Argentine President Javier Milei is embroiled in a corruption investigation related to his promotion of a meme coin, a highly speculative form of cryptocurrency that has recently gained traction. The scandal, dubbed “Cryptogate” locally, involves a diverse cast of characters and raises questions about the intersection of politics, finance, and social media.
Milei, known for his tech-friendly and libertarian views, posted about the meme coin $LIBRA on X (formerly Twitter) shortly after its launch. He stated that he was “encouraging economic growth by funding small businesses and startups.” The coin’s price surged rapidly, briefly pushing its market value beyond $4 billion. However, the price plummeted soon after, a phenomenon often associated with “rug pulls.” This occurs when insiders rapidly sell off their holdings in a new coin, causing a price collapse that harms less-informed investors.
Following the price drop, Milei deleted his initial post and distanced himself from the project. Criminal complaints quickly mounted, and a judge initiated an investigation. A federal prosecutor has begun a probe to examine the potential involvement of Milei and five others, considering charges of bribery, fraud, influence peddling, and abuse of authority.
A central figure in the scandal is Hayden Davis, a 28-year-old American crypto developer who claims to advise Milei and helped launch $LIBRA. Despite Milei’s office denying any connection to Davis, Davis’s interview with independent crypto journalist Stephen Findeisen paints a picture of meme coins as inherently risky, benefiting a few at the expense of many.
Davis has also been linked to the launch of Melania Trump’s meme coin, which experienced a similar pattern of rapid price increases followed by a sharp decline. Melania Trump’s office has declined comment. Online influencer Dave Portnoy, founder of Barstool Sports, revealed that Davis had informed him of $LIBRA’s launch, seeking his promotional support. Portnoy stated he lost money on the coin after Milei’s post. Davis claimed he reimbursed Portnoy’s losses.
Another key figure is the anonymous co-founder of a crypto firm involved in launching meme coins, using the pseudonym “Meow.” Meow asserted that no one at the firm engaged in insider trading or financial misconduct. However, the company has initiated an independent investigation and accepted the resignation of a leader at the company for “a lack of judgement.”
“Cryptogate” marks the first major scandal of Milei’s presidency. Analysts believe it potentially undermines public trust in the President, who rose to prominence on promises to combat inflation and corruption. The scandal’s fallout might impact foreign investor confidence at a critical time when the government seeks to ease currency controls and secure an International Monetary Fund loan. Meanwhile, Milei is in Washington meeting with tech leaders to generate interest in his economic reforms.
Meme coins, despite their volatile nature, are unlikely to disappear. The experiences of $LIBRA, other similar ventures, and the coins promoted by the Trump family serve as cautions for both investors and creators alike.
