noticias last week and publicly addressed the ongoing scandal for the first time since the events occurred. The Argentine president asserted that he “acted in good faith and took a slap in the face” over the promotion of the Libra cryptocurrency.
“Did the State lose money? No. Did the Argentines lose money? At the most, four or five. The great majority of investors are Chinese and American,” Milei said, insisting, “this episode does not damage my credibility in the world.”
“I shared this [Libra] as I shared hundreds of things. My tweet is three minutes after the creation of the coin because I am a fan of these things and I heard about it,” he continued. “They are volatility traders who knew what they were doing.”
The Argentine president dismissed the possibility that someone from the government is involved in the cryptocurrency scandal, but stressed that, “if the Justice determines that there is, the guillotine will roll.”
Milei dismissed claims that there were roughly 44,000 individuals affected by the Libra “rug pull” and asserted that, at most, there were 5,000 individuals affected. He emphasized that there being a significant number of Argentine nationals among the alleged victims was “very remote.”
“They are people who are highly specialized in this type of instrument. Those who entered there knew the risk well: they are volatility traders. It is a problem between private individuals and they did it voluntarily,” Milei said.
The Argentine president asserted that he did not “promote” the currency, but rather, “spread it” because he is a self-described “fanatical techno-optimist.”
“When I look at the political repercussions, I can say ‘I have something to learn.’” Milei said. “I have to learn that I assumed the presidency and continued being the Javier Milei of always. Unfortunately, what this shows me is that I have to remove the filters and it cannot be easy to reach me.”
Hours after the controversial events, the Office of the Argentine Presidency published a lengthy message on Saturday, February 15, in which it informed that Milei had decided to immediately involve Argentina’s Anti-Corruption Office (OA) to determine if there was improper conduct on the part of any member of the national government, including Milei himself, in the events surrounding the Libra cryptocurrency.
The office explained that, in October, Milei met with representatives of a company identified as KIP Protocol in Argentina where he was informed of the company’s intention to develop a project called “Viva la Libertad” to finance private ventures in the Argentine Republic using blockchain technology.
“All information gathered during the investigation will be handed over to the courts to determine whether any of the companies or individuals linked to the KIP Protocol project committed a crime,” the statement read. “President Milei, who has demonstrated his commitment to truth through his actions, is committed to the due clarification of this incident to the ultimate consequences.”
KIP protocol, whose CEO Julián Peh is part of prosecutor Taiano’s probe, publicly denied any role in the creation, management, or financial dealings of the Libra cryptocurrency token in a statement published on Monday morning.
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
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