By Wyatt Reed and Oscar León · Feb 17, 2025The Argentinean president branded himself as an edgy economic genius to ride a wave of financial discontent to power. Now he’s implicated in one of the biggest scams in history, wiping out over $4 billion in market cap in a few hours, leaving Argentineans wondering if they’ve also been rugged.Argentina’s President Javier Milei has been accused of fraud, and is likely to face impeachment charges, after he promoted a sham cryptocurrency token which allowed a handful of con artists to dupe crypto owners out of hundreds of millions of dollars in a single day. The scam is believed to be the first cryptocurrency “rug-pull” to have been orchestrated with the help of a sitting president. While the exact number of victims is unknown, around 75,000 people are suspected to have been swindled, and a judge has been appointed to investigate after at least 100 criminal complaints were filed against Milei in Argentina in the days since.Crypto token $LIBRA jumped massively in value after Milei endorsed it on social media on Feb. 14, posting a link to purchase the coin and lauding the “private project” for “encouraging the growth of the Argentine economy, funding small business and Argentine ventures.” Milei went as far as framing the coin as a legitimate investment, writing, “the world wants to invest in Argentina.”The URL for the $LIBRA token’s official website, vivalalibertadproject.com, was a clear nod to Milei’s campaign slogan, “¡Viva la libertad, carajo!” The page, which remains online, says the coin was being launched “in honor of Javier Milei’s libertarian ideas” and was “designed to strengthen the Argentine economy from the ground up by supporting entrepreneurship and innovation.”The token immediately shot up from $0.27 to well over $4, then dropped to less than $0.20 in a matter of hours as a tiny handful of insiders who owned over 80% of the supply dumped their holdings, draining an estimated $280 million from the unsuspecting buyers. While horrified owners discovered they’d been victimized by a classic “pump-and-dump” scheme, Milei promptly deleted his post publicizing the coin.In their place, Milei published a new message attempting to wash his hands of the matter, insisting he’d merely been “supporting a supposed private enterprise with which I obviously have no connection whatsoever.”“I was not aware of the details of the project and after having become aware of it I decided not to continue spreading the word (that is why I deleted the tweet),” he wrote.But a number of social media posts make clear that Milei had previously interacted with at least three of the scheme’s operators, and met with two of them on multiple occasions. Further, the claim that Milei was “not aware of the details of the project” is contradicted by a prior statement he gave to Bloomberg in which he insisted that the project was “real” and involved “pure private financing.”Just two weeks before the scam’s culmination, Milei uploaded a photo to Instagram showing him posing beside Hayden Mark Davis, one of the creators of the $LIBRA coin. As of publication, the post remains online.The day after the $LIBRA crash, Davis took to Twitter to “set the record straight.” In a video message, Davis concedes that “things didn’t go according to plan” with the meme token launch, but promises to re-inject the approximately $100 million they made from it back into the venture. Furthermore, Davis said he still continues to serve as “Javier Milei’s advisor,” and suggested they have no plans to stop the crypto collaboration. “I am working with him and his team on much bigger tokenization and really cool stuff in Argentina, and I absolutely back him.”But in a subsequent written statement, Hayden heaped blame on Milei, accusing him of causing a “wave of panic selling” by deleting his X post and denouncing the project. “The sudden loss of confidence had a catastrophic impact on the token’s market stability,” he wrote. As other users quickly pointed out, though, Milei’s post wasn’t deleted until the coin had already crashed by over 80% of its peak value.An hour and half later, Argentina’s Office of the President published a statement which characterized the entire scheme as the work of KIP Protocol – a company which helped create the token – and described Davis as affiliated purely with KIP, not the president. But it acknowledged that on Jan. 30 Milei had met with Davis, “who, according to the KIP Protocol representatives, would provide the technological infrastructure for his project.”However, “Mr. Davis had no and does not have any connection with the Argentinean government” and was simply “was presented by representatives of KIP Protocol as one of their partners in the project,” the official statement insisted.La