The S&P Merval index, Argentina’s main stock market benchmark, dropped nearly 6% on February 17, 2025, following President Javier Milei’s promotion of the cryptocurrency $LIBRA.
By the end of the trading session, the index recovered slightly to close down approximately 4%. The incident has since sparked financial losses, legal scrutiny, and political tension.
On February 14, Milei endorsed $LIBRA on X (formerly Twitter), presenting it as an initiative to support small businesses and boost Argentina’s economy. His endorsement caused the token’s market capitalization to surge to $4.5 billion, with its price peaking at nearly $5 per token.
However, within hours, $LIBRA collapsed by 95%, erasing almost $4 billion in market value. Blockchain analysis revealed that insiders withdrew over $87 million from the token’s liquidity pool shortly after its launch.
Investigators also found that 82% of the token’s supply was concentrated in a small number of wallets, raising suspicions of insider manipulation. Milei deleted his promotional post hours after the collapse and denied involvement in the cryptocurrency’s development.
Argentine Stock Market Drops After Milei’s Crypto Controversy. (Photo Internet reproduction)
He claimed he had no prior knowledge of the project’s specifics and acted to prevent further speculation. In response to public backlash, mercy ordered an official investigation into the matter and tasked Argentina’s Anti-Corruption Office with reviewing all transactions linked to $LIBRA.
Milei Faces Legal and Political Fallout Over $LIBRA Controversy
His administration pledged full cooperation with authorities and emphasized transparency in addressing the controversy. Despite these measures, opposition lawmakers have called for Milei’s impeachment. They accuse him of promoting a fraudulent venture and violating Argentina’s Public Ethics Law.
Legal complaints filed by prominent lawyers allege that Milei played a key role in what they describe as a “rug pull” scheme that harmed over 40,000 investors. While investigations continue, this episode underscores the risks associated with unregulated digital assets.
It also raises questions about regulatory oversight and public accountability. The political and economic consequences for Argentina remain uncertain. Authorities are working to determine the extent of wrongdoing tied to $LIBRA’s collapse.
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