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Argentina’s President Javier Milei has found himself at the center of a cryptocurrency scandal after a token he promoted, Libra, led to massive losses for retail traders.

Research firm Nansen estimates that 86% of those who invested in the memecoin lost money, amounting to a staggering $251 million in total losses.

Libra’s market value briefly surged to $4.5 billion after Milei’s endorsement, only to collapse rapidly, wiping out gains for most investors.

Meanwhile, a small group of insiders walked away with a combined $180 million in profits. The scandal has raised concerns about the role of political figures in financial markets and the risks associated with volatile digital assets.

Javier Milei just DESTROYED the memecoin market: Hours ago, Argentinian President Milei launched a memecoin, $LIBRA, for “the growth of their economy.” Within 5 hours, over -$4.4 BILLION of market cap was erased. Is this the biggest rug pull in history? (a thread)

It has also put the Solana blockchain under scrutiny, as its token and total value locked (TVL) plunged following the fallout.

The drama began on Friday night when Javier Milei directed his followers to a website claiming to raise funds for small businesses in Argentina through Libra.

This triggered a frenzy in the crypto market, with automated trading bots attempting to front-run gains. Within hours, the memecoin’s market value soared to $4.5 billion, attracting thousands of retail investors looking for quick profits.

As Nansen’s on-chain data later revealed, a select group of wallets had already positioned themselves to profit. These insiders swiftly liquidated their holdings while retail traders rushed in, creating an artificial price surge before an inevitable crash.

By the time Milei deleted his original post on X five hours later, Libra had already plummeted by 80% from its peak.

Kelsier Ventures, one of the firms behind the token’s launch, later downplayed Libra as nothing more than a memecoin.

This starkly contrasted with its initial presentation as a tool for Argentina’s struggling economy, leaving traders questioning whether they had been misled.

The collapse of Libra has also triggered fears about the stability of the Solana blockchain, which hosted the token alongside thousands of other speculative cryptocurrencies.

Solana’s token plunged by 20% from Friday evening through Tuesday, while the total value of assets locked in the network plummeted from $12.1 billion to $8.29 billion, according to DefiLlama data.

Investors are now speculating on whether more memecoins could suffer similar fates.

The controversy has renewed concerns over the risks of decentralized finance (DeFi) projects, where anonymous insiders can manipulate token prices before offloading their holdings onto unsuspecting traders.

The backlash against Milei’s involvement in the Libra scandal has raised broader questions about political endorsements in the crypto space.

As outrage spread across Argentina, suspicions emerged over whether the president had fallen victim to a scam himself or if his account had been compromised.

By Monday, Milei attempted to distance himself from the fiasco, claiming he was unaware of the project’s details before deleting his post.

Critics argue that his initial promotion of the token, without prior due diligence, contributed to the massive losses suffered by retail investors.

The Libra collapse has reignited debates in Argentina over cryptocurrency regulation and consumer protection, with regulators now facing pressure to clamp down on memecoin speculation.

While the crypto market remains largely unregulated, this scandal may accelerate discussions on legal frameworks to prevent similar incidents in the future.

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