Oficina del Presidente informa que el pasado 19 de octubre el Presidente Javier Milei mantuvo un encuentro con los representantes de KIP Protocol en Argentina en el que se le comentó la intención de la empresa de desarrollar un proyecto llamado “Viva la Libertad” para…— Oficina del Presidente (@OPRArgentina) February 16, 2025For their part, KIP Protocol has categorically denied involvement, issuing their own statement with the help of legal representatives in which they claim they’re merely an AI infrastructure company and that “it would be unusual to be pitching anything else.”They say their company “had no knowledge of, or involvement in, this meeting of 30 January 2025” and “certainly did not have any representatives present at this meeting.” Though the company’s CEO was photographed posing enthusiastically in October 2024 alongside Milei, the company maintains that the meeting “was the only occasion on which… any employee of KIP Protocol met with President Milei” and that no other employee of KIP has been in contact with Milei since.Prior to the meeting, KIP said it had “no business dealings with Hayden Mark Davis, adding that Davis was never employed by the company, never represented them, and “at no time did [any] employee of KIP Protocol make any representations about Davis being a partner of KIP” to Milei. But the notion that KIP is completely unconnected to $LIBRA is undermined by the token’s official page, which describes it as a “Private Initative [sic] project Developed by KIP Network Inc © 2025.”So far, Davis remains the only figure to have conceded to participating in the plot. In an interview published on Feb 17, Davis made a series of highly incriminating admissions, including acknowledging that insiders around him had sold off huge quantities of the token (making off with over $100 million while tanking the price) and revealing that he’d personally paid out $5 million of the proceeds to an acquaintance who apparently lost that money in the scam. Davis defended his actions by describing the token, which was explicitly marketed as a social investment vehicle for the state of Argentina, as “dogshit.”“All [cryptocurrency] is extractive to some degree, or a zero-sum game. None of it has value. Whether it’s a fuckin’ meme coin, or it’s a giant utility project, it all is dogshit.”Davis went on to explain that members of the team “sniped” the token — a method by which crypto insiders use algorithmic bots to identify new tokens and other situations ripe for manipulation — but claimed they only did it to prevent other, more predatory investors from doing so. Davis also admits to having participated in the launch (and having subsequently “sniped”) the infamous $MELANIA meme coin.Later on in the discussion, however, he attempted to distance himself from the coin’s creators, describing $LIBRA as a joint project between KIP Protocol and the government of Argentina which he merely facilitated.Another strange figure who appears to have been central to the scheme was Mauricio Novelli, with whom Milei had maintained business ties since early 2021, when the then-Congressman repeatedly lent his likeness to a company called N&W Professional Traders which was co-founded by Novelli. A week before the the scam took place, Novelli published a now-deleted photo on Instagram in which he’s seen posing at a Los Angeles Lakers game alongside Agustin Laje, a close associate of Milei who also worked as an “instructor” at N&W Professional Traders, and who also promoted $LIBRA on social media.In the year prior to the scam, Novelli reportedly met with Karina Milei, the president’s sister and closest political confidante, on at least four occasions.Cryptogate: Milei Justifies His Role in Multimillion-Dollar Scam with an Arranged TV InterviewEverything’s coming up MileiSo what exactly did Pres. Milei know about the scheme, and did he personally profit off it? Or was he, like tens of thousands of purchasers, simply taken for a ride? The answer to that crucial question has so far remained elusive, but it’s clear that at least some of those being recruited to promote $LIBRA were being compensated for it.Two days after the scam unfolded, male influencer Dave Portnoy revealed the coin’s creator, Hayden Mark Davis, had given him over 6 million of the tokens to promote $LIBRA. Portnoy says he returned the tokens, which would have been worth some $25 million at the coin’s peak, after Davis ordered him not to divulge that he’d been compensated. Nevertheless, Portnoy went on to lose approximately $5 million of his own assets in the scam regardless. But unlike the vast majority of victims, Portnoy was subsequently reimbursed – directly from a crypto wallet containing the “sniped” funds, according to Davis. Davis subsequently