The $LIBRA Case: How a Memecoin Scam Exposed the Dark Side of the Crypto World

At 5:01 p.m. (ET) on February 14, the President of Argentina, Javier Milei, posted a message on the social media platform X that had global repercussions.

On February 14 at 5:01 p.m. (ET), the President of Argentina, Javier Milei, posted a message on the social media platform X that had global repercussions. In it, he promoted the memecoin $LIBRA, a digital asset whose valuation depends on market confidence and its level of adoption.

The token, which was valued at $0.000001 at the time, surged within minutes to $1 and reached a peak of $5.2. However, in just 11 hours—after hitting a market capitalization of $4.56 billion, meaning the total value of all its circulating units—it lost more than 94% of its value, according to Dex Screener, a platform that tracks cryptocurrency prices and movements in decentralized markets.

Today, although the president has denied it, it is estimated that more than 40,000 people have recorded losses exceeding $4 billion. Additionally, the president of the neighboring country is under investigation for abuse of authority, fraud, influence peddling, and bribery in a case led by federal prosecutor Eduardo Taiano.

What is a memecoin?

A memecoin is a digital currency based on a meme or an intellectual property. By bringing together a community or representing a mission, people can give it value by turning it into an asset they can buy, sell, or trade. Its price depends on how many people support it and make it popular.

The collapse of $LIBRA

From the beginning, the distribution of $LIBRA was completely manipulated. A single group controlled more than 80% of the total supply, giving them absolute power to move the price at their convenience. However, this information was never disclosed to the public, leading many investors to buy without knowing the real risk.

Just three hours after the launch, insiders or individuals with privileged information began selling their tokens in large quantities, managing to withdraw $87.4 million before the price collapsed. As a result, the supply of tokens in the market increased drastically, causing a sharp drop in its value.

But the insiders' strategy didn’t end there. Instead of selling directly on exchanges, they manipulated the token’s liquidity using Meteora, a financial platform on the Solana blockchain. There, they added large amounts of $LIBRA, making it appear as if there was significant liquidity in the system.

However, instead of allowing the market to function fairly, they withdrew the digital dollars (stablecoins) and SOL (another cryptocurrency), which were the funds backing the token, leaving $LIBRA without real financial support.

To understand it better, imagine a currency exchange where people trade money. The creators of $LIBRA put many coins into circulation, but before buyers could exchange their money back, they emptied the vault and took all the real cash. When people wanted to sell their tokens, there was no money left, causing the price to crash.

This move left the token without sufficient financial backing, accelerating the collapse of its price. With each sale, there was less liquidity to sustain $LIBRA’s value, leading to a straight-line decline.

Involvement with Milei

The link shared in the X post directed users to a Google form for the Viva La Libertad project, sponsored by KIP Network Inc., which was reportedly created shortly before the launch of $LIBRA, according to The Kobeissi Letter, an account specializing in global capital market analysis.

“Today was the launch of the Viva La Libertad project, and the $LIBRA coin has been a success. We want to thank everyone for their trust and support. We want to clarify that President Milei was not and is not involved in any way in the development of this project, which is entirely private. Thank you for being part of this great beginning!” reads their first tweet on that fateful day.

However, it was not until the following day that the organization clarified through its X account that the token launch was “entirely handled by the company Kelsier Ventures, represented by businessman Hayden Davis.”

By that time, a photo was already circulating showing Javier Milei alongside Julian Peh, co-founder and CEO of KIP Protocol, during a meeting in Argentina on October 19, 2024, as part of the Tech Forum Argentina, which did not dispel suspicions.

Later that same day, Davis himself posted a video confirming that he was behind the launch of the $LIBRA project and that he served as an "advisor to Milei." According to his own admission, he managed to capture the Argentine president’s attention due to his family’s direct ties to Donald Trump, which would also explain his involvement in the $MELANIA memecoin.

"Davis came to me and proposed this. I met him at the fintech event in October 2024, and in that context, he suggested creating a structure to finance entrepreneurs and promote economic growth. I found it to be