$LIBRA: the timeline of a crypto scandal that’s rocking the Milei government #CriptoNews

Javier Milei is in his tightest spot since becoming president of Argentina. His X post supporting a cryptocurrency token called $LIBRA prompted many investors to buy the cryptocurrency. It then collapsed and lost all of its value when its developers withdrew between US$80 million and US$100 million less than an hour after creating it.

The Herald has put together a detailed timeline of events, including some explanations of how the crypto ecosystem works. The events are separated into stages, marking the main twists in the story.

$LIBRA: timeline of a scam

1. The setup: creating the website, $LIBRA and financing

First, the “Long live freedom project” website was created, offering very basic information about the project’s goals. According to the developers, they were hoping to raise funds to finance Argentine entrepreneurs by launching $LIBRA.

Half an hour before Milei’s social media post, at around 6:30 p.m., they created the $LIBRA token. They used a platform called Fix Float for this, which does not ask for any personal identification, allowing users to remain anonymous. This is the platform most commonly used by scammers.

All the coins created were transferred to 12 different wallets. This was done to split the total into different shares, so the project is not immediately considered a scam.

Five minutes before Milei posted, various users from the team that developed $LIBRA transferred funds (they form what is technically known as a “liquidity pool”) so that investors can buy and sell $LIBRA.

2. Milei’s backing: the value explosion

At around 7 p.m. Argentine time, Milei spread the news of $LIBRA’s launch on X. In his post, he copied the cryptocurrency’s identification number, known as a “contract,” enabling investors to locate the currency quickly.

Without that number, nobody would have been able to find the currency to buy it, because it was a newly-created project and the major cryptocurrency trading platforms did not include it among their investment options.

Within 45 minutes, the price of the $LIBRA tokens had ballooned, peaking at US$5.54 each. The first $LIBRA buyer paid US$0.216 per token, purchasing at the same instant Milei published on X. Around 37 minutes later, that user sold most of their tokens, making a net profit of US$6.5 million.

The impact of Milei’s post was massive. Between them, buyers and sellers of the cryptocurrency moved a volume of US$1.5 billion. It reached a market capitalization (that is, a total value) of US$4.5 billion. That is comparable to the Argentine private bank, Banco Francés.

Around 84% of the coins were in the hands of three users, who were on the development team. In these projects, developers typically hold between 15% and 20%.

3. The great scam: privileged information, extraordinary profits

Around 40 minutes after it was launched, the first users who had bought $LIBRA started to sell. That prompted a 70% collapse in its price over the next hour: it dropped from US$4.74 to US$1.44.

According to crypto analysts, most of these sales were by users who were on the project’s development team. This was confirmed by Hayden Davis, an advisor to Milei and chief executive officer of the company that created $LIBRA.

In an interview with Stephen Findeisen, a YouTuber known as Coffeezilla, Davis admitted that he had made around US$100 million, that he still holds around US$11 million in cryptocurrency, and that he made US$13 million in fees by selling the coin. In total, Davis believes he made profits of US$113 million and still holds around US$11 million in coins.

But while the creators made extraordinary profits on the project, over 75% of investors who bought $LIBRA in good faith lost out.

According to the Argentine crypto specialist Fernando Molina, 62.8% of wallets lost between US$1 and US$1,000; 8.7% lost between US$1,000 and US$10,000, and 2.9% lost between US$10,000 and US$100,000.

Of those who profited, 22.3% made between US$1 and US$1,000; 2.6% made between US$1,000 and US$10,000, and just 0.18% of users made over US$100,000.

The wallet that profited the most made four purchases of US$250,000 (totaling US$1 million) simultaneously with Milei’s post and started to sell around 45 minutes later. Its net profit was US$8.5 million.

The wallet with the greatest losses made its first purchase 10 minutes after Milei’s post and kept buying for the next 13 minutes, before starting to sell after Milei withdrew his public support. In total, it lost US$5.25 million.

Crypto analysts suspect that the individuals who ended up with the money are not only those who created the project, something Davis himself admitted in the interview, but also some investors who had access to privileged information.

Another important matter is whether or not $LIBRA is a memecoin. This is central to determining what responsibility Milei bears.

A memecoin is like the crypto equivalent of a collectible figurine: it’s a cryptocurrency based on recurrent online jokes that has no specific use — investors hold them just for fun.

$LIBRA was developed using tools that are normally used for memecoins, so technically, it is a memecoin. Proof of this is in the maneuvers of its developers, who ended up with extraordinary profits thanks to Milei’s support, as tends to happen whenever a memecoin is issued.

The problem is that the Argentine president publicized the project as a serious endeavor, not as a memecoin. This gives rise to two possible interpretations: one is that the president didn’t know what he was promoting, and therefore someone tricked him. In that case, the question is who, and to what extent they were responsible. The other is that it’s impossible for the president not to know, and he is criminally responsible for the crimes committed with this launch.

4. The Great Pontius Pilate: ‘I wasn’t informed of the details of the project’

At around 12:38 a.m. on Saturday, more than five hours after publicizing the cryptocurrency on his X account, the president deleted the post promoting the project. “I was not informed of the fine details of the project and after learning, I decided not to continue spreading it (that’s why I deleted the tweet),” he wrote.

That post was the nail in the coffin for $LIBRA’s value and caused losses for the vast majority of users who had acquired the memecoin.

In stark contrast to his usual hyperactive social media use, the president went all weekend without making statements or sharing content. He was locked up in the Quinta de Olivos, Argentina’s presidential residence, and only took visits from his innermost circle: his sister Karina Milei, advisor Santiago Caputo, and Human Capital Minister Sandra Pettovello.