Ponzi scheme

Milei criticized after advertising crypto scam

Milei had previously promoted a cryptocurrency that later turned out to be a scam.

(Bild: APA/AFP/MANDEL NGAN)

Following the collapse of a cryptocurrency he advertised, Argentinian President Javier Milei has ordered an investigation into the case. He told the online service X on Saturday that he was unaware of the details of the project and "obviously had no connection" to it. 

According to Argentinian media reports, Milei had referred to the cryptocurrency $LIBRA via X last Friday evening, the aim of which was to "boost the growth of the Argentinian economy by financing small businesses and Argentinian entrepreneurs".

Just a few hours later, Milei deleted the post and explained that he had decided to stop promoting the project after learning more about it. Shortly after Milei's advertisement, the cryptocurrency had reached a record price - and then crashed.

Profit of 107 million dollars
Expert Javier Smaldone described the cryptocurrency as a "rug pull", a widespread type of Ponzi scheme in the crypto industry. This involves attracting as many investors as possible with a new cryptocurrency. As soon as the value of the currency has risen sharply, the major shareholders sell their shares and the currency collapses.

According to Smaldone, this process took about two hours for $LIBRA. "The profit is around 107 million dollars," the computer scientist told the AFP news agency.

Not the first time
Following the collapse of the currency, the Argentine presidential office said that in light of the events, Milei himself had called in the anti-corruption agency OA "to investigate whether any member of the government, including the president, had acted improperly". Milei was in no way involved in the development of the cryptocurrency.

A special unit of the OA will also investigate the creation of the cryptocurrency and all companies and individuals associated with it.

Milei was criticized by the opposition. Former President Christina Kirchner called Milei a "crypto fraudster" on X. Senator Martín Lousteau from the centrist UCR party pointed out that this was the second time Milei had advertised a cryptocurrency that later turned out to be a scam.