described the decision to only compensate the high-profile influencer as “a mistake.”It’s unclear whether Milei was offered a similar arrangement. But it’s also unclear why else the president would have lent his likeness to the project. For economist and cryptocurrency expert Saifedean Ammous, the most likely explanation is that simplest – which is, as he wrote in a popular post on X, that Milei “marketed a shitcoin to support the growth of Argentina, received millions of dollars from fans worldwide, dumped his coins, tanking the coin 95%, deleted the tweet, and now expects everyone to just move on.”Astonishing shitcoinery by Milei, shocking even to shitcoiners.He marketed a shitcoin to support the growth of Argentina, received millions of dollars from fans worldwide, dumped his coins, tanking the coin 95%, deleted the tweet, and now expects everyone to just move on. pic.twitter.com/y7xhZ9oFLH— Saifedean Ammous (@saifedean) February 15, 2025But Charles Hoskinson, one of the crypto entrepreneurs featured in a now-infamous photograph in which Milei poses alongside a number of the scammers, insisted that Milei was simply another rube who was fooled by the token’s operators. The day after the scheme unfolded, Hoskinson published a video, stating:“Here’s what I think happened. I think there’s some people in that inner circle surrounding Milei himself who took advantage of his lack of knowledge of our industry, and what happened with Trump coin and these other things, to convince him that it would be a good idea to launch some crypto infrastructure, and be basically endorsing it, and the used the President of Argentina basically to make a lot of money. And they left him, basically, to clean up the mess after they ran away.”It’s a line that a number of the president’s most vocal defenders have adopted. From a legal perspective, the notion that Milei was just another victim of the scam would arguably represent the best-case scenario for him. But that, too, involves its own set of problems.Perhaps most importantly, Milei’s political fortunes largely hinged on his supposed economic acumen. The president stormed to power in 2023 by presenting himself as an edgy, politically incorrect economist who was unafraid to challenge the fiscal orthodoxies that he claimed led to Argentina’s financial woes, even going as far as wielding a chainsaw at rallies to symbolize the budget cuts he’d enact. Those who voted him into power are now confronted with the burning question: what kind of fiscal responsibility can he offer if he can’t even keep from falling for a digital shakedown?Not his first rug pullThe question is all the more pressing given that it’s not the first time Milei has been credibly accused of participating in a cryptocurrency scam.In 2022, a scandal erupted around Milei, who was a member of Argentina’s Congress at the time, after he promoted another dubious crypto operation that operated under the name “CoinX.” The platform largely consisted of an extremely basic website created just three weeks before Milei began promoting it, but the highly attractive monthly returns offered led lots of Milei’s followers to buy in, with many even entrusting it with their life savings.Milei later claimed that his promotional work was a “one-time thing,” but posts on social media between late 2021 and early 2022 indicate Milei visited the CoinX offices at least three times. By May 2022, CoinX had ceased paying investors, and the next month, its CEO and employees vanished – along with the investors’ money – after a national regulatory commision ordered the platform to cease operations due to its strong resemblance to a ponzi scheme.When confronted by a radio journalist in a live interview, Milei defended the original business model and refused to accept responsibility for swindling numerous people – even after a number of them called the show and directly blamed his endorsement for their decision to invest. Although Milei never admitted fault, when asked directly if he was paid by CoinX he stated simply, “I charge for my opinions.”As of publication, the case is still being litigated. In August 2024, Milei nominated the judge in control of the case, Ariel Lijo, to a seat on the Supreme Court.New charges against Milei relating to his role in the $LIBRA scam are still in their infancy, with a federal judge appointed Feb. 17 set to investigate the various fraud claims against the president. The Argentinean opposition is severely outnumbered, and thus unlikely to win an impeachment battle barring any unforeseen developments. Instead, as Argentina’s markets reacted to the scam by tumbling over 6% on the first day after, it seems the force most likely to end Milei’s presidency is the one closest to his heart: the free market. (The Grayzone)