How Incompetence and Greed Led Argentina’s Javier Milei to Become the Face of the $4.5B LIBRA Scam

President Javier Milei could have lifted Argentina with crypto but instead crypto could sink him.

Last Friday on Valentine’s Day at exactly 5PM EST, Argentine President Javier Milei tweeted to his 3.8 million followers that there was a "private project” that’s “dedicated to encouraging the growth of the Argentine economy, funding small Argentine businesses and ventures.” He posted the link to the project’s website, added a token cash tag and a Solana contract address.

The implied message was clear: Go buy the $LIBRA token.

And the followers of Milei diligently followed suit sending Libra to as high as $4.56 billion in market capitalization just 30 minutes after the president’s tweet.

It didn’t last long.

Milei tweeted at 10:38 PM, that he has “obviously no connection” with the project he had promoted earlier, saying he wasn’t familiar with its details, and after having learned more about it, he decided to stop giving it exposure, which is why he deleted the original tweet. He closed the post with a mini rant about the “political caste” who want to take political gain from “this situation.”

By midnight Feb. 15, the token had plunged by 97%.

Of the about 44,000 wallets who bought the token the day it was issued, almost 74% lost money (between $1 and $100,000). 21% made up to $1,000. But there was a small cluster of wallets, just 0.18%, which made more than $100,000, according to BlockWorks data scientist Fernando Molina.

It's an insiders' game

But the token had started plunging well before Milei’s second tweet. It started to sink immediately after reaching $4.56 billion in fully diluted valuation, when eight wallets linked to the LIBRA team, which had provided initial liquidity, withdrew that liquidity plus trading fees, making $107 million, according to data from Lookonchain.

In addition to gains made from LP tokens and fees, insider wallets – about 12 of them– also profited by setting up bots that knew to buy LIBRA at the exact same time Milei tweeted, Molina said. One of these wallets bought $1 million in LIBRA when the token was at $0.38 and cashed out with $8 million in profit when the token had rocketed to $4, minutes later, Molina said in an X space Sunday.

It’s presumed that influencers (a.ka “KOLs”) were paid to promote the token after launch. Barstool Sports founder Dave Portnoy said in an X post Davis paid him 6 million LIBRA tokens to promote the project, and that he returned the funds.

A textbook rugpull.

Scam, Not Memecoin

It’s important to highlight this is not like other memecoins, where buyers know they’re essentially entering a casino. LIBRA is closer to an outright scam, as it was pitched and promoted as a project to invest the token proceeds in Argentine businesses and education. It’s now clear the parties behind it, KIP Protocol and Kelsier Ventures (we’ll get into who they are in a bit), had no intention of doing so and pulled the token’s liquidity within hours after it had launched.

Another distinction: Not all memecoins get explicit backing from a country’s President. South America’s second-largest country by GDP, no less.

The scam caused the loss of millions of dollars. Some will say it was crypto degens who lost money and they knew what they were getting into. I disagree.

When Milei shared this Solana contract address and cash tag, it was regular Argentines, who up until that moment believed Milei could do no wrong in his promise to guide Argentina to progress with libertarian ideas and free markets, the ones who jumped in. But they got in after insiders had already bought first, and quickly got rekt. Milei helped feed the sharks.

Backlash spread quickly, with opposition lawmakers calling for Milei to be impeached and former President Cristina Fernandez accusing him of being the ringleader of a Ponzi scheme. When markets opened Monday, the Merval stock index plunged more than 5% as investors were still grappling with the fact that the Argentine president either knowingly shilled a scam or was gullible enough to fall for it.

Milei's Unstated Crypto Promise

This disaster started brewing as soon as MIlei was elected. Even though he had never spoken in favor of Bitcoin or crypto, to most in the crypto ecosystem in Argentina, it was clear that given Mile’s libertarian ideals, he would be more prone to establishing a more crypto-friendly regulatory environment. His kinship with Donald Trump, who became the crypto candidate and then president, solidified this belief.

Argentina has long been a hub for crypto in the region with several prominent crypto companies established there or with Argentine founders – Zeppelin, Decentraland, Ripio, Lemon, Belo, RSK Labs, etc. It is one of the few countries where crypto is actually mainstream and used for everyday payments and savings. It wasn’t a stretch to believe that the libertarian president would supercharge an ecosystem that was already in place and thriving.

So the moment Milei was elected it was go time for the Argie crypto community and there was a rush to gain Milei’s ear. The Crecimiento project that’s aimed at establishing Argentina as a global crypto hub, lobbied for months to speak to Milei and get his support. Milei never showed, even as key members of his administration spoke at the pop-up city established in Buenos Aires last August. Some of the group’s organizers also tried to get Milei to meet with Ethereum’s Vitaik Buterin and Filecoin’s Juan Benet, with no success.

That makes it even more jarring that of all the legitimate crypto projects in the country, and of all the actually influential people that have been keen to meet with the Argentine president, he chose to meet with the people behind $LIBRA, who are 1) not Argie 2) completely unknown in crypto.

Milei’s Gatekeepers

How did this happen? According to those involved in conversations with Mieli’s circle, there are at least three key figures gatekeeping access to Milei when it comes to crypto: Mauricio Novelli, Demian Reidel, and Karina Milei.

Novelli, who knows Milei since before he become president, has a trading school called NW Professional Traders. Reidel is the Chairman of Milei’s Council of Advisors. Karina’s official title is the president’s General Secretary, and she’s also Milei’s sister.

For tech matters, to get to Milei, you likely have to get through to one of these three advisors. And for some strange reason, the two companies behind the LIBRA scam, KIP Protocol and Kelsier Ventures, both unknown entities in crypto, backed by unknown people, were able to gain access.

KIP and Kelsier Meet Milei

In its website, KIP Protocol describes itself as a way to “unlock our digital property rights in AI, granting us our fair share of the economic benefits of the AI powered future.” It was founded in 2019 by Julian Peh. How that relates to launching an Argentina memecoin-turned scam is anyone’s guess.

Kelsier Ventrues is a venture capital firm founded in 2021 led by CEO Hayden Davis and COO Gideon Davis.

On Oct. 19 in a conference called Tech Forum Argentina, founded by Novelli, the Argentine president held a meeting with Peh, of KIP Protocol. Novelli, and presidential spokesperson, Manuel Adorni, were also there. The group told Milei of KIP’s intention to develop a project called “Viva la Libertad,”(Long Live Freeedom), to finance private ventures in Argentina using blockchain technology, according to an official statement from Milei’s office.

A quick side note about the Tech Forum: Novelli was able to secure government sponsorship for the event, where Milei also spoke. But other than a handful of known names, the conference didn’t have many known speakers. Most of the local crypto community was turned off by sponsorship prices and tickets in the several thousands of dollars. Cardano founder Charles Hoskinson said in a viral tweet that he was promised a meeting with Milei at the event, in exchange for payment. Event though Cardano promoted a meeting with the Argentine president before the confenrece, it never materialized.

Talks about LIBRA continued on Jan. 30, when Milei held a meeting at Casa Rosada with Hayden Davis, who, according to representatives of KIP Protocol, would provide the technological infrastructure for LIBRA project, the statement said, adding that Davis has no connection with the Argentine government and was presented by representatives of KIP Protocol as one of their partners in the project. Milei shared a photo with David on his X account, saying that Davis had advised him on the impact blockchain tech could have on Argentina.

According to meeting records disclosed by the news outlet El Destape, Milei’s sister, Karina, had previously met with Davis, in July. Records show a YouTuber called Terrones Godoy, and Bartosz Lipinski, co-founder of crypto exchange Cube Group, also joined the meeting.

So between these three meetings, in July when Kelsier Ventures’ Davis first met Karina, later in October, when Peh from Kip met Milei at the Tech Forum, and then in January when Davis met Milei at the Casa Rosada, the LIBRA team was able to seal the deal and get Milei’s support for their scam. They registered the vivalalibertadproject.com domain on Feb. 14, launched the token, and pulled its liquidity, all on the same day.

Finger Pointing

Now everyone is trying to distance themselves from the project.

Davis, in what will no doubt go down in crypto history as one of its strangest videos, said on Feb. 15, “every single dollar I managed to roundup, from fees, farming or liquidations,” he intends to “inject everything back into the LIBRA chart in the next 24 to 48 hours,” effectively admitting that he pulled the token’s liquidity. In a statement, he said he’s “the custodian,” not owner, of about $100 million made from LIBRA, and that he’s not “comfortable” sending those funds back to KIP and Milei’s associates.

In an interview with Portnoy, when Portnoy pressed him asking who owned those funds, he was unable to give an intelligible answer.

In a statement, KIP denied that Peh had discussed LIBRA in the October meeting with Milei. It also denied attending the January meeting with Davis and naming him as a partner, and said they were not involved in the token launch.

“Mr Peh was informed that Hayden / Kelsier Ventures would be the lead on the Project, and they would launch the token and that KIP Protocol would play a role after the token had been launched,” the statement said,

Still, KIP tweeted in support of LIBRA when the token launched and the original Viva la Libertad website said KIP was the developer of the project.

Milei is also trying to shake the blame off, launching an investigation into LIBRA, and tweeting about how Kirchnerism was Argentina’s biggest rugpull together with a chart showing the depreciation of the peso.

But there’s no denying it. Instead of lifting up local entrepreneurs, Milei promoted the project of a “Yankee” scammer, as Argentines would say, and led his followers to become exit liquidity.

The right thing for Milei to do would be to take responsibility for not doing better diligence before posting on X and leading them to become exit liquidity for scammers.

It would be even better if he could spend some time getting to know the actual builders in Argentina, and learning more about meaningful policy to push for the ecosystem to thrive. We already know his support can drive billions of value. Imagine if that could actually go to Argentine builders and not scammers.

As for the wider ecosystem, memecoins are fine if they’re an avenue to speculate on internet jokes on equal footing with everyone else. Degens gamble, join telegram groups, share memes, make some money, lose some more. But the ecosystem has become industrialized and rigged to the point where we’re far from that game. Driven by “cabals,” their KOLs and their bots, who pump and dump tokens. On top of all that, they crossed the line to become an outright scam this time. And they messed with LatAm. So this is the final straw for me. This is where I hope the pendulum starts to shift and that actual utility, not nihilisitc speculation, starts to drive the most volume in crypto.

[UPDATE: Corrected to reflect $4.56 billion refers to LIBRA FDV, not market cap]