Argentina’s stock market took a sharp hit over the weekend after President Javier Milei became involved in a crypto scandal.

On Feb. 17, Reuters reported that Argentina’s flagship index, the S&P Merval, dropped more than 5% following his endorsement of the LIBRA memecoin, which collapsed shortly after reaching a $4.5 billion market capitalization.

On Feb. 14, Milei backed the Solana-based asset as an economic initiative for Argentina. However, the project quickly faced scrutiny amid allegations of insider trading and fraud.

Within hours of its launch, the token lost 95% of its value, wiping out billions in investor funds. Soon after, the president distanced himself from the project, but legal and political repercussions had already begun.

LIBRA insider trading

On-chain analysis suggests that LIBRA’s creators engaged in questionable activities, including insider trading and price manipulation.

Blockchain analytics firm Lookonchain reported that the team behind the project withdrew approximately $107 million from the token, contributing to a rapid price collapse. The firm also noted that the team behind the token used three insider wallets to snipe their tokens, making a profit of $6.65 million.

Meanwhile, Barstool Sports founder Dave Portnoy is one of the notable figures entangled in the LIBRA scandal.

Lookonchain reported that an insider wallet associated with Portnoy had access to early information about the token’s launch.

However, Portnoy claimed he was not part of any pre-sale and had invested late, resulting in a personal loss of $5.34 million. In response, LIBRA’s developers reportedly compensated him $5 million in USDC.

Portnoy later disclosed that he had initially received 650,000 LIBRA tokens but returned them due to concerns over the project’s non-disclosure policies.

He asserted that Hayden Davis, Kelsier’s Ventures CEO, falsely assured him that President Milei was actively supporting the project. Kelsier served as LIBRA’s market maker and was a central player in the project.

According to Portnoy, Davis’s misrepresentation played a significant role in his investment decision. He added:

“I didn’t buy early or as an insider. I bought 10 minutes or so after Milei tweeted. I woulda bought 10 milly if I could have. That’s how sold I was on this.”

Meanwhile, blockchain data firm Bubblemaps has further implicated LIBRA’s backers in additional misconduct.

The firm linked a wallet used in MELANIA sniper trading to LIBRA’s launch. This address reportedly profited $2.4 million from MELANIA before funneling those gains into LIBRA’s development.

The company concluded:

“The creator of MELANIA / LIBRA not only launched tokens to extract value but used insider knowledge to snipe them. Making over $100M on LIBRA alone.”

Legal and political consequences

The fallout from the LIBRA scandal has led to serious legal challenges for President Milei.

Critics argue that Milei’s actions damaged investor confidence and tarnished Argentina’s reputation in global financial markets.

Lawyers and political opponents have reportedly filed fraud charges against him, alleging that his endorsement misled investors.

The legal complaint also accuses Kelsier Ventures and its CEO Hayden Davis of orchestrating a large-scale fraudulent scheme, with Milei’s involvement amplifying its reach.

Separately, the Argentine government has launched an official investigation into the matter, seeking to uncover potential misconduct by the project’s backers.

The authorities are also examining whether any government officials played a role in the token’s promotion or benefited from its collapse.

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