Keys to Understanding Argentine President Milei’s Crypto Fiasco
Argentine President Javier Milei (R). X/ @BarrancoAnaya
February 17, 2025 Hour: 8:54 am
‘Meme coins’ or ‘junk coins’ lack real economic backing and merely seek to capitalize on public enthusiasm.
The cryptocurrency $LIBRA, promoted by Argentine President Javier Milei, belongs to the world of digital assets designed to generate money for its creator by leveraging the image of a public figure and the gullibility of their followers.
RELATED:
Argentine Anti-Corruption Office to Investigate Milei and His Cabinet for Cryptocurrency Scam
Due to the lack of regulation, offerings of this kind have more in common with a Ponzi scheme (a type of pyramid scam) than with a legitimate financial asset.
So-called “meme coins” or “junk coins” lack real economic backing and merely seek to capitalize on public enthusiasm surrounding a phenomenon. This is what happened with Milei, who advertised the cryptocurrency as a “private venture” and later deleted it from his social media accounts amid fraud suspicions.
Rodolfo Andragnes, founder of the NGO Bitcoin Argentina, explained that $LIBRA is one of over 50,000 pseudo-cryptocurrencies in existence, which can be created in just five minutes and whose developers allocate units for sale at their discretion under the Pump & Dump scheme.
“Almost 100% of these coins operate on the premise that there is a very large market of investors trying to buy at the launch price and sell when it rises. But since they have no real utility, they die out,” detailed the founder of the NGO dedicated to promoting the sustainable use and development of the crypto ecosystem.
During the few hours that Milei’s posts about $LIBRA remained on his social media, demand skyrocketed. Its price jumped from 0.3 cents to US$5.54, moving millions in transactions before crashing. Its current value stands at 0.0006 cents per dollar.
A financial report by the U.S. firm Kobbeissi Letter revealed that as soon as the currency was launched, the initial investors in the “venture” began withdrawing funds, raking in US$87.4 million in profits. “In just five hours, over US$4.4 billion in market capitalization was wiped out.”
This type of maneuver is called a “rug pull,” one of the most common scams in the crypto world. “Basically, they provided a bank account number for people to deposit money,” explained Ciro Edgardo Romero, a computer researcher specializing in new technologies.
“If properly done, a cryptocurrency project works like any other currency. Serious projects have a visible ‘Whitepaper’ explaining their operation, economic and technical backing. This provides transparency and trust by being supported by blockchain technology,” the expert added.
Lax Regulations
Romero, a researcher and professor at the Faculty of Engineering of the University of Buenos Aires specializing in blockchain and decentralized technologies, stated that these scams thrive due to lax regulations on entities providing financial services with cryptocurrencies. Non-governmental oversight mechanisms mainly focus on raising investor awareness.
“These types of frauds take advantage of people’s impulsiveness. They amass significant capital because many people invest money without questioning anything. You should always be critical and research before investing in anything. If you don’t fully understand how it works, you shouldn’t take the risk,” advised Romero.
In this regard, Andragnes warned that while the Argentine state regulates financial service providers, no one takes responsibility for those promoting junk assets on platforms, and “there is no motivation to prevent their publication and offering.”
“This is the main ignored complaint that our NGO has regarding regulations. In fact, they allow anything to be sold with a trust seal from the National Securities Commission (CNV),” concluded the founder of Bitcoin Argentina.
Following the “crypto fiasco” promoted by Milei, the Argentine Fintech Chamber—which represents technology-based financial service companies—issued a statement highlighting the use of CNV-approved platforms and offering to collaborate with authorities in developing policies for innovation and user protection.
“We reaffirm our commitment to working alongside the public and private sectors on an agenda that ensures crypto is a tool for progress and sustained growth in the country,” stated Fintech.
According to this Chamber, Argentina is one of the leaders in cryptocurrency and blockchain technology adoption, with over 2.5 million active monthly users and a transaction volume exceeding US$91 billion in 2024.
teleSUR/ JF
Source: EFE
