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Argentina’s President Milei Cleared of Ethics Violations Over Libra Cryptocurrency
Argentina’s Anti-Corruption Office (OA) recently concluded an investigation into President Javier Milei regarding his endorsement of the Libra ($LIBRA) cryptocurrency. The agency determined that Milei’s support for Libra was a personal act and did not constitute a breach of public ethics laws.
This investigation arose after Milei publicly promoted the cryptocurrency on his personal X account in February, describing it as a valuable tool for empowering small businesses and startups. His endorsement significantly boosted Libra’s market capitalisation to over US$2 billion (around AU$3.8 billion). However, the token’s value plummeted by over 90%, resulting in substantial financial losses for investors and sparking widespread political controversy, which the media dubbed "Cryptogate." Currently, Libra has a mere US$7 million (approximately AU$10.7 million) market cap, reflecting a staggering 99.1% decline.
Investor Fallout and Allegations
The rapid decline of Libra garnered international attention. Reports indicate that more than 70% of the token’s total supply was concentrated among its founders, who liquidated their holdings at the peak of its value. This manoeuvre led to a dramatic loss of up to US$250 million (around AU$385 million) for investors within mere hours.
The aftermath has been tumultuous, with numerous lawsuits filed against the project, resulting in outrage from investors and claims of pump-and-dump schemes associated with Milei’s public office role. In response, Milei has refuted any allegations of wrongdoing, asserting that his endorsement merely expressed his personal views after a meeting with the founders of Libra. He claims that his intention was to highlight the potential of blockchain technology for economic growth, not to prompt speculative trading.
In an ironic twist, two cryptocurrency wallets linked to Hayden Davis, a central figure in the Libra project, have been frozen by Circle under a court directive from the US District Court in the Southern District of New York. These wallets together contained US$57.6 million (approximately AU$86.5 million) in USDC, raising further questions about the project’s management and transparency.
Ongoing Legal Challenges
Despite the OA’s ruling, the legal situation remains precarious. A federal criminal investigation into possible securities fraud and market manipulation is still active. Unlike the OA’s administrative review, the criminal courts function independently and could arrive at significantly different conclusions regarding Milei’s conduct. Class action lawsuits are currently being prepared by affected investors from Argentina, the US, and the UK, indicating that the ramifications of this controversy will continue to unfold.
This incident underscores the larger issues surrounding cryptocurrency regulation and the responsibilities of public officials when endorsing digital assets. As the situation develops, both Milei’s future and that of the Libra cryptocurrency will remain under scrutiny